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Volkswagen relies on electric vehicles and nostalgia to grow in the US| GuyWhoKnowsThings


Probably only Americans of a certain age remember when the Volkswagen Beetle was the best-selling imported car in the United States and the coolest ride to a Grateful Dead concert was a Volkswagen Microbus.

Volkswagen is trying to harness some of that nostalgia in its latest effort to recapture the status and sales it enjoyed in the United States during the heyday of the Beetle and Microbus in the 1960s. But this time it hopes to make its top models electric.

The German automaker ranks second globally to Toyota, but is a niche player in the United States. Part of his plan to revive his fortunes here is to lean on a new electric model that looks like the Microbus, the ID.Buzz, and revive the Scout brand with a line of electric pickup trucks and sport utility vehicles.

Last week, as giant bulldozers kicked up clouds of dust, Volkswagen executives and local officials gathered near Columbia, South Carolina, to dedicate the site of a factory that will build vehicles bearing the Scout badge for the first time since 1980.

Volkswagen is one of several foreign automakers that see electric cars and the upheaval they are causing as a way to challenge dominant players in the United States. Volkswagen, which also owns Audi, Porsche, Bentley and Lamborghini, aims to at least double its U.S. market share by the end of the decade from the current meager 4 percent.

“This market is going electric and everyone is starting from scratch,” Arno Antlitz, Volkswagen's chief financial officer, said in an interview. “This is our unique opportunity to grow.”

Electric vehicles have already shaken up industry rankings, emboldening Volkswagen and other foreign automakers. Battery-powered SUVs and sedans helped Hyundai Motor and its sister brand Kia overtake Stellantis, the maker of Jeep, Dodge, Chrysler and Ram, as the fourth-largest automaker by sales in the United States last year.

“Electric vehicles are helping our brand be seen as a technology leader,” said José Muñoz, Hyundai's chief operating officer. They also attract a better-educated and wealthier customer than is the case with the South Korean company's gasoline vehicles, he said in an interview.

The list of companies dominating electric car sales looks very different from the top rankings for overall sales in the United States, suggesting a future in which a different group of companies rule.

The top five companies in the United States for all types of engines are General Motors, Toyota, Ford Motor, Hyundai and Stellantis. In electric cars, Tesla is number one by a wide margin, followed by Hyundai, GM, Ford and Volkswagen. toyota is a minor player in electric cars.

“Just because it's been around for 120 years doesn't mean it's going to have anything in this new market.said Steven Center, chief operating officer of Kia America.

Volvo Cars is another company hoping to take advantage of the changes brought about by electric vehicles. The Swedish automaker, which is majority owned by China's Geely Holding Group, reported a 26 percent increase in U.S. sales last year.

Much of that growth came from hybrids that have a gasoline engine and can travel shorter distances on batteries. But Mike Cottone, president of Volvo Car for the United States and Canada, said he saw hybrids as a path to fully electric vehicles.

Later this year, Volvo will begin selling a Chinese-made all-electric compact SUV, the EX30, which will start at $35,000. The company will also begin delivering the EX90, a seven-seat SUV manufactured in South Carolina and whose starting price will be around $80,000.

Especially for luxury car buyers, Cottone said, “there is a lot of room for growth in the electric vehicle segment in the coming years.”

Volkswagen has tried unsuccessfully since the 1970s to have a greater presence in the United States, and analysts are skeptical that this time will be different. “I've seen Volkswagen set these goals before,” said Michelle Krebs, executive analyst at Cox Automotive.

Established automakers won't be a pushover. GM and Ford are also investing heavily in electric vehicles, while Toyota has said it will begin producing a full-size electric SUV in Kentucky next year.

Krebs noted that U.S. auto sales were growing slowly, making the fight for market share largely a zero-sum game. “There's a little growth that everyone looks for,” he said.

Volkswagen's last big push in the United States ended in scandal. In the early 2000s, the company tried to sell Americans cars with “clean diesel”engines. He promoted the fuel, which is used much more in European passenger cars than in American ones, as more environmentally friendly than gasoline.

But the campaign failed in 2015 when U.S. regulators discovered that Volkswagen had used software in vehicles to cheat on emissions tests. In reality, cars polluted as much as long-haul trucks.

The scandal had a benefit for Volkswagen. This prompted the company to invest early in electric vehicle technology and build cars designed from the ground up to run on batteries, rather than making cumbersome modifications to gasoline models. In Europe, Volkswagen's various electric brands outsell Tesla, according to Schmidt Automotive Research.

The person responsible for doubling Volkswagen sales in the United States is Pablo Di Si, president of the Volkswagen Group of America. Di Si, originally from Argentina, said he planned to use the same strategy he implemented while overseeing the company's operations in Brazil, where Volkswagen's market share rose to more than 16 percent from 9 percent.

“You look at the segments that you think are going to be successful in 10 years,” Di Si said in an interview. “What are your gaps in the product portfolio? And then you start adding products for those particular markets.”

In the United States, he said, that is likely to include gasoline and hybrid cars, as well as fully electric vehicles. Volkswagen plans to import the ID.7, an electric sedan, and the ID.Buzz. He di Si hinted that there could also be a new electric vehicle that references the Beetle design. He latest version of that car sold in the United States was the beetle 2019.

Volkswagen is building a $5 billion factory in Ontario to supply batteries to its factories in Chattanooga, Tennessee, and Puebla, Mexico, which together will produce at least 80 percent of the company's cars sold in North America. . That will help car buyers of its Volkswagen, Audi and other brands qualify for federal tax credits of up to $7,500 per car.

Scout will fill a major gap in Volkswagen's portfolio: pickup trucks, one of the most popular vehicles in the United States. By reviving the Scout, which was one of the first passenger vehicles that could navigate rugged dirt roads as well as city streets, Volkswagen hopes to attract buyers who normally purchase off-road capable vehicles from American brands such as Chevrolet, Ford and Jeep.

The South Carolina factory will underscore the made-in-America vibe when the first Scouts go on sale in late 2026. Volkswagen inherited the Scout brand when the company's truck subsidiary, Traton, acquired Navistar, a U.S. company formerly known as International Harvester, in 2021.

The new Scouts may borrow some parts used in other Volkswagen vehicles, company executives said, but the design will be different from existing vehicles like the ID.4 electric SUV made in Chattanooga. Scout plans to reveal prototypes this year.

A stronger presence in the United States is “a strategic necessity,” Scott Keogh, CEO of Volkswagen's Scout Motors division, said last week in South Carolina.

Outside the United States, Volkswagen is a giant, with a 26 percent share of the European market and 15 percent in China. But the company is under severe pressure in China, where sales of electric vehicles have been growing rapidly, allowing BYD and other Chinese automakers to gain market share from foreign automakers. Volkswagen needs growth in the United States to compensate.

Volkswagen “wants to have a strong global presence,” Keogh said, “not have an isolated footprint, where it only remains strong in one region.”


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