“New Auto”: VW group is on a downward path

“New Auto”
VW Group is on a downward path

From Helmut Becker

Volkswagen boss Diess is serious: in 2026, combustion engines will no longer be developed and none will be built in the mid-2030s. His new corporate directive: pure electronics and digitization. As a reward, his contract will be extended until 2025. The only question is what for?

In spring 2021, Volkswagen will make three headlines that will not only shake your own house, but also the “old” car world of horsepower and power:

  1. Audi gets out of the combustion engine
  2. VW brand boss Brandst├Ątter: “not a new combustion family”
  3. VW is investing billions in its own standard battery

In addition, there are reports from Brussels, which in total mean the end of the future of internal combustion engines. EU commissioner Timmermans announces that the CO2 fleet limits for new vehicles will be tightened to zero from 2035. The European automotive industry – but also all importers of cars from the USA and Asia to Europe – are in fact being forced to only bring purely battery-electric or fuel cell vehicles onto the market.

That is the death of the combustion engine based on fossil fuels, as well as of synthetic fuels or plug-in hybrids, the new hit of the German manufacturers. And it is exactly the opposite of technology openness to which the Commission and Vice-President Timmermanns have always admitted.

Volkswagen CEO Herbert Diess seized the opportunity to justify his industry-wide unique and technologically monogamous electric strategy and presented his new corporate plan for 2030 called “New Auto” – a word homunculus, like the strategy itself.

For him it is the moment in every respect. His bitterest opponent, Bernd Osterloh, is gone. The powerful group works council chairman has taken on board responsibility at the truck subsidiary Traton. This gives Diess a free hand to subject the VW Group to a unique technological revolution. He prescribes a double transformation: on the one hand away from the combustion engine, on the other hand towards electronics and digitization. The spearhead is Audi.


VW advantages 208.60

The VW subsidiary wants from 2026 onwards, no longer produce any new models with combustion engines. From 2026, new models will only have an electric drive. Only the existing combustion engines are still being sold as discontinued models.

In just four years – one year earlier than previously assumed – the last new model with a classic combustion engine will roll off the production line. According to Audi boss Markus Duesmann, the car will be sold for around seven years, i.e. until around 2032 or 2033 – depending on customer demand. Then it’s over, the engine developers are sent home or are also “transformed”. Because the end of the currently very successful Audi hybrid vehicles has also been decided. From 2026 Audi will only be bringing new models onto the market that are purely electrically powered.

Volkswagen boss Diess proudly presents his future strategy with the words: “Because the car is here to stay!” For today’s world stock of roughly 350 million VWs alone, this is unlikely to apply: Because that will shrink if the cars in the future only come off the production line as robot and battery-based electric cars.


The basis of the new strategy at VW is the electrification of the fleet: in 2030 half of all Group models worldwide are to be purely electric, in 2040 VW wants to reach almost 100 percent in the main markets, which means that Diess is still a backdoor for the with the word “almost” Keeps the burner open. The media was not interested in that, however.

But Diess creates facts: For VW electric cars, there is only one new super-standard platform called “Scalable Size Platform” (SSP), which is to be rolled out from 2026 across all brands and series from small cars to luxury SUVs. It is intended to merge the electrical platforms MEB and PPE and gradually replace them. Audi boss Markus Duesmann, who is also responsible for research and development on the group board, confirms: “By the end of the decade we had rolled out the SSP across all brands.”

Diess announces the end of the development of internal combustion engines from 2026, parallel to the expiry of its contract. VW has been preparing for the end of combustion engines since 2019, and production is increasingly being converted to e-mobility, for example in the Emden and Zwickau plants. By 2030, half of all VW vehicles sold should be fully electric. In addition, VW wants to increase its share of added value in the car again, for which purpose its own battery production is to be established: By 2030, six group-owned battery factories are to be built in Europe alone. Production here is largely fully automated, so the added value does not end up with the employees, but primarily with foreign raw material suppliers.

Porsche + Seat / Skoda

The VW group subsidiaries Porsche and Seat / Skoda join the VW exit strategy. In the next few years, Porsche plans to phase out the internal combustion engine entirely, with the exception of the 911 series. Seat and Skoda are planning to gradually expand their range of electrified models. Seat has also founded a sub-brand, Cupra, which exclusively produces e-cars. There are no stipulations of a fixed point in time for a final exit from the combustion engine for both group subsidiaries.

What are the consequences for the group?

The only correct answer to the question from both a global economic and a market-specific point of view was BMW CEO Oliver Zipse, currently also President of the Brussels automobile umbrella association ACEA. Zipse warned in interviews of a “shrinking course”. Oliver Zipse is certain that if the combustion engine farewell too early, “half the market volume would be lost”. In general, the prevailing opinion in the industry is that the market for e-cars can at most reach half of the total market volume in the next few decades. “If a manufacturer no longer has a combustion engine on offer, then half the market volume is lost to them and they are on a downward course in business terms.” From this there is only one conclusion: Volkswagen will shrink.

Zipses main argument against the exit is: “The real decision-makers in our industry are the customers. And you should never lose sight of them.” In the next 15 years there will be cities, regions and countries in which the transformation process to electromobility will take place in full. But that will not be the case in the sum total of 140 BMW sales markets worldwide.

Helmut Becker writes a monthly column about the car market for n-tv.de.  Becker was chief economist at BMW for 24 years and is in charge of it "Institute for Economic Analysis and Communication (IWK)".  He advises companies on automotive-specific issues.

Since Volkswagen is represented in almost all markets with its high global market share, this argument weighs particularly heavily. One thing is certain: only the highly developed industrial markets will be able to enable the operation and infrastructure of electric cars in the long term. The majority of developing and emerging countries are concentrating on getting their daily power outages under control rather than on electric cars. There is simply a lack of resources for electromobility.

According to VDA statistics, 3,089,221 new electric cars and 67.27 million passenger cars were registered globally in 2020. For Stromer, this means an average world market share of 4.6 percent. As of today, VW actually cuts itself off from 95 percent of the world market without a combustion engine.

The global passenger car population makes it even clearer: According to the VDA, around 1.6 billion cars were registered in the 33 main sales countries for e-cars in 2020, around 10 million of them electrified cars. And of these 6.8 million were pure battery electric cars (BEV), as the VW Group wants to build. If you follow the statistics of the Federal Motor Transport Authority (KBA), the number of manufacturers of electric cars is now over 20 who share this very narrow market.

The crux is: Even the market for BEV cars in the highly developed industrialized countries is far from ready for electromobility. Honda estimates that the potential electric countries will not be fully developed for electric vehicles until 2040. This could be compensated for by higher market shares in the remaining main markets, but this is unlikely in view of the fierce competition. The exit decisions by Group boss Diess and colleagues therefore mean nothing more than a shrinking of the sales and thus the production base.