Volkswagen on Monday committed $7.1 billion over the next five years to boost its product portfolio, regional R&D and manufacturing capabilities in North America.
By locally integrating its combustion-engine and electric vehicle assembly, American-focused engineering, battery know-how, and software development, Volkswagen aims to drive 55% of U.S. sales to be fully electric by 2030.
VW will begin to phase out gasoline-powered vehicles from its American lineup, aiming to exit from sales at the beginning of the next decade, while focusing on the most desirable models. In its place, the company will advance its electric lineup, including the American-assembled ID.4 in 2022, the ID. Buzz electric microbus in 2024, and new electric SUVs from 2026. In all, Volkswagen Group brands plan to introduce more than 25 new battery-electric vehicles to American consumers through 2030.
Currently, more than 90% of VW’s vehicle portfolio for North America is assembled in North America, including the Atlas and Atlas Cross Sport SUVs in Chattanooga, Tennessee, as well as Tiguan, Taos and Jetta in Puebla, Mexico. VW aims to strengthen these capabilities in its pivot to electric mobility.
This strategy builds on the company’s preparation of its Chattanooga facilities for local EV production. Assembly of the ID.4 SUV is poised to begin in 2022, sourced mostly from regional suppliers. VW also plans to upgrade its factories in Puebla and Silao, Mexico, for the assembly of electric vehicles and components (such as e-motors), by the middle of the decade.
Beyond assembly, the company aims to localize all major design and engineering responsibilities for the “vehicle hat” (body and interior) of products destined for the domestic markets by 2030. This approach reflects the company’s emphasis on American consumer demands, while scaling Volkswagen Group’s global vehicle platforms (MEB and future SSP).
As part of its preparation to launch the American-assembled ID.4, VW has invested more than $2.7 billion in supplier partnerships throughout the North American continent, including its battery partnership with SK Innovation. In addition, the global Volkswagen Group aims to build up a battery cell production in the U.S. to meet the growing demand for batteries across its brands. VW is currently assessing governance and finance models, and aims to finalize decisions through 2022.
Beyond supply, VW is expanding its battery know-how in the U.S.. In May 2022, its new Battery Engineering Lab (BEL) in Chattanooga will start operations. As result of a $22 million investment, the BEL will enable the company to test and validate batteries for all VW electric models in the American marketplace.
On the research side, the Center of Excellence (CoE) NAR Battery with locations in Belmont, California, and Chattanooga will accumulate know-how and research capabilities in battery cell technology. The CoE closely collaborates with technology partners Quantumscape (San Jose, California) which is driving solid-state battery technology, and 24M (Cambridge, Massachusetts), which is re-imagining the design of battery cells.
Finally, VW plans to bring over-the-air (OTA) updates and new software features, such as plug and charge, for the ID.4 this year. The company is also working with CARIAD SE, Volkswagen Group’s software entity, to supporting the formation of its North American subsidiary in 2022, with software units in Seattle and California’s Bay Area. The goal is to strengthen the company’s digital footprint in America.