Volkswagen AG (VOW.DE) has strengthened its commitment to the manufacturing of electric vehicles only. The German automobile manufacturer has declared that its next-generation gas-powered and diesel engine vehicles will be its last to roll off the assembly line, as the company moves to electric models only. In this regard, the company disclosed that its concluding generation of vehicles utilizing combustion engine technology would be launched in 2026.
Diesel-emissions cheating scandal, a turning point for Volkswagen
In the wake of a detrimental diesel emission cheating scandal in 2015 that resulted in shelling out billions of dollars in fines, automobile manufacturer VW has decided to move permanently towards battery-driven vehicles. The Wolfsburg headquartered company was forced to call back millions of cars after admitting to manipulation of emission control software to pass stringent pollution requirements. The company stated that it installed a “defeat device” on more than 11 million Volkswagen and Audi diesel-powered vehicles.
The “dieselgate” scandal severely harmed the reputation of VW, resulting in the arrest of Audi Chief Executive Officer, Rupert Stadler, in June.
At an industry conference near the company’s headquarters, Michael Jost, strategy chief for Volkswagen’s namesake brand, said “Our colleagues are working on the last platform for vehicles that aren’t CO2 neutral. We’re gradually fading out combustion engines to the absolute minimum.”
At the Handelsblatt automotive summit conference, Michael Jost said: “In the year 2026 will be the last product start on a combustion engine platform.”
A VW spokesman affirmed Jost’s comments by saying that Europe and China’s best-selling vehicle brand will instead concentrate on electric cars. In addition, VW stated that during the lifetime of these vehicles, it would continue to overhaul its petrol and diesel engine vehicles in order to meet pollution standards. Jost also said that the German car manufacturer has now taken radical steps to stop global warming.
Jost revealed that Volkswagen had changed its automotive development benchmarks to include the goal of radically reducing carbon dioxide pollution levels in production to meet the Paris climate agreement objectives.
Traditional car manufacturers are compelled by regulators to lessen carbon dioxide emissions to fight climate change, making Volkswagen and other car manufacturers shift to electric vehicles.
Volkswagen has already introduced its first series of electric models, with Porsche Taycan to be introduced next year. The Taycan sedan is perceived as a fierce competitor to the Tesla Model S once it becomes available.
The electrification of the 12 brands of the Volkswagen Group, including Audi and Porsche, comprising approximately 15 million vehicles, is already progressing. Over the next five years, Volkswagen plans to spend up to $50 billion on the development of autonomous cars and electric models.
Production of the new VW electric hatchback Neo is scheduled to begin next year in Germany. This will be followed by other electronic brands. From 2020 onwards, the vehicles will be manufactured in two facilities in China. VW said that it would work towards changing its combustion engine technology after upgrading the platform in the next decade.
Jost believes that some gasoline and diesel models may still exist in regions that lack charging infrastructure in 2050. He thinks that cleaner engines can solve issues with diesel pollution in cities, but the much more significant long-term risk is CO2 emissions, which are considerably more damaging and add to global warming.
Volkswagen says it is “fully committed” to the objectives outlined in the Paris Climate Agreement, which calls for the acceleration of the roll-out of vehicles that reduce or eliminate harmful emissions.
For Volkswagen, the transition to electrification is crucial, as the company wants to rebuild its reputation. Jost said “We have a clear responsibility here. We made mistakes.” The announcement is expected to receive a positive response from the market.
Technically, the stock is trading near its major support at 18.50. The stochastic indicator is rising. Therefore, we can expect the stock to move up in the short-term.
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