VW saying bye to combustion engines in 2026

WOLFSBURG, 5 Dec 2018: 

Volkswagen’s (VW) strategy chief yesterday said the German carmaker’s core brand will develop its final generation of vehicles using combustion engine technology in 2026.

Volkswagen made a strategy shift towards battery-driven vehicles in the wake of a damaging diesel-emissions cheating scandal in 2015, which forced the carmaker to pay more than €27 billion in fines for hiding excessive pollution.

“In the year 2026 will be the last product start on a combustion engine platform,” Michael Jost told the Handelsblatt automotive summit conference at Volkswagen’s headquarters in Wolfsburg, Germany.

A spokesman confirmed Jost’s remarks meant that VW, Europe and China’s best selling passenger car brand, will focus on electric cars instead.

VW will continue to adapt its petrol and diesel engined cars to meet environmental standards during the lifetime of those vehicles, but the German carmaker is now committed to radical steps to stop global warming, Jost said.

As a way to meet the goals of the Paris climate accord, Volkswagen has changed its car development benchmarks to include the target of radically cutting levels of carbon dioxide pollution in production as well, Jost said.

Separately, Volkswagen AG chief executive yesterday said the German automaker was building an alliance with Ford Motor Co and might use the US automaker’s plants to build cars.

Speaking after a meeting at the White House, VW CEO Herbert Diess said the company was also “considering building a second car plant” in the US.

“We are in quite advanced negotiations and dialogue with Ford Corporation to really build up a global automotive alliance, which also would strengthen the American automotive industry.”

Ford Executive ehairman Bill Ford Jr told reporters at an event near Detroit yesterday talks with VW about an alliance are going “very well.”

Asked about Diess’ comments that VW could use some of Ford’s unused capacity for car production, Bill Ford said the companies “haven’t gotten that granular in our talks yet.”

He said he did not want to say much about a VW alliance until the automaker had “a lot of definitive things to talk about.”

The proposed alliance between VW and Ford suggests the days of carmakers going it alone are over, as tariffs, new technology and tougher emissions rules fragment markets that were once global, Reuters reported last week.

Firms that once sought vehicles with universal global appeal to create economies of scale are now seeking advantages in specific market segments like hybrid SUVs, North American pickup trucks or European city cars.

RBC Capital Markets analyst Joseph Spak said in a research note Diess’ comments raised the chances that VW would use some of Ford’s unused capacity as part of a broader partnership.

Spak also said that a European or Asian automaker could seek to acquire some of General Motors Co’s unused capacity. GM announced last week it plans to idle five North American plants.

“VW may have a little negotiating power as some of the GM facilities could be bought (although this could impact their broader intentions with Ford),” Spak wrote.

VW has an assembly plant in Chattanooga, Tennessee. Of the need for a new plant, Diess said the company is in “quite advanced negotiations in Tennessee but there might be other options as well.”

Diess said VW would not take an equity stake in Ford as part of its alliance. “We are building an alliance with Ford which will strengthen Ford’s position in Europe because we will share platforms,” he said. “We might use Ford capacity here in the US to build cars for us.”

– Reuters