Volkswagen invests $7.1-B for R&D, production in North America

MANILA: Volkswagen stated that it will invest $7.1 billion in the North American region (NAR) over the next five years to expand its product lineup, regional R&D, and production capabilities. Volkswagen Group of America, Inc. President and CEO Scott Keogh presented an update on the company's strategic roadmap. By locally integrating its combustion-engine (ICE) and electric vehicle (EV) assembly, American-focused engineering, battery expertise, and software development, Volkswagen targets to drive 55% of US sales to be fully electric by 2030.

“American ingenuity and manufacturing know-how are at the heart of our strategy for growth, and thousands of men and women are working hard every day throughout North America to bring the Volkswagen brand to life for consumers. This profound commitment to our localized capabilities will transform Volkswagen into one of the leading EV brands known for its commitment to innovation, quality, and the communities we call home,” Keogh said.

According to Keogh, Volkswagen will start to phase out gasoline-powered vehicles from its American lineup, with the goal of ceasing sales at the beginning of the next decade, while concentrating on the most popular models. In its place, Volkswagen will expand its electric lineup, which will include the ID.4 in 2022, the ID. Buzz electric microbus in 2024, and new electric SUVs in 2026. Over 25 new battery electric vehicles (BEVs) will be introduced by Volkswagen Group brands to American consumers through 2030.

Volkswagen's performance in the American market, according to Keogh, will depend on regional capabilities. Presently, more than 90% of Volkswagen's vehicle portfolio for North America is built in North America, including the Atlas and Atlas Cross Sport SUVs in Chattanooga, Tennessee, as well as the Tiguan, Taos, and Jetta in Puebla, Mexico. Volkswagen wants to improve these competencies in its transition to electric mobility.

This strategy was based on the company's preparations for local EV production at its Chattanooga facilities. The ID.4 SUV will be produced starting this year, with the majority of the parts coming from regional suppliers.  Volkswagen plans to modernize its facilities in Puebla and Silao, Mexico to accommodate the production of electric vehicles and components (such as e-motors) by the middle of the decade.

Volkswagen has committed more than $2.7 billion in supplier agreements across the North American continent, including its battery partnership with SK Innovation, as part of its preparations to introduce the American-assembled ID.4. Furthermore, the Group plans to establish a battery cell production facility in the United States to keep up with the growing demand for batteries across its brands. The Group is currently evaluating governance and financial options, and aims to finalize decisions within this year.

In addition to increasing supplies, Volkswagen is boosting its battery expertise in the United States. The company's new Battery Engineering Lab (BEL) in Chattanooga will open in May. The BEL, which received a $22-million investment, will allow Volkswagen to test and approve batteries for all Volkswagen electric vehicles sold in the American marketplace.

Keogh also reaffirmed the company's commitment to developing software and digital solutions for American consumers. Volkswagen aims to provide over-the-air (OTA) updates and additional software features for the ID.4 this year, including plug-and-charge. The company  is also collaborating with Cariad SE, Volkswagen Group's software firm, to enable the development of a North American subsidiary this year, with software units in Seattle, Washington, and the Bay Area of California. The goal is to expand the company's digital footprint in America.

Photos from Volkswagen

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