Volkswagen says the diesel emissions scandal that has savaged the company over the past year has been a catalyst for greatly-needed internal change, and fast-tracked its drive to be the undisputed world leader in electric cars.
In a situation akin to burning away the dead wood, Europe’s biggest auto brand has spent the past year accelerating its plunge into EVs while developing new core global products under a new management team — all while untangling the destructive dieselgate mess and finding divergent fixes for Europe and the US.
The diesel emissions saga stems from the revelation about 12 months ago that Volkswagen had systematically fitted cheat codes into the software of millions of diesel engines to fudge NOx emissions numbers. Heads rolled, billions of Euros were spent on compensation and penalties, and the company’s image took a beating.
But there's no change agent quite like disaster. Ask any war economist.
A key take away is that VW’s electric car program, recently announced, and expanded upon this week in Paris, is much more than a duplicitous stunt or distraction. Its I.D concept will launch in production form by 2020 with a 600km range, priced in line with a Golf diesel. Its platform will underpin a family of EVs, with one million sales demanded by 2025.
Volkswagen AG’s member of the board of management for VW passenger cars (with responsibility for sales, marketing and aftersales), Jurgen Stackmann, spoke with Australian media including CarAdvice this week about working for the company during one of its toughest years to date — one that was facilitated by greed, lies and faulty internal communications.
The year, he said, had put the company’s vehicle development programs under extreme stress, but had also forced the company to alter its internal processes, and to set on a new course under a swathe of new managers to failsafe its very future.
Indeed, this week's reveal of the I.D EV concept appears to have been brought forward as one way of restoring the company's status — even though remarkably, Volkswagen’s global sales are steady in 2016, with China growth offsetting declines in North and South America, and Europe static.
"In retrospect we don't know if we would have taken the same decision [to do the I.D for Paris 2016] or not. I would say that, because I have only been at Volkswagen now for under one year, that we have taken the key decision to make this move in the first three months of a new Volkswagen board led by Mr Muller,” Stackmann said.
"I think this may have been a key enabler of having a whole new team composed together and looking at how we all project our future of Volkswagen with the brand and re-create the strength of the brand.
"Whether you call it an enabler or not, we didn't take it light-heartedly because we knew it had a huge impact on our other investments. We had to make our priorities clear and we were firm and fast and we're happy we can now come to Paris eight months later with a technology kit that is in full development and a firm commitment for the whole technology to be developed within three years.
"Volkswagen is in a massive change and massive cultural shift in opening itself up and inviting outside energy in. And this should happen in a very short time frame; we know it's stressed but that is exactly what we believe the company needs to truly get moving and not only overcome some of the last year's issues but also to get ready for a positive commitment for the future.
"We realised fast we needed to take some changes and we couldn't stay how we were.”
It’s a frank assessment from a man who, based on our interview, is either genuinely straight-down-the-line and a decent change agent, or a very convincing impersonator of one. Stackmann also updated us on the progress of the dieselgate fix, which comprises 11 million VW Group cars (including Audi/Skoda), and about 7 million with Volkswagen badges.
First, there are two major areas, the first being Europe and Asia, and the other being North America. In Europe, the company had had to work through 850 different software solutions for various drivetrain layouts/cars, without affecting any cars’ emissions, NVH or performance.
“The end result… was we were working extremely hard to really have no change for the customer,” Stackmann said, adding that VW had achieved a technical solution for 5.6 million cars (having passed third-party tests with the software fix) without affecting vehicle performance.
Now the company can get the recalls rolling faster “in a wave”, with a plan to have all technical solutions in place by the end of 2016. All dealers will be able to change the software over, in a process than should take 10 minutes and which can be done during servicing.
The problem is thornier in North America where the whole issue took root, because of the different and more stringent regulations. Stackmann says a separate team is in the process of finalising the solution with the authorities and other third-parties. A US-market rebirth will begin with the reveal of a new large SUV to rival the Ford Explorer at November’s LA motor show, helping offset double-digit volume declines this year in such a vital region.
Stackman did concede that the diesel saga had put the company under financial strain, but said new model programs remained on track.
"It has put the total resources under extreme pressure," he said.
"There is not a wild, unused capacity of engineers around the world. But it is our job to not have any normal new car programs affected by the work. Most of the changes are to our internal work procedures with many more controls and check points along the way. This is more affecting the daily life and the stress of having to do all of the diesel [solutions] plus all of the work at the same time.
"Looking at the financial burden of all this… this is money we could have used in a different way to our and our customer's benefit at the same time. But it doesn't really change our planning. We are going forward full-hearted and we are showing here a really comprehensive plan to introduce a family of electric cars, starting in 2020. This is a big investment in the future."
The company says it has set aside around 18 billion euros to cover repairs, buy-backs and legal costs, but it could sail much higher. Ordered compensation in the US totalled $15 billion.
What do you think? Has Volkswagen really changed, or is this just all just a new lick of paint on the same old structure?