Car Industry

VW to reduce model, engine lineup as it invests in EVs

The automaker will cut its number of powertrain configurations by 25 percent.

Nick Miotke/Roadshow

As it ramps up production of electric cars on the way to a goal of selling 1 million EVs annually by 2025, Volkswagen will dramatically simplify its internal-combustion car range. On Thursday the automaker said it will invest 9 billion euros ($10.26 billion) in electrification from 2019 to 2023 -- while cutting the number of traditional engine and transmission options by a quarter.

VW plans to launch the ID family of electric cars next year. They will be built on the MEB modular platform, with VW saying today it plans to offer 20 different electric cars by 2025. In the first full year of production, VW expects to sell about 100,000 ID electrics.

Volkswagen MEB chassis

VW plans to sell a variety of EVs based on this MEB chassis.

Volkswagen

At the same time, VW plans to simplify production (and make it more profitable) by building fewer cars with fewer types of powertrains. "Complexity is too high, so we need to reduce that to boost productivity at our plants," VW passenger cars chief operating officer Ralf Brandstätter said in a statement.

VW will simplify its portfolio and offer "a customized product range" -- in other words, fewer models overall. And slow-selling engine/transmission combinations will be cut, with the overall goal of reducing the number of powertrain combinations by 25 percent. "Low-demand variants will be discontinued and there will be intelligent equipment packages," Brandstätter said.

As an example, the automaker noted that the eighth-generation Golf will offer 40 percent fewer wheel designs and 60 percent fewer steering-wheel options than today's Golf. As another example of simplification, Automotive News reports that entry-level engines would no longer offer automatic transmission or all-wheel drive in Europe.

Those changes, as well as a planned 30 percent increase in factory efficiency, are intended to help VW finance its transition to building more electric cars. The automaker said it hopes to boost its profit from 4 to 6 percent by 2022.

VW also reiterated that it plans to open a North American plant to build electric cars, noting that the board "plans to make a decision on a production location for electric vehicles soon." The goal is to build EVs at 16 plants globally by 2022. As it moves toward electrification, VW has also said that its next generation of internal-combustion engines will be its last.