VW aims to sell 1m electric or hybrid cars this year

March 16, 2021

German automaker forecasts tenfold rise in sales since 2019 as it sets sights on profits recovery.

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Volkswagen plans to sell 1m electric or hybrid cars this year — a near tenfold increase since 2019 — as the German carmaker sets its sights on a recovery in profits after the pandemic. Sales of battery-only cars tripled to 231,000 in 2020, but the company expects an even faster take-up this year, boosted by new model launches. Of the 1m electric cars it expects to sell, about half will be battery-only, with the rest plug-in hybrid models, chief executive Herbert Diess told the Financial Times.

VW also expects its profit margins to recover to the upper end of the 5-6.5 per cent guidance window for the year, up from 4.8 per cent during 2020. This is lower than the 7.6 per cent it hit in 2019, and lower than the long-term target of 7-8 per cent. Arno Antlitz, who takes over as chief financial officer of VW in April, said this year was “not risk free” because of the slow recovery from the pandemic, and the chip shortage that has crippled the industry. Diess said the group will be unable to claw back lost production in the back end of the year because its factories are due to be full. “We expect to be at the limit of our capacity, so we will not be able to recover,” he told the FT. The German carmaker has not yet quantified its likely profit impact, but said it expects to make 100,000 fewer cars over the first quarter. Carmakers are ramping up electric sales as tightening rules in Europe and China force them to cut carbon emissions or face large fines. VW missed its European CO2 targets in 2020 because of delays to the launch of its key ID.3 electric car, leaving it facing a fine that could reach €200m.

But the company plans six new models this year based on its electric MEB platform, as well as a full year of sales of its ID.3. The majority of the battery cars sold this year will be in Europe, where the carmaker needs to increase electric sales to avoid emissions fines, Diess added, with the VW ID.4 expected to be the biggest-selling model. Diess said he had “no concerns at all” about the launch of the models, after last year’s delays of the ID.3 and Golf because of software problems. “We learned a lot from the ID.3,” he said. He added that the group would be open to selling emissions credits to rivals if it overshot the EU targets this year, even though the “price for credits is declining”.

The falling price of credits is an intentional move by regulators to wean industry laggards off the habit of complying with the rules by paying money to better-performing rivals. VW, which has bet billions on its transition to electric cars, expects one in five cars sold by the group to be electric by 2025, rising to 50 per cent by the end of the decade.

The group has refrained from setting an end date for sales of combustion-engine vehicles, unlike some other carmakers. However, its carbon neutral by 2050 pledge means it is likely to stop selling vehicles with engines by 2040. VW on Tuesday broke down the performance of its various brands after in January revealing 2020 profits of €10bn following a late recovery last year in China. Despite the pandemic, Porsche saw profits fall by just 4.5 per cent to €4bn, while Bentley suffered a 70 per cent drop and Audi was hit with a 40 per cent decline as the main VW brand scraped a profit.

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