
Volkswagen’s Costly Bet on Electric Cars - prostoalex
https://www.wsj.com/articles/volkswagens-costly-bet-on-electric-cars-11552403871
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michaelbuckbee
Is there any credible doubt that electric cars are the future?

We can quibble about timing, regulatory vs customer preference factors,
models, etc. but it's clear from all the data I've seen that EVs (and
specifically plug in EVs) are growing at a fast clip and are on the way to
becoming mainstream and unremarkable within the next decade or two.

If you were a big auto company, what wouldn't you spend to not lose out on
that wave? I look at other industries where fundamental underlying technology
changes remade the landscape: the switch to mobile phones, internet
penetration, etc.

~~~
Misdicorl
I think comparing the switch from gas to EV to internet/mobile phones is quite
the stretch. There's nothing really new or different about an EV.

The car market isn't going to experience several orders of magnitude growth
spurred by EVs. Most buyers will compare across engine types. So to answer
your question

>If you were a big auto company, what wouldn't you spend to not lose out on
that wave

I'd spend nothing until the EV I can produce is expected to have profit
margins on the order of my other vehicles in that class, discounted at maybe
30-50% of the development cost. Note that brand recognition/green efforts/etc
gets wrapped up into the profit margin calculation.

The nail in the coffin here is that early movers get penalized unless they can
effectively vertically integrate all the tech used for EVs (e.g. Tesla with
their battery specialization). If you want to bet on the battery tech getting
commoditized, its in your interest to wait as long as possible.

~~~
martythemaniak
The problem with this view is that it assumes the EV/ICE differences are a
simple swap, akin to moving from a I4 to a V6.

The switch to an EV drivetrain has lead to a much more through redesign of
cars and none of the first gen batteries-bolted-onto-existing-chasis type EVs
were particularly good. That is, if you don't get on the EV wave early and
just wait for cheap batteries, you will be years behind your competitors in
producing a properly thought-out EV and will be facing some very tough times.

~~~
ams6110
Apple would disagree. They were not first to market with music players, or
mobile phones. They looked at what others did, saw their opening, and when
they were ready they came in and absolutely dominated the market with products
that had been designed with the benefit of knowing where others had made
mistakes.

~~~
cptskippy
The iPod is decidedly and dramatically simpler than an automobile in every
way. The hardest part of the iPod was a commodity part the purchased (e.g.
HDD).

What Apple did correctly was determine that the market would pay a lot more
for an MP3 player if it was all around better than the competition. Then they
kept up momentum by iterating and improving their design before the
competition had a chance to respond.

In the audio player market, MP3 Players had significant advantages over CDs
and other mediums that drove rapid adoption and since Apple was best in class
they quickly developed a monopoly.

The Car market is very different, EVs do not have significant advantages over
ICE and there is not rapid adoption so it's hard for a monopoly to develop.
EVs currently have range-over-time limitations compared to ICE as well as much
lower margins with much higher costs. Those limitations are being addressed
but until they are, there's only so much makers can do to tempt buyers.

~~~
novaRom
>> EVs do not have significant advantages over ICE

Disagree.

Advantage 1: EV can be charged virtually everywhere with access to electricity
(like parking lots), no gas stations, no gas transportation necessary.

Advantage 2: low maintenance costs. Electrically powered engines are simpler
with fewer mechanical elements

Advantage 3: EVs are very quiet, so lower noise pollution

Some disadvantages are short driving range and long recharge time.

~~~
navigatesol
> _no gas stations, no gas transportation necessary._

In many parts of the world, being able to transport fuel to where it's needed
is a _huge_ advantage. We are a long way from a global electricity
infrastructure.

~~~
jhayward
> In many parts of the world, being able to transport fuel to where it's
> needed is a huge advantage

Just offhand, what % of the new car market would you say those areas represent
in the current model year? In 10 years?

~~~
cptskippy
It's probably a greater % than those who buy an EV expecting to be able to
charge it in a parking lot.

His scenario is highly unusual but it highlights a weakness of EVs. There are
numerous scenarios where an ICE can bring extra fuel with it or for multiple
vehicles.

While his scenario might me a boundary condition, the comment he was
responding to listed a similarly unlikely scenario outside of dense Urban
environments.

The reality is we should be heavily promoting/supporting or even requiring EVs
where they make sense like dense Urban areas with access to charging and
suburban commuters. At the same time we should also recognize that there are
many scenarios today where EVs don't make sense and ensure we don't penalize
people who need to remain ICE bound. Eventually the EV tech will supplant most
or all use cases.

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marsRoverDev
It'll be more costly for them if the EU ban all combustion consumer vehicles
and VW are left unable to sell to the european market.

That is beside the point that the author of this article will be on the wrong
side of history.

~~~
melling
You mean 2 decades from now?

It’s a little premature to worry about an EU ban.

Investing in battery R&D is probably important now. Meeting the requirements
of China is also important.

~~~
ciceryadam
By 2021, phased in from 2020, the fleet average to be achieved by all new cars
is 95 grams of CO2 per kilometre. This means a fuel consumption of around 4.1
l/100 km of petrol or 3.6 l/100 km of diesel.

To encourage eco-innovation, manufacturers can be granted emission credits
equivalent to a maximum emissions saving of 7 g/km per year for their fleet if
they equip vehicles with innovative technologies, based on independently
verified data. [0]

So this move is more of a combination of short-term gains of less-restrictive
emissions, and a long-term move to electric.

[0]
[https://ec.europa.eu/clima/policies/transport/vehicles/cars_...](https://ec.europa.eu/clima/policies/transport/vehicles/cars_en)

~~~
richardhod
Just as a reference, that's 57mpg for petrol and 65mpg for diesel, and that's
average, not peak, for all cars. A good diesel estate might average 50mpg if
driven carefully, but in towns a lot less. So there's a long way to go.
Companies will need to build/sell/operate a lot of tiny cars, or definitely
have significant electric and hybrid parts of the fleet.

~~~
throw0101a
> A good diesel estate might average 50mpg if driven carefully, but in towns a
> lot less.

Going to fuelly.com, newer Golf TDIs seem to average out at 40 mpg, with the
tails trailing out by +/\- 5mpg:

* [http://www.fuelly.com/car/volkswagen/golf?engineconfig_id=10...](http://www.fuelly.com/car/volkswagen/golf?engineconfig_id=103)

The older 1.9L engines are slightly better.

~~~
richardhod
Ah yes, i forgot Americans gallons are 4/5 size. Adjust data accordingly, so i
did mean 40mpg US! (Most modern diesel estates(station wagons) do up to and
sometimes over that, such as mazda 6, Ford Mondeo)

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neonate
[https://outline.com/7a25Eh](https://outline.com/7a25Eh)

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sigi45
Why is that even an issue?

Build a electric car which needs less components, less repair and can actually
be refuelled at home.

In worst case, put a range extender into it. Doesn't cost much and just burns
fuel as before.

The only risk could be that batterie technology just suddenly stops. But i
would argue that its quite a save bet.

And it doesn't has to do anything with saving the environment.

There is obvious a technolgy change happening. It might be unclear how long it
still takes or if global warming hits us quicker but sitll.

~~~
pfortuny
The “at home” is very tricky in Europe (Western) where most (like almost all)
of the people live in flats.

~~~
pedrocr
That doesn't mean they don't have a parking spot. Most flats include them and
states are passing laws that say you can install chargers in your space.
Street parking does need more chargers as well and cities are adding them.

~~~
cr0sh
> Most flats include them and states are passing laws that say you can install
> chargers in your space.

That certainly can't be cheap. The cost of the charger aside, you'd still have
the costs of:

    
    
      1. Permits and inspections of the work.
      2. Trenching costs for the electrical line.
      3. Survey work to make sure it doesn't interfere with other underground stuff.
      4. Materials and time for the mounting pad.
      5. ...and probably a ton of other things I don't know about.
    

On an individual basis, it would seem to make little sense. Plus - is there a
standard for chargers yet? Unless it's just a standard (for whatever country)
plug, I don't know if EV manufacturers have standardized on a particular
charger style so that any vehicle type can plug into a charger (I'm thinking
more of the case where somebody either sells their EV and buys another, or
sells their flat and moves, the next buyer with a different EV, etc).

Maybe it's not as big a deal as I am thinking (owner takes charger, leaves
infrastructure behind for next owner to mount theirs in place?)...

~~~
pedrocr
I think you're overthinking this. I'm planning on adding a charging point to
my parking space. The building's shared garage already has power everywhere so
I just need to install a meter and a standard power socket. The actual charger
just plugs in there and if I change EV I just change the charger (or not since
everything is moving to CCS hopefully). Neighbors have done it and it was
quite simple. If it's an external parking lot without power already installed
it may be harder but in cities this is the most common setup. I'm sure third-
party parking garages that people use when their flat doesn't include one will
also be doing these installations at scale to attract customers. It's really
the equivalent of adding a few power sockets. For night time charging you
don't want fast charging, 10kW is fine and 5kW probably enough and that's not
a very complex electrical install.

The only actual issue I know of is that once the whole building is doing this
because 90% of cars are EVs we're going to need more total power in the
garage. Depending on the electrical infrastructure around you that may or may
not be an easy thing to do. I suspect it's not a huge issue since we all
together already have enough contracted power right now if you add up our
individual circuits going to the actual flats. But maybe the electrical
company is oversubscribed counting on low effective usage of the contracted
power, I don't know.

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leowoo91
I started to worry about attitude of these articles, instead of reading it.

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ProAm
Not any more costly than their bet on diesel

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pmarreck
I am not a paying WSJ customer, can anyone provide the text or a link that
works?

(Note: Considering being a WSJ customer, but already a NYT customer so...)

~~~
Errsher
Don't do it, if you live anywhere other than California they basically make it
impossible to unsubscribe.

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devy
> No other car maker is betting anything like this kind of money on the new
> technology.

In fact, all German automakers are increasing leaning towards all EV future,
that's VW Group, BMW AG and Daimler AG. The only holdout of major automakers
that doesn't have significant buyin in 100% battery electric vehicle is
Toyato.

~~~
dwd
Volkswagen Group was pushed as much as taking a bet.

Part of their settlement for the diesel emissions scandal was committing
investments into EV and paying into funds to help US states transition.

On top of that they basically destroyed their diesel business. And they were
also not the only cheats.

A few commentators have pointed out that if not for the scandal, we probably
wouldn't have seen anything near as aggressive a push into switching from
diesel vehicles to electric.

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pmarreck
I find it fascinating that this seems to at least in part be a reaction to the
scandal. Like a spouse whose indiscretion is found out and then decides to
radically "come clean" about literally everything, having your screwup
discovered might end up making you a better entity :)

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melling
Doesn’t China have EV quotas from 2019 onward for manufacturers?

If you don’t produce EVs, you’ll be restricted from the market?

~~~
baybal2
Yes, in some cities in China, EVs are already effectively the only car type
that can get a new numberplace.

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ed312
TFA doesn't seem to add much new information to an old news story - am I
missing something?

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olivermarks
'Is there any credible doubt that electric cars are the future?' I think in
the near term yes. Hybrid is the only viable next generation of vehicles, with
full EV possibly after that.

~~~
wnorris
Hybrid was only a stop gap until batteries reached the point they are today.

In markets (California and Norway in particular) where there is significant EV
growth you are seeing Hybrid sales drop quickly.

~~~
KSteffensen
I have a hybrid (from VW), my next car will be full EV. I expect to buy this
within a one or two years.

~~~
olivermarks
I'm in California. EVs are a tiny niche market, battery tech still has massive
mileage and safety issues to overcome and the grid is not fit for purpose in
most parts of the world.

China are building out scale EV infrastructure and since they are the main
global market for vehicles going forward it seems inevitable they will
ultimately own the EV transportation and infrastructure markets
[https://en.wikipedia.org/wiki/Smart_grid_in_China](https://en.wikipedia.org/wiki/Smart_grid_in_China)

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woodandsteel
If you ran into the wsj's paywall, you can get past it with outline.com

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CalRobert
Paywalled; thought HN didn't permit these links?

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baybal2
Wv is currently close to nowhere in electric cars, and few advances they got
are in China, where SAIC makes thinks for them...

