CHINA – Volkswagen has revealed that it is ramping up production of electric cars to around 1 million vehicles by end of 2022.
According to a Reuters report, the increase in production will enable the German carmaker to leapfrog Tesla Inc which has recently started production in its Shanghai based factory.
Volkswagen is readying two Chinese factories to build electric cars next year making the country the next battle ground for electric car manufacturers.
The Chinese plants will have a production capacity of 600,000 vehicles, according to Volkswagen’s plans, which have not been previously reported – revealing VW’s ability to industrialise production faster than other pioneers in the electric vehicle market.
Tesla is still trying to reach its goal of making more than 500,000 cars a year by building a new factory in Shanghai, China, while VW can rely on an established workforce in two of its plants in Anting and Foshun to build zero-emission cars, noted Reuters.
The scale and speed of VW’s electrification push marks a shift in favour of established manufacturers that can use existing factories and profit from combustion-engined sport utility vehicles (SUVs) to scale up faster than startups.
“The truth is barriers to entry in autos remain high,” said Max Warburton, an analyst at Bernstein Research. “Making cars is hard. The move to electric vehicles will be expensive but will probably be led by traditional manufacturers.”
VW is leveraging its large infrastructure of suppliers, factories and workers, long a handicap to its profitability, more aggressively than rivals BMW, Renault SA, General Motors Co and Tesla, which were all quicker to sell a custom-designed electric car, to scale up production.
Rather than adjusting production gradually, and using multi-powertrain platforms, Volkswagen is making a massive bet on a dedicated electric vehicle architecture, known as MEB, in the hope of increasing economies of scale sufficiently to push down the price of electric cars to around 20,000 euros ($22,262).
The Wolfsburg, Germany-based carmaker is also retooling eight plants across the globe by 2022 to specialise in manufacturing electric cars, and license its electric MEB platform to rivals, putting it on track to become the world’s largest maker of zero-emission vehicles.