German automaker Volkswagen Group plans to deliver 30 electric plug-in models by 2025 as part of a sweeping plan to overhaul its global strategy,
The new plan comes in the wake of a devastating emissions scandal that cast doubt on the future of its once-beloved diesel cars. It also exposes the immense challenges that the company will face internally.
Volkswagen CEO Matthias Mueller on Thursday articulated a new vision for the automaker through 2025, describing electric cars, ride-hailing services and cost-cutting as critical to the company's future.
Mueller suggested that Volkswagen Group, whose brands include Audi and Porsche, will "significantly" reduce the number of models it makes and will slash almost $9 billion in spending annually to bolster the bottom line.
The product overhaul and pledge to embrace thriftiness come as Volkswagen is already facing a bill of more than $18 billion to cover the costs of its emissions scandal. The company rigged some 11 million diesel cars worldwide with software to cheat emissions standards. The admission triggered a litany of government investigations, a U.S. sales slump, a management shakeup and a lot of soul searching at the world's second-largest automaker.
On Wednesday, a federal judge gave Volkswagen an additional week to file details of its settlement with U.S. and California regulators and class-action lawsuit plaintiffs, a case that will involve compensation and fixes for vehicle owners.
Mueller, who has repeatedly apologized for the scandal, acknowledged Thursday in a press conference that the episode exposed "major weaknesses" and a measure of "complacency" that requires a "revolutionary transition."
The bet on fully electric vehicles will be paired with an investment in battery technology, though Mueller provided few details of what that would entail. Among the electric vehicles already in the works are the Porsche Mission E sports car, billed as a Tesla fighter, and the Audi e-tron quattro luxury electric crossover concept.
The strategy overhaul met a skeptical audience in Jack Nerad, executive market analyst at Kelley Blue Book, who questioned whether Volkswagen can achieve swift cultural changes and dramatic product transformation while cutting costs.
What's more, serious questions about the mass-market viability of electric vehicles remain.
"Certainly electric vehicles are coming," Nerad said. But "there's no general consumer groundswell for electric vehicles."
Volkswagen may also find itself with split loyalties between its diesel cars, a favorite of European car buyers and some American consumers, and the need to develop electric vehicles.
"Diesel is so deeply entrenched in Europe," he said. "That's the home field for Volkswagen. It's hard to imagine they would step away from that."
Speaking at a press conference in Germany that was live-streamed online and translated into English, Mueller said Volkswagen's turnaround would hinge on plans to:
• Launch a new "mobility services" division based in Berlin, giving it "sufficient distance" from the automaker's Wolfsburg, Germany, headquarters. The division will manage Volkswagen's recent $300 million investment in ride-hailing app Gett.
• Increase Volkswagen Group's operating profit margin from about 6% before one-time items in 2015 to between 7% and 8% by 2025, fueled by a reduction in R&D and capital expenditures as a percentage of revenue.
• Expand the automaker's self-driving car capabilities. Volkswagen will hire 1,000 "software specialists" to bolster its capabilities in autonomous vehicles, Mueller said.
"We believe in the future of this technology, its rapid spread and its revolutionary potential," Mueller said.
• Turn Volkswagen's components division into "a separate company." The unit currently employs about 67,000 workers at 26 locations worldwide.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
