Who will lead NEV market?

In 2020, Tesla sold 499,000 vehicles, unsurprisingly becoming the world's new energy vehicle sales champion, but what is surprising is that Volkswagen, the leader of traditional fuel vehicles, has emerged as a new force in this emerging market.

Author：He Lun, IIA’s Co-Chief Content Officer, Deputy Head of IIA Academy of Auto

Automobile hot topic Q&A (Ep.240)

TEXT：

The sales of new energy vehicles increased from 84,000 in 2019 to 420,000 in 2020, and the ranking of manufacturers jumped from sixth to second, which is close to Tesla. Against this background, Herbert Diess, Chairman of the Volkswagen Group’s board of directors, threatened to accept media interviews during the group’s “Power Day” a few days ago: “Volkswagen Group plans to deliver 1 million electric vehicles this year, and it will become a global electric vehicle by 2025 at the latest. The leader of the market.” As soon as this statement came out, it caused heated public opinion. Volkswagen Group's share price soared, with a market value of more than 150 billion euros, the highest level in five years.

Q: Is it possible for Volkswagen to double its sales of electric vehicles to 1 million units this year.?

A: I think it is unlikely that Tesla's sales will double this year to 1 million vehicles, because Tesla's size and system capabilities do not allow it. But Volkswagen is different. What you see is that an elephant said that it was going to turn around a few years ago. Now it has finally turned around. The potential energy released by Tesla is incomparable. In particular, FAW-Volkswagen’s ID.4 CROZZ and Shanghai Volkswagen’s ID.4 X electric vehicles will soon be launched in China, the world’s largest auto market, which can bring a large increase in Volkswagen’s new energy vehicles. Therefore, the sales of Volkswagen's new energy vehicles this year will reach 1 million, which is very likely, unless uncertain factors subvert the auto market.

Q: Does it mean that Volkswagen will become the leader in the global electric vehicle market this year, instead of 2025 as it was said?

A: It depends on what the leader's standard is. If you just refer to sales, Volkswagen may become this year. But if it includes technical standards, such as software, it will take some time for the public. I think what Dr. Diess said "by 2025 at the latest" refers to a comprehensive standard.

Q: Like smart phones, the key to electric vehicles is software. Volkswagen will have more than 10,000 software development engineers worldwide. However, there is a view that traditional vehicle companies wanting to follow Silicon Valley cannot be easily accomplished by hiring more software engineers and investing more research and development funds. Because the conflict between the deep-rooted engineer culture and software thinking of traditional car companies is difficult to reconcile. We all know that Volkswagen ID.3 has encountered major software problems.

A: The software problem of ID.3 has been resolved, which is normal. Musk, who has a background in software, began to build cars. Many people think that he lacks an engineer background, which is necessary for building cars. During its growth, Tesla also encountered a lot of huge challenges in automotive engineering and manufacturing, as well as many product problems, and there are still many failures in China so far. And in terms of quality, product quality and driving experience are not high-end, but it is still successful. People who once doubted Tesla can shut up. I feel that the people who doubted Volkswagen now made the same mistakes as the people who doubted Tesla. They just looked at the problem from the opposite perspective. The former is based on engineer culture, the latter is based on software thinking. They all underestimated a company's adaptability.

Three years ago, when I interviewed the Volkswagen Asia Future Center in Beijing, I felt that the atmosphere of software thinking is already quite strong.

Q: Looking at the future of electric vehicles, Toyota must be mentioned. Last year it regained Toyota, the world's number one car in sales, from Volkswagen, but it has made little progress in electric vehicles. Moreover, Akio Toyoda said not long ago that under current conditions, electric vehicles are neither environmentally friendly nor economical, and they have been overhyped. Some people say that this is jealousy. What do you think?

A: First of all, as the world's largest car company and the head of Japan's largest company, Akio Toyoda should have sufficient reasons to say this. Furthermore, it is also biased to say that Toyota is jealous of others. In fact, Toyota was the global leader in the field of electric vehicles 20 years ago. Six years ago, I interviewed a comprehensive experimental demonstration area for solar and electric vehicles near Toyota City and learned that Toyota has two principles for developing new energy vehicles: First, it is necessary to minimize the restrictions on vehicle driving caused by various disasters, such as Power outages, earthquakes, etc., of course also include wars. Although Toyota does not take the initiative to mention this point, this is determined by the unique sense of anxiety of the Japanese; the other is to use "clean electricity", that is, zero-emission electricity such as solar energy and wind energy, otherwise environmental protection is of little significance. Therefore, the local power supply is dominated by independent systems composed of solar panels and storage batteries for each household and is basically self-sufficient. The surplus power can be shared and automatically connected to the grid when it is insufficient, but the overall cost is still relatively high. Hydrogen fuel cell vehicles are more in line with Toyota's philosophy. Therefore, Toyota puts the focus of new energy vehicles on hydrogen fuel cell vehicles. To a large extent, electric vehicles are developed to meet the needs of other countries' markets or governments. As for electric vehicle technology, Toyota has a solid accumulation. Since it can take the most complex hybrid vehicles to the extreme, pure electric vehicles are naturally easy.

Q: Who do you think is the most likely to become the leader of new energy vehicles among Tesla, Volkswagen, and Toyota in the future?

A: They are all possible. The mass system is extremely capable and has been transformed. Although Tesla is not large in size, its cost control is the world's first, and its software and battery technology are leading. With the first-hand advantage, it is very possible to rapidly expand sales, provided that no serious problems arise. The problem Toyota faces depends on whether the balance between power supply and environmental protection and cost caused by the popularization of electric vehicles will be effectively solved. If it encounters a bottleneck and electric vehicles become non-mainstream, Toyota's hydrogen fuel cell vehicles will become popular. Even if it is proved to be wrong to share, with Toyota's strong strength, it is not difficult to shift the focus to electric vehicles.