Volkswagen Turns Attention from Diesel to Electric

Germany's Volkswagen AG has long been a pioneer in fuel efficient vehicles – some of its European variant diesel vehicles get well over 60 mpg. However, it has trailed in hybrid and electric vehicle efforts. In fact, will just get around to offering its first hybrid vehicle in the U.S. later this year.

At its Electronics Research Laboratory in Palo Alto, California, amid the backdrop of the launch of its sixth-generation VW Jetta compact, the company talked about its transition from being focused on diesel to going for the gold in the electric arena. Volkswagen CEO Martin Winterkorn comments, "I am deeply convinced Volkswagen will play a key role in electrifying the automotive world."

The company's efforts will be spread across its base consumer brand and its luxury brands -- Audi and the recently acquired Porsche brand.

VW plans to release a Touareg (SUV) this year and Jetta (sedan) hybrid in 2012. It will then follow up with hybrid Golf and Passat models in 2013. In 2011, it plans to start testing a fleet of electric VW Golf vehicles. VW will also introduce a new electric called the E-Up! .

On the luxury front, Audi will release its first EV, the e-tron. Meanwhile, Porsche is cooking up hybrid variants of its Cayenne (SUV) and 918 Spyder (roadster).

VW reports that by the time these vehicles hit the market, its electric efforts will be as refined as its diesel ones. It says that its E-Up! batteries are already capable of running for 93 miles on a charge -- more than the 2011 Chevy Volt's, which can only muster 40 miles on a charge.

Winkerton states, "Our customers are not willing to compromise. They expect the same high standards from an electric Golf as from a conventional one."

Volkswagen has seen a long slide in sales in America. Once the top foreign brand -- selling 570,000 vehicles in the U.S. in 1970 -- the company has been gradually displaced by Japanese and Korean automakers who have a better reputation for quality. Diesel enthusiast still love VW, though, and Volkswagen Group of America increased deliveries by 29 percent to 175,000 vehicles in H1 2010.

The German automaker will soon open a $1B USD plant in Chattanooga, Tennessee, which will produce the popular Jetta and its upcoming hybrid variant. The plant will mark VW's first auto-production facility in the U.S. since it shut the doors on its Pennsylvania assembly plant in 1988.

Volkswagen has set a relatively lofty goal of selling 800,000 VW-brand vehicles and 200,000 Audis annually in the United States by 2018 -- over twice current sales levels. Winkerton states, "We want to take Volkswagen to the top of the industry by 2018. ... We know that the United States is one of our main destinations on our way to the top."

The company realizes that diesel will not necessarily win many new customers, so its hoping its shift to electric will win new business.