Volkswagen has announced a significant surge in electric vehicle (EV) orders in Europe, with a doubling of orders in the first quarter of 2024 compared to the same period last year. This increase defies concerns that interest in EVs may be waning. The company's chief financial officer, Arno Antlitz, expressed confidence in the future of electric vehicles, stating that "the future will be electric, this is our conviction."
Despite the increase in orders, Volkswagen's EV deliveries in Europe actually declined by 16% in the first quarter due to supply bottlenecks. However, the company expects this to be a temporary issue and is confident that EV penetration will continue to increase quarter-by-quarter and year-over-year.
In China, Volkswagen's largest market, EV deliveries almost doubled to 41,033 units, a significant increase from the previous year. However, the company is facing intense competition in China, where it has fallen behind Tesla and local EV producers such as BYD. To address this, Volkswagen plans to reduce battery and material costs to become cost-competitive with Chinese rivals by 2026, which will enable it to reduce the price of its EVs in China.
The company is also launching four new models in China over the next three years, two of which will be electric, and is reducing the time to market for new products and features by 30%. Volkswagen aims to maintain its market share in China at around 15% by the end of the decade.
Despite the challenges, Volkswagen remains confident in its financial targets for 2024, despite a 20% plunge in profit to €4.6 billion ($4.9 billion) in the first quarter due to lower sales and higher costs. The company is implementing a €10 billion ($10.8 billion) cost-cutting program to boost efficiency, which includes slashing its workforce and paying out €900 million ($965 million) in severance costs to employees this year.
Overall, Volkswagen's increase in EV orders in Europe and its plans to expand its EV offerings in China demonstrate its commitment to electric vehicles and its confidence in their future success. Despite the challenges it faces in China, the company remains determined to play a leading role in the country's automotive market.
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