Volkswagen to Become World’s Largest EV Manufacturer by 2028

Wood Mackenzie expects Volkswagen to miss its target of 22 million EVs target, but in the process still become the leading EV manufacturer globally.

The Volkswagen (VW) group has pledged to become carbon-neutral by 2050. Included in its roadmap for reaching this target is a plan to manufacture 22 million electric vehicles (EV) by 2028. Wood Mackenzie, however, expects the company to miss this target. However, according to the analysis, VW will hit 14 million EVs by 2028 – making it the world’s largest EV manufacturer by the end of the decade.

The firm views battery electric vehicles (BEVs) as the most effective means of CO2 reduction. Currently, there is very little overlap between the top ten automakers and top ten BEV makers. In fact, only three companies – Nissan, Hyundai and VW – appear on both lists. VW sat in second place, behind Toyota, for all car sales in 2018, however, it dropped down to the tenth place for BEV sales in the same year.

According to Wood Mackenzie’s base case scenario, VW would need to capture 53 percent of the global BEV market share to sell 22 million EVs by 2028. The company would also need to secure 57 percent of all EV battery pack production, something that would prove to be extremely challenging.

“VW has reached an agreement with Ganfeng to supply lithium for the next decade. It also has cell supply deals with Samsung SDI, LG Chem, SK Innovation and CATL. Most recently, VW invested USD 1 billion in Northvolt, a Swedish battery manufacturer. However, there have been issues with some of these companies, therefore threatening VW’s targets,” said Ram Chandrasekaran, Wood Mackenzie Principal Analyst.

The firm should have seven more manufacturing plants online by 2022. Based on planned production starts, capacity and small increases over time, Wood Mackenzie expects VW to hit 14 million EVs by 2028. This would represent 27 percent of all global EVs, requiring 30 percent of battery cell supply. However, according to the analysis, this number could hit 16 million EVs if VW adds three more plants for BEV manufacturing once its first eight reach capacity. This would increase its overall market share projection to 39 percent.

“Chinese policy can be a double-edged sword. A change to the range requirement of EVs meant the Passat plug-in electric vehicle did not qualify for subsidies and therefore was pulled from the market.

“The US trade war weakened demand for VW products by just over 6% during the first half of 2019. If the trade war were to reduce demand by 5-8 percent, we would still expect VW to sell between 13.2 and 13.8 million EVs depending on the speed of recovery,” added Chandrasekaran.