Volkswagen Mulls Road Map for New Atlas CUV

Electrification, a 5-passenger version and a diesel engine – at least for some markets – appear to be in the cards for Volkswagen’s new U.S.-built Atlas CUV, though the particulars surrounding those moves remain very much up for debate, says a top engineer at the German automaker.

The Atlas, unveiled late last month in Santa Monica, CA, is the most important new-model launch for the Volkswagen brand in the U.S. since it rejiggered its Passat midsize sedan to better suit American tastes.

Like the U.S.-market Passat, the new Atlas will be built beginning in December at VW’s Chattanooga, TN, assembly plant, where VW also is adding engineering capacity in order to develop vehicles more attuned to American tastes and expand local content to cut costs.

The investment in Tennessee is part of a $7 billion outlay for North America that also will see production of a long-wheelbase 2-row Tiguan – better sized for the U.S. market – at VW’s Puebla, Mexico, plant.

The expansion comes as VW reorganizes its U.S., Canada and Mexico operations into a single entity for the North American region that will play a greater role in product development and other strategies for the parent company in Germany.

The Atlas, sized almost inch-for-inch with the Ford Explorer, is based on VW’s MQB architecture, shared with the Golf, Beetle and Jetta. It will offer 3-row seating for seven and is powered by a standard Mexican-built 238-hp 2.0L TFSI gasoline 4-cyl. or optional 280-hp 3.6L gasoline V-6 imported from Germany, both mated to an 8-speed automatic transmission.

But the Atlas and the upsized Tiguan on the way are just the first volleys in VW’s effort to fill whitespace in its CUV lineup, with much more to come.

In a wide-ranging interview, Matthias Erb, chief engineering officer for VW in North America and head of its Engineering and Planning Center in Chattanooga, discusses Atlas’ development, what’s next and how VW is reshaping its North American operations in the image of its key Japanese competitors. Following is an edited transcript:

WardsAuto: One of the advantages of MQB is you can swap powertrains, you can use electrification, even package in a fuel cell. Does that ability remain with the Atlas?

Erb: Yeah, exactly. When you look at the MQB toolkit, you have some things that (can be) redefined. You can be sure that all the powertrains fit into the car in terms of packaging. So for example, if you decide to build a hybrid version, you’ve already made sure that the car is ready to also get a kind of hybrid powertrain, so that in terms of packaging, the powertrain fits into the car.

WardsAuto: You showed a plug-in hybrid version of the CrossBlue concept (that foretold the Atlas) in Detroit in January. Is that still the plan, to offer a plug-in down the road?

Erb: This is a thing we are still discussing. At the moment, the plug-in is not so very attractive to us because of the upstream emissions (carbon dioxide produced in generating electricity). If you have a plug-in, in our case, (it equates to) almost 50g of CO2 (in upstream emissions).

We really don’t know how attractive those cars are anymore because the CO2 balance is not much better than the balance of (conventional) hybrid vehicles. So it is possible (there will be a plug-in Atlas), but this is a question of product strategy.

WardsAuto: So there will be some form of electrification, you’re just not sure whether it will be a conventional hybrid or plug-in?

Erb: Yes. You have the CO2 requirements and you have market requirements. And (we) are observing the markets for demand for electrified cars. We do have customers who are willing to pay for that. (But) we’re still working on whether that would be an Atlas-type of car or whether more of a passenger car with a hybrid system. This is open. We have a certain strategy, and I can’t really talk about that, but we’re still considering where (in the model lineup) to electrify and where not to electrify so much.

Fewer Seats, Diesel Engine?

WardsAuto: VW’s been investing in engineering capacity in Chattanooga. What role did that operation play with the Atlas?

Erb: When the concept took place for the packaging of the Atlas, we unfortunately didn’t have the (Chattanooga) engineering center. Today, we would contribute a lot in the early stages. We would look into the market requirements and so on. But in the time when the Atlas was in the concept phase, they were not there already. For the moment (though) the package is not bad on the car. It’s really pretty good.

WardsAuto: So Chattanooga mostly will give you feedback on the market, or will the operation engineer future derivatives as well?

Erb: All of that. In the latest stages of the (Atlas), especially in the production ramp-up you also need engineering. And the engineering center already currently is doing a lot of things in this phase for the Atlas. The production is still ramping up, and we have many guys still working on the car, optimizing the car for (Job One) scheduled for later this year. So this is something going on. And then if you look into product optimization, into facelifts, into new cars coming up and so on, the engineering center will contribute much more than today…along with colleagues in Mexico.

As you might have heard, we have now introduced the so-called North America region. All the engineers (within the region) that are working on the Volkswagen brand will work way closer together as of today and contribute to certain processes. (VW North America) now is really going to be…developing (products) in a full-fledged operation like you see with Honda and Toyota.

WardsAuto: What about parts sourcing and developing local suppliers?

Erb: Not sure diesel right direction for VW in U.S.

Erb: Yes, I should have mentioned that. We are really focusing on localizing as many parts as possible. It doesn’t make sense to localize everything. For example, we are looking at (it), but for the moment it doesn’t make sense to localize a 6-cyl. engine, because it’s only for the Passat and Atlas. But in total we are looking to localize as much as possible, and in order to do that you need a lot of engineering capacity.

WardsAuto: Early indications were you would offer Atlas as both 7-seater and 5-seater. Is that still the case?

Erb: No, for the moment it’s just a 7-seater.

WardsAuto: Are there plans for a 5-seat version down the road?

Erb: Yes, of course. If you look into the SUV segment, you can see that it is kind of separated into two parts, 7-seaters and 5-seaters, and in our opinion it would make perfect sense to also offer a 5-seater.

WardsAuto: Would that change the vehicle length, or just eliminate the back row?

Erb: It’s a very good discussion, and they’re looking into that, whether it will have the same wheelbase or be a little shorter. It depends. What we see here in the market is the 5-seaters look a little different from the 7-seaters. That’s why we’re not offering the Atlas without a third row. As you might imagine, the 5-seater might look different.

WardsAuto: This vehicle obviously fills a gap in your lineup, but during development did you identify a fundamental need that wasn’t being met in the marketplace the Atlas meets?

Erb: We looked to make it really family friendly. For example, second-seat folding: If you want to access the third row, you do not have to remove a child seat. In competitive cars (we looked at) you have to (take out) the child seat to really access the third row. This is not customer friendly. We offer huge interior space. The car’s easy to drive. It offers all the safety and security features, whether active or passive.

We hope it can fill some of the gaps in our lineup. We are convinced it is not everything, but it closes one of the biggest gaps we have at the moment.

WardsAuto: So it will be more of a customer-retention vehicle than a conquest vehicle?

Erb: That’s a good question. It depends. I mean, since we don’t offer anything (in that segment) at the moment, we have to conquest. But to win back a customer is really expensive for a company, so why let customers (leave the brand), if (instead) you could offer them good products?

But this is only one part of the story. The second part of the story is it has to be attractive to all customers coming into your stores. SUVs are the more attractive cars at the moment. And we have to be there, and we have to be there way stronger than where we are today. The Atlas is a very important next step.

WardsAuto: The Atlas was developed primarily for the U.S., but are there other export markets where you expect it to do well?

Erb: Yes, we’re looking at Mexico, Canada and Russia, for example.

WardsAuto: Are there plans for a diesel engine for this vehicle or are you focused more on electrification now?

Erb: It depends on the market. You might see a diesel in Russia. This car is ready for a diesel engine. Whether we will offer a diesel in the U.S., to be honest we’re not 100% sure this is the right direction for Volkswagen to go. The platform is ready and there is something already developed, but for the moment we’re not planning to offer it in the beginning, not for the U.S.

[email protected] @DavidZoia