VW Looks to Build MEB-Based Electrics in North America

LOS ANGELES – Volkswagen officials here say they would like to produce the new I.D. Crozz battery-electric vehicle and other future derivatives from the automaker’s upcoming MEB platform in North America, but so far additional capacity for EVs has not been greenlighted by German management.

The automaker already has confirmed it will build MEB vehicles at its Zwickau, Germany, plant, beginning with the I.D. hatchback model in 2019, and it also has announced plans for production in China.

However, even though no announcement has been made, it appears more likely than not VW will add a third facility into the mix and that it will be in the U.S., where the automaker operates an assembly plant in Chattanooga, TN.

“The idea from the beginning is to have a high utilization of manufacturing, (making sure) one plant is fully loaded before you go on to additional capacity somewhere else,” says Hinrich Woebcken, CEO of Volkswagen North American Region & Volkswagen Group of America.

“Of course we also are looking into this most likely option of industrialization in the United States. (But) nothing has been finally decided yet.”

VW isn’t specifying volume plans for the MEB dedicated-BEV platform, but says it expects demand in the U.S. for all-electric vehicles to reach 10% of the market by 2025 and that the Volkswagen brand should exceed that level.

The automaker has aggressive plans for MEB, promising to turn out 50 new BEVs by 2025 for the Volkswagen Group’s entire portfolio of brands, including upmarket Audi and Porsche. The VW Group sold more than 10 million vehicles worldwide last year, so even if BEVs account for a single-digit market share for the automaker, it is conceivable a third assembly plant will be needed to meet demand.

The MEB is designed to be made in a dedicated facility, in part because VW believes it easily will scale up output to full capacity. There will be no mix of internal-combustion-engine cars and BEVs in production on a single assembly as is the case at General Motors and some other automakers, though it’s possible for the vehicles to share a paint shop and portions of a body shop.

“This is basically a rolling chassis,” Matthias Erb, executive vice president and chief engineering officer for the North American region, says of the MEB platform. “It’s a little bit of a different car. That’s another reason why you separate it (from an ICE-vehicle line).”

VW officials here for the auto show say they would like to have a North American production source for MEB, because it would give them more control of the process, keep costs in check and help open the vehicle-supply pipeline to the U.S. market.

“We (in) the North American region are fighting to get production here,” Erb says. “Obviously, there would be more potential in terms of delivery times from the factory and so on. I think we can make it happen.”

Besides Chattanooga, which is maxed out on production of the Passat sedan and Atlas SUV, VW could source the MEB from its other North American facility, the massive Puebla, Mexico, complex that supplies the U.S.-market Golf, Jetta, Beetle and Tiguan.

Part of the holdup in announcing North American MEB capacity could be uncertainty about the direction of NAFTA. The Trump Admin. is threatening to back out of the trade pact or otherwise modify it in unfavorable ways, which means VW may be hesitating to make a commitment to a U.S. or Mexico MEB production site until it has a clear handle on the business case.

“All elements and criteria (are) always part of our evaluation,” Woebcken says, acknowledging the uncertain NAFTA outcome is factoring into the discussion at VW.

There’s still a little time yet before the trigger must be pulled, as the I.D. Crozz won’t hit the U.S. market until 2020, but the clock is ticking. “We believe (we need to make a decision) in the course of the next year,” Woebcken says.

VW's Hinrich Woebcken.

In a backgrounder here with reporters, Erb outlines VW’s MEB plans for the U.S., which in addition to the Crozz and previously announced VW I.D. Buzz includes a midsize sedan and midsize SUV, both arriving ahead of the I.D. Buzz’s 2022 debut. A second wave of MEB products will arrive between 2022 and 2025 that will include an MPV, CUV and additional derivatives of existing models.

Also in the pipeline is a commercial van derivative of the I.D. Buzz for Europe that Erb says is under consideration for the U.S. market as well.

VWA sees the bevy of BEVs as helping to define its brand and build market share in the U.S., which has fallen to just 2.0%, a level Woebcken says makes the brand “not relevant.”

“I think there’s a great growth opportunity for the brand,” he says, noting VW is moving away from small, somewhat premium-priced models to a lineup stocked with CUVs and other vehicles that are competitively priced and cover the U.S.-market’s major sweet spots. “I think we’re (making) strong moves that will bring the brand to a relevant position.”

The MEB models, which will be priced competitively to conventional vehicles with similar passenger room, will be hitting the market at the right time, Woebcken says.

“The big difference between Volkswagen and other brands globally is we’re doing this without any compromise,” Woebcken says, adding the automaker will not merely electrify existing vehicle architectures.

“We believe the timing is perfect,” he says. When VW’s BEVs begin arriving in 2020, a broader charging infrastructure will be in place, vehicle costs will be lower and range will have increased, along with scalability, he argues.

The MEB isn’t VW’s only upcoming play in the U.S., Woebken notes, promising the brand will unveil two new models per year in the future, starting with a revamped Jetta sedan to bow at the Detroit auto show and the Arteon sedan replacement for the CC to come later next year.

“We’ve got a lot of great ideas on top of (the EVs),” he says.

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