VW boss confident for second half despite chip supply problems

FILED - Raindrops bead on a Volkswagen logo at a VW dealer in the northern German city of Hanover in the file shot from January 12, 2021. Photo: Julian Stratenschulte/dpa
FILED - Raindrops bead on a Volkswagen logo at a VW dealer in the northern German city of Hanover in the file shot from January 12, 2021. Photo: Julian Stratenschulte/dpa

Following a strong first half, Europe’s largest carmaker Volkswagen is determined not to be thrown off track by the supply problems and rising costs of raw materials that have dogged the motor industry.

Volkswagen chief executive Herbert Diess expects the shortage of chip components and the rising costs of raw materials to continue. Car prices may well also continue to rise.

However, the challenges posed by the coronavirus pandemic are no longer insurmountable, Diess said in an interview with the dpa published on Wednesday.

Diess sees the crisis caused by the pandemic as largely over. “For that reason I am confident overall for the second half of the year,” he said.

While fresh waves of the virus will result in logistical challenges, VW is well prepared, Diess says.

“We will certainly experience further restrictions,” he says, while insisting that any problems that arise can be defused through flexibility in production.

Turning to the waiting times caused by bottlenecks in the supply of semiconductors, the VW chief executive, who has recently signed a four-year extension to his contract, said he was working on the assumption that VW could catch up in the fourth quarter.

The chip shortage prevented VW from assembling vehicles reported to number in the hundreds of thousands.

Diess said demand had returned following the coronavirus shock. “We have full order books – as good as seldom in the past,” he said. Demand for electric vehicles, boosted up to 2025 at least by discounts, is also strong, he says.

Diess put electric vehicles centre stage after becoming Volkswagen CEO in 2018 and believes that better charging facilities are essential. State subsidies for electric vehicles could become unnecessary in the medium term, “but one must then also reduce the preferential treatment given to fossil fuels.”

Diesel is still subsidized in Germany, he said. “Does that make sense at a time when we have plug-in hybrids that are similarly efficient, maybe even better, even over long distances?” asked Diess. “And we already have markets such as Norway, where having a petrol engine is so strongly penalized compared to electric vehicles that the latter are almost always bought.”

VW believes a worldwide phase-out date for petrol cars makes little sense, a position criticized by climate activists.

“We would do well not to discuss an internal combustion engine phase-out date at all in Latin America, for example – where there is a functioning, nationwide supply of bioethanol,” Diess argued.

Poland, with its predominantly coal-fired electricity plants, is in a different situation than Spain or Norway, where far more green energy is used, he added.

Currently, the VW Group is planning six battery cell plants for Europe to meet the expected growth in demand.

Diess chose not to comment on the chances of a second large battery factory in Germany: “We have a lot of political demand for investments in cell production – even in countries that are not yet as far along with electrification.”

Diess has recently outlined VW strategy to 2030. Following the transition to electric vehicles, networking and software will play a major role, especially in the field of self-driving cars.

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