Volkswagen and Mercedes' electric-car ambitions run into trouble

BMW, Mercedes and Volkswagen are pouring more than €100 billion into scaling up an entirely new infrastructure of assembly platforms, battery plants a
FILE PHOTO: Electric cars charge on a street in London, Britain. (REUTERS)
FILE PHOTO: Electric cars charge on a street in London, Britain.

The German car industry’s bid to wrest the electric-vehicle crown from Tesla Inc. veered off course this week with stumbles for Volkswagen AG and Mercedes-Benz AG.

VW plans to delay a key project by at least two years after software fumbles, according to a person familiar with the situation, calling into question its ambitious €52 billion ($54 billion) EV rollout touted as the industry’s biggest. Also this week, Mercedes cut prices on its flagship EQS EV in China by about $33,000 after misjudging the market. The shares fell as much as 7.2%.

Also check these Cars

Find more Cars
Volkswagen Polo 2024 (HT Auto photo)
999 cc Petrol Manual
₹ 8 Lakhs
View Details
Volkswagen Tiguan 2025 (HT Auto photo)
1984 cc Petrol Manual
₹ 37 Lakhs
View Details
Volkswagen Taigun (HT Auto photo)
1498.0 cc Petrol Both
₹ 10.49 - 17.50 Lakhs
View Offers
Volkswagen Virtus (HT Auto photo)
999.0 cc Petrol Both
₹ 11.21 - 17.91 Lakh
View Offers
Volkswagen Tiguan (HT Auto photo)
1984.0 Petrol Automatic
₹ 32.79 Lakhs
View Offers
Volkswagen Id.7 (HT Auto photo)
77 kWh 621 Km
₹ 70 Lakhs
View Details

The developments are a red flag for the industry that is pouring unprecedented funds into the transition with ambitious timelines. While carmakers the world over grapple with the switch away from combustion engines, the stakes are highest for Germany’s manufacturers accustomed to commanding a premium based on cutting edge technology and luxurious trims.

Also Read : Slow to the EV game, foreign car ventures in China face bleak future

“German automakers have announced bold electrification targets and claim they’re leading the transition, but they’re not yet delivering," said Bloomberg Intelligence’s Michael Dean. “They still have a long way to go."

After years of failed attempts to displace Tesla and with Chinese upstarts prepping their own moves, German carmakers have switched gears to win the EV race, moving away from making incremental changes to their combustion-engine cars that have dominated for decades.

File photo of an electric vehicle being charged used for representational purpose only (REUTERS)
File photo of an electric vehicle being charged used for representational purpose only (REUTERS)

BMW, Mercedes and VW are pouring more than €100 billion into scaling up an entirely new infrastructure of assembly platforms, battery plants and software to deliver a new generation of EVs. The hope is that these will lead on driving range as well as digital offerings that tap new sources of revenue and shut out tech rivals.

“From a hardware perspective I would have no doubts that they can make superb cars," said Axel Schmidt, global head of the automotive division at management consultancy firm Accenture. “But can the complexity and quality needed for the software be mastered by a 120-year-old hardware manufacture? I’m not so sure."

This week’s developments show how VW is reevaluating the strategies set out by former Chief Executive Officer Herbert Diess, who was replaced in September with Porsche head Oliver Blume after a number of setbacks. For Mercedes, the struggles with its top-of-the-line EV model in China is a delicate development as it plans to go electric-only where possible by 2030 while shifting its portfolio upmarket.

At VW, the fallout could also be far-reaching. Should the delay of its Trinity battery car project beyond the original 2026 be confirmed, the carmaker may also scrap plans for a €2 billion factory in Germany. It would also mean the VW brand loses a chance to close the technology gap with Tesla, especially on automated driving features.

The Trinity project delay stems from well-documented struggles at Volkswagen’s software-development unit, Cariad. The subsidiary has been beset with disruptions and mis-management that had already pushed back the release of the Audi Artemis -- the company’s luxury answer to Tesla -- by three years to 2027.

“Blume is clearly reevaluating the whole battery-electric vehicle and software strategy, and therefore 2026 would be the earliest VW could challenge Tesla -- with the caveat of further platform and software delays," Dean said, who in June said the carmaker was well-placed to get to that goal already in 22024.

With any Trinity delay, Volkswagen could be forced to invest more in its MEB platform that has been the basis for its ID electric-vehicle series. Those cars have been riddled with software problems, including sudden braking from a faulty traffic-detection system and drivers’ car displays seizing up.

Cariad will now focus on finishing a new software architecture for premium models from Porsche and Audi, and push back a cross-brand platform that was meant to bolster the Trinity project and deliver self-driving capabilities.

“It certainly looks like the Germans are tripping over themselves a bit recently," said Matthias Schmidt, a Berlin-based auto-industry analyst. “The inherent perfectionism could be their own worst enemy and could likely be slowing them down in the fast-paced EV environment."

First Published Date: 20 Nov 2022, 09:46 AM IST

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.