VW to Drop Fossil Fuels, Spend $7.1B on Products, R&D and Manufacturing in Canada, Mexico and US

VW aims to localize all major design and engineering responsibilities for the body and interior of new vehicles, a turn around from a German-centric firm.

Volkswagen today announced it will spend $7.1 billion during the next five years in the North America*1 to increase products, regional R&D and manufacturing capabilities. Volkswagen hopes that 55% of U.S. vehicle sales will be fully electric by 2030. Volkswagen plans to launch American-assembled ID.4 in 2022, ID. Buzz in 2024, as well as new electric SUVs starting in 2026.

Scott Keogh, President and CEO, Volkswagen Group of America said that Volkswagen will begin to phase out gasoline-powered vehicles from its American line-up, aiming to completely exit from internal combustion sales at the beginning of the next decade, while focusing on the most desirable models. In its place, Volkswagen will advance its electric line-up, including the American-assembled ID.4 in 2022, the ID. Buzz electric microbus in 2024, and new electric SUVs from 2026. In all, Volkswagen Group brands plan to introduce more than 25 new battery electric vehicles (BEVs) to American consumers through 2030.

Keogh claimed a commitment to software and “digital solutions” for American consumers, developed directly in the United States. As part of that, Volkswagen plans to bring over-the-air (OTA) updates and new software features, such as plug and charge, for the ID.4 this year. Volkswagen is also working with CARIAD SE, Volkswagen Group’s software entity, to supporting the formation of its North American subsidiary in 2022, with software units in Seattle, WA, and California’s Bay Area.

Roughly 90%  of Volkswagen’s vehicle portfolio for North America is assembled in North America, including the Atlas and Atlas Cross Sport SUVs in Chattanooga, TN, as well as Tiguan, Taos and Jetta in Puebla, Mexico. Volkswagen aims to strengthen these capabilities in its pivot to electric mobility.

This strategy builds on the company’s preparation of its Chattanooga facilities for local EV production. Assembly of the ID.4 SUV is poised to begin in 2022, sourced mostly from regional suppliers. Volkswagen also plans to upgrade its factories in Puebla and Silao, Mexico, for the assembly of electric vehicles and components (such as e-motors), by the middle of the decade.

Beyond assembly, Volkswagen aims to localize all major design and engineering responsibilities for the “vehicle hat” (body and interior) of products destined for the domestic markets by 2030. This approach reflects the company’s emphasis on American consumer demands, while scaling Volkswagen Group’s global vehicle platforms (MEB and future SSP).

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*1 Canada, Mexico, United States