Volkswagen, the world’s biggest automaker, is getting into the electricity business, not only to charge its own electric vehicles but to compete with established providers like RWE and E.On as well as Tesla.
VW has established a new unit, Elli (short for Electric Life), to distribute electricity from renewable power sources to charging stations for e-vehicles but also to provide other services such as computer-based energy management systems. VW will sell wall boxes to charge electric cars, offer electricity from renewable energy sources and provide a network of charging stations throughout Europe.
Elli’s establishment comes a year before VW plans to sell its new series of electric cars, which should help it to become a mass-producer of e-cars and catch up with Tesla, Nissan and Renault. The first model of VW’s new electric ID. series, the ID. Neo, will roll off the production line next year. VW’s subsidiary Audi already offers the e-tron, an electric SUV and the VW Group, which also includes Porsche, Seat and Skoda, hopes to sell 2 million to 3 million electric cars by 2025.
A shortage of charging points, especially along highways, has been a bottleneck in the development of Europe’s e-car market, with people fearing they may get stranded with empty batteries in the middle of nowhere. In 2017, VW, Mercedes-maker Daimler, BMW and Ford established a charging company, Ionity, and are now building 400 charging stations along highways in Europe. Tesla already operates its own charging network at more than 300 European locations and sells solar power panels and battery systems to store power at home or the office.
“Automakers are becoming more like mobility service providers,” said Stefan Bratzel, director of the Center for Automotive Management at the Bergisch Gladbach technical school. “Car companies are trying to keep their customers in their own ecosystems as long as possible.”
Starting in February, Elli will offer green power to charge e-cars. VW, which already generates its own electricity for its factory at headquarters in Wolfsburg, will produce the electricity, and, depending on demand, may draw on third-party suppliers. It will become a direct rival of established utilities, such as RWE, E.ON and Vattenfall, some of which also offer charging services.
Electric utilities welcomed VW’s commitment to providing charge stations as it would support the market for electric cars. Some, however, were skeptical, pointing to failed projects in the past. In 2009, VW started a joint venture with renewable energy provider Lichtblick to supply combined heat and power units for homes, but that foundered in 2014 on differences between the partners. VW also partnered with SenerTec to manufacture mini-power generators used at home, but that, too, has been shut down.
Thorsten Nicklass, designated CEO of Elli, countered that VW has considerable expertise in the power sector because of its own power subsidiary, VW Kraftwerk, the German word for power plant. But that unit operates in cooperation with utilities and car expert Bratzel believes the company will have to rely on partners for its new ambitions as well. “VW won’t get it done alone,” he said.
Building up a charging network should be easier, because Elli will first increase the number of charging stations for staff parking at VW’s own offices and factories to 5,000 by next year, from 1,000 currently. At the same time, it wants to equip 4,000 VW dealers and service partners in the European Union with charging options.
If the charging stations are there, VW may perhaps follow in Tesla’s footsteps and actually start selling e-cars successfully.
Kathrin Witsch reports on economic policy for Handelsblatt. Darrell Delamaide and Gilbert Kreijger adapted this article into English for Handelsblatt Today. To contact the author: [email protected].