This is an important moment for Volkswagen’s e-mobility drive. Emerging from the wake of the diesel scandal and under pressure to meet stricter EU emissions regulations, the company has an ambition to sell as many as 3 million electric vehicles per year by 2025. To put that into context, VW Group sold approximately 11million vehicles globally last year, 3.7 million of which were under the VW brand.

The UK order books for the first car from its new ID electric range, that will launch at the Frankfurt Motor Show later in the year, are now open. A compact hatchback similar in size to a Golf, the new car will reportedly offer a range of up to 341 miles, although the anticipated £26k entry model is likely to offer only 205 miles. Whether this combination of affordability and range is enough to tempt buyers away from traditional combustion engines in sufficient numbers remains to be seen.

With climate change at the forefront of the public conscience, electric vehicle sales are growing rapidly. The latest figures from the European Automobile Manufacturers Association show that alternatively-powered vehicle sales increased 25.9% in Europe in the first quarter versus 2018. This was largely driven by the electrically-chargeable vehicle segment (ECV), within which pure battery-electric vehicles sales grew 84.4% year-on-year. However, in terms of market share, ECVs still only accounted for 2.5% of all cars sold in the region during the period.

Whilst a step change is required if VW is to monetise the 34 billion Euros it has budgeted to spend on e-mobility to the end of 2022, we believe the company’s scale and strong heritage as a producer of quality, affordable vehicles puts it at the vanguard of the electric vehicle revolution. It is our contention that the market’s focus will ultimately place more emphasis on this and move away from its preoccupation with the historical issues around “Diesel-gate”.

Disclaimer – At the time of writing, Kames holds bonds issued by VW.

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