VW Credit Holds Reins on EV Financing Until 2018

Volkswagen AG has ambitious plans to be a “world market leader in e-mobility,” starting by building “attractively priced” electric cars in China, Matthias Müller, Volkswagen chief executive, said during the automaker’s annual meeting for shareholders yesterday.

However, the company’s captive VW Credit may not play a significant role in these plans until the vehicles are produced in 2018, Mobility Finance has learned.

Over the last five years, Volkswagen has invested around $3.2 billion in alternative drive technologies, and plans to triple that amount over the next five years, investing a total of around $10 billion. The German automaker will release 10 new electrified models by yearend 2018, and will be adding more than 30 battery electric vehicles by 2025, Müller said during the meeting.

“Our goal is for Volkswagen Group to gradually assume the position of world market leader in e-mobility,” he said. And one way the company plans to assume this position is by producing its electric vehicles in China — which surpassed the United States last year to become the largest maker of purely electric vehicles. This was achieved, in part, because the Chinese government has provided financial incentives to promote the switch from gasoline to electricity as the country battles heavy pollution.

“Starting next year, we aim to build attractively priced electric cars in China for the domestic market together with the Chinese automaker JAC.” Müller said.

But at the moment, “attractively priced” does not include the automaker’s captive VW Credit — yet.

“Right now our focus is [beginning] production by 2018, and then we will look at the role of VW Credit,” a Volkswagen Group China spokesperson told Mobility Finance, adding that the negotiations with JAC are in the final stages.

Because of government incentives and tax breaks, it is possible that VW Credit will not need to supplement electric vehicles in order to make them less expensive. At least not in the near future. Within the United States, for instance, the government offers up to a $7,500 tax credit for every electric vehicle sold — for the first 200,000 vehicles sold at each automaker before being phased out. Volkswagen has yet to come close to entering a phase-out period, according to a report. And in Europe, 15 of the 27 European Union countries offer tax incentives for plug-in vehicles, according to the European Automobile Manufacturers’ Association.

To learn more about the evolution of transportation, join us at the second annual Auto Finance Innovation 2017 conference, May 17-18 at the Hilton Bayfront in San Diego. Visit www.autofinanceinnovation.com to register or learn more. To request a media pass, contact Skylar Taylor at staylor@royalmedia.com.

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