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Volkswagen Wants To Snag Tesla’s Spot As Top Dog In The US Electric Car Market

REUTERS/Bobby Yip

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Chris White Tech Reporter
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Scandal-plagued Volkswagen believes it can leapfrog over Tesla to become the top dog in the electric vehicle market.

VW head Herbert Diess said the German automaker would target one million electric car sales by 2025. The company’s push to edge out Tesla in the electric auto market could be a play to recover from the 2015 dieselgate scandal.

“[Tesla] is a competitor we take seriously. Tesla comes from a high-priced segment; however, they are moving down,” Diess said Sunday at a press conference, referring to the $35,000 Model 3, which enters production this summer. “It’s our ambition, with our new architecture, to stop them there, to rein them in.”

While Tesla has a jump in the premium market, Diess said, VW can overcome that advantage through its ability to mass produce battery charged electric vehicles.  VW will have “leapfrogging cost advantages,” he added, thanks to a rollout of its “MQB” platform, which helps the 12 VW brands share parts, technology and assembly sequences.

The company pleaded guilty in March to charges from the so-called dieselgate, which affected more than 500,000 vehicles and cost the automaker billions of dollars. It was sentenced to three years of probation and forced to pay billions of dollars in penalties.

VW admitted in 2015 to installing so-called defeat devices in hundreds of thousands of diesel-powered vehicles in the U.S. The devices would only kick on during road conditions when emission measuring tools were not engaged.

Part of the legal agreement requires VW to plow a $2 billion investment into electric vehicle technology, which will be distributed within the next decade.

The payments will be doled out to various plaintiffs, such as the state of New York, which will use $115 million for environmental projects to improve air quality, and another $30 million to the state’s general fund.

All told, the company will now be responsible for shoveling nearly $5 billion into certain aspects of the green energy industry.

Diess said VW would focus on cutting costs to increase profitability and enhance productivity by 25 percent over the next five years. The company would then start a full-throated effort at targeting the electric vehicle market by 2025.

Tesla, a relatively new electric car market, for its part, has the unique challenge of scaling its products up to VW’s level – Tesla’s problem is acute, as Ford and GM produced more than 1 million vehicles in 2016, while Tesla sold 80,000.

Still, Tesla has managed to increase its valuation to a level higher than GM. It raised its market capitalization last month to $51 billion, a number that is valued at about $1.7 billion more than GM. Tesla trails only VW in market value.

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