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The Volkswagen formula: “This is how Italy can pick up the pace on e-mobility”

5.5.2021
The Volkswagen formula: “This is how Italy can pick up the pace on e-mobility”

Interview with Massimo Nordio. “The offering is growing, prices as well as charging times are going down, but the transition will take time and will require support – a correct perception by the customers is crucial,” says the CEO of Volkswagen Group Italia.

Is Italy ready for the electric car revolution? Last week the Volkswagen Group’s CEO, Herbert Diess, moved the conversation even further into the future. In an interview with Handelsblatt, he said he is already thinking of the next revolution: digitalisation and autonomous driving. Diess is taking the long view as the sector is dealing with an unprecedented chip crisis which is keeping factories shut and will cost billions to the industry.

This is happening while Italy is struggling with a pandemic-impacted market which saw volumes drop 30% last year (from 1.9 million vehicles registered to 1.4 million). And the comparison with the first four months of 2019 makes for grim reading: 592,000 registrations, -16.9%. The outlook provided by research firm Centro Studi Promotor suggest we could even see a return to 1960s levels at the end of 2021.

Against this backdrop, however, the newest cars on the scene – electric vehicles – have gained ground. The category collected 29,000 registrations in the first quarter, with a 6.6% market share. 3% of these were battery-powered (BEV), and the rest hybrid plug-ins (PHEV). The market share rose to 8.7% in March, before dropping to 6.7% in April. In 2020, there were 60,000 registrations in the whole year, and only 17,000 in 2019 (a share of 4.3% and 0.9% respectively). In Europe, newly registered electric cars already enjoy a market share of 13.9% (ACEA figures); 8.2% are plug-ins and 5.7% are battery-powered.

In Italy, there is room for further progress, given that almost one citizen in five is keen to buy an e-car (according to Findomestic bank). And even more so because the European decarbonisation target envisages six million electric vehicles in circulation by 2030 (out of a total of around 39 million). By the end of the year that number is likely to be about 200,000.

What will it take for electrification on the roads to really take off in Italy? “The offering is expanding significantly,” explains Massimo Nordio, CEO of Volkswagen Group Italia. “A lot of models coming out now are also more appealing because of three factors that used to be slightly limiting: price, range and charging time. An example of this is our Volkswagen ID.3. Compared to the Golf TDI – with which it shares the same size and performance, with 150 horsepower – it has a list price of 34,800 Euros against 34,250 Euros. But you also need to consider the long-term rental option; in that case, the price is even less relevant because the residual value is what counts. We expect electric vehicles to hold their value much better than conventional cars.

So why aren’t more people buying them?

Doubts and a misperception of the real situation are holding people back. The speed at which things are changing means that in six months information and the overall offering are radically different. Up-to-date information is thus essential. Communication and customer perception are vital. Add to this the fake news that continues to circulate and you get the explanation for people’s mistrust and hesitancy.

What fake news?

One example is that there would not be enough electric power if everyone had an electric car. The reality, according to a study by Polytechnic University of Milan, is that one million additional electric cars require an increase in energy production of 0.5%. Then there is the fear over raw materials: for example, a lithium scarcity. Our estimates suggest that verified reserves would be enough to make billions, not millions, of electric cars.

At Volkswagen Group Italia, we have created a dedicated website (MoDo) to provide answers on these issues.

But range and charging concerns persist around electric cars.

The truth is that batteries are getting smaller, more compact and more powerful – and increasingly cheaper. Similarly, High Power Charging (HPC) is bringing down charging times significantly. Many people would like to buy an electric car but don’t, for a very good reason: they have no option of installing a wallbox or a charging point in their apartment building to allow them charging at home. This is the same situation I find myself in.

In these cases, the public charging network is the only option you have; but that takes quite a bit of time. That’s where we come back to ultrafast charging, or HPC. We need to move faster in this area.

How long will we have to wait?

I think that the three obstacles that have slowed the mass rollout of electric cars – price, range and charging times – are very quickly being overcome, despite many people not being aware of the progress. Then you have the industrial aspect: part of the reason why it will have to be a gradual process is because industry must be set up to supply at large volumes. We have 125 sites throughout the world, 18 of which already produce electric vehicles.

The transition will take time; and that’s why we’ll need to be able to successfully manage the co-existence of electric mobility with conventional mobility. The image that comes to my mind is of a disc jockey skilfully mixing one track into another.

How long will we have to wait?

Is that why Volkswagen hasn’t set a date when it will call time on the conventional engine?

Look, the time limit for us is to be net zero by 2050, in line with the Paris Agreement. Combustion engines will gradually fade away, determined by the situation in each market.

All these efforts and investments do, in any case, have an impact on public policy. The new Italian Minister for Ecological Transition, Roberto Cingolani, has been rather unkind to electric cars in recent declarations, stating that they are not that green, and that their widespread use will make sense when 72% of electricity is generated without emissions.

In the recently approved National Recovery and Resilience Plan, however, there is quite significant investment for creating the high-power charging network (around 21,000 of the 31,500 public charging points needed plus 100 experimental stations, Ed.) which, as I said before, is such a key, basic element to this.

You remain fairly optimistic then?

I think it’s important to look at how things are in reality. It’s clear where we need to get to, but it will take time. And we need to spend that time ushering in the era of electric mobility and phasing out combustion engines.

Fleets are still heavily penalised from a tax perspective – a highly controversial topic. And this is despite electric fleets in Italy growing faster than in the rest of Europe, as the Arval Mobility Observatory Barometer reports.

We know that company cars are a crucial market segment if electric cars are to become firmly established on a large scale. Unfortunately, the benefits available to final customers are not available for fleets and companies. A change in this area would make a big difference.

In terms of tax, there are still no plans to be able to fully deduct leasing or hire costs for an electric vehicle, and there’s no specific tax policy to promote this. We think one is needed. We have the right incentives for private customers to move to electric cars; however, it could make an even bigger difference if incentives existed for corporate fleets too.

Interview by Alberto Annicchiarico

Source: Il Sole 24 Ore, 05/05/2021

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