Member of the Board of Management for Finance and Operations (CFO/COO), Volkswagen AG
Volkswagen CFO Arno Antlitz Talks EVs | Bloomberg Talks
Volkswagen CFO and COO Arno Antlitz discusses scaling up EVs in the US market, the anticipated all-electric Scout model, developing the company's own battery supply and getting generative AI into vehicles. He speaks with Bloomberg's Matt Miller and Alix Steel.
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Transcript (22 segments)
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Interviewer0:00
I'm joined now by Arno Antlitz, Volkswagen Group CFO and COO. Volkswagen is home to portfolio brands of Audi, Porsche, Lamborghini, and Bentley. And Bloomberg's Matt Miller is also here, back from paternity leave for one time only. Matt, by the way, congratulations. It's so good to have you.
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Matt Miller0:16
Thank you very much. I'm very happy to be back and I'm happy to talk to Arno. I have a long history with Volkswagen myself as a driver, as a fan, and the brand here, I mean, I've been to the factory in Chattanooga. I've been to Wolfsburg, obviously, a lot in Germany as well, but the brand here hasn't really picked up in a way I would have expected with some of the new products you've had in the past few years. How do you plan to build a bigger presence in America?
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Arno Antlitz0:43
No, thanks for having me here and it's a great question. Look, where are we coming from? As you said, we have some of the broadest and most fascinating brand portfolios in the industry, Porsche, Lamborghini, Bentley, Volkswagen. Ducati as well. We have a market-leading position in Europe. We have a strong position in China, but yet we have only 4% in the US in terms of market share and 5% in North America. So, what's the reason? You need great products to be successful locally, but you also need scale. And in the combustion engine world, we never really had the scale. And now the market is turning electric. And this is a great opportunity for us to grow. We have all the ingredients we need to grow successfully. We have great products with great heritage. We have the technology. We decided on a local battery capacity in Canada, Ontario, which will be very competitive. We have the financial resources and the will. So, this is really our time to grow. And there's also, in addition to that, a once-in-a-lifetime opportunity with our new brand, Scout, to enter one of the most promising segments in America, the C pickup, with an all-electric car.
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Matt Miller1:59
Can you give us any more details on that? I mean, International Harvester Scout, it's a very storied 4x4 from the '60s and it's been away for a long time. Now, Scott Keogh, who ran Audi and Volkswagen here in the US, is taking over that project. When are we going to see the first ones on the road? Where are you going to get your battery supply for that?
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Arno Antlitz2:17
No, I mean, as enthusiastic about the project as you, Scout has a great heritage. It will be an all-electric pickup truck in the C pickup segment and also a B-segment SUV. Actually, I saw the designs just before Christmas. They are great. It's really a great car with a lot of heritage, but it's also very modern. It looks pretty similar to the original Scouts. We will produce it in North America. We will spend $2 billion on investment. The capacity will be about 200,000 a year in South Carolina. And we get the batteries from Ontario, from Canada.
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Matt Miller2:58
Are people going to buy them? What has been so striking is the lack of real pickup once you get the early adopters. Like, where is all the demand?
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Arno Antlitz3:06
Yeah, no, you're quite right. We see some reluctance right now in Europe and perhaps also in the US. Early adopters bought already and now it's the next wave of customers. And of course, it depends on charging infrastructure. Is it there? Is it enough charging infrastructure? Of course, of pricing. We had quite high raw material prices, so prices for EVs are higher, but we are convinced that in the long term the market will be electric and we have the great products. We will, by 2030, have 30 all-electric cars in the US. A lot of them localized.
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Matt Miller3:41
I wonder about if you gave us more details about the battery production because I know PowerCo, which is one of your investments in battery production, is breaking ground on its first North American plant in Ontario. You mentioned you'll get your batteries for the Scout there, but Scout's supposed to come out before you'll be producing batteries there. So, where will the power come from?
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Arno Antlitz4:02
No, no, Scout will be one of the first cars who get the batteries from PowerCo. There might be a small part where we will have to bridge some battery supply from Europe, but Scout will definitely be part of the customer group. And to elaborate a little bit more on our strategy, as you mentioned, we are convinced that having our own battery supply in the company is very important and this has really three pillars. One, a unified cell, then our own production, and we secure our raw materials. And this will lead to a very competitive offer in terms of battery and Scout will be basically one of the first customers of that plant in Ontario.
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Matt Miller4:43
You mentioned the investment there, $2 billion. Overall Volkswagen Group has always had the most eye-popping numbers in terms of EV investment, from when Diess started until now at Blume. I think you're planning on putting $130 billion into EV and digitalization. Are you still pushing ahead that hard because, you know, demand for EVs has fallen off. There's even a little bit of backlash as Alex is mentioning.
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Arno Antlitz5:13
This is a great question. Exactly as you mentioned, total spend, R&D, capex combined for the next five years is 180 billion and 130 billion of that is going into electrification and digitalization of our products. We're still absolutely committed to ramp that up, of course. But we also built in some certain flexibilities. So, about a third of the upfront investment goes into combustion engine cars still. So, we have a flexible strategy to keep our combustion engine cars competitive on the way and we are fully convinced that the future will be electric. Our strategy is rather flexible and provides robustness and flexibility going forward.
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Matt Miller5:53
This might be a really dumb question, but that just means like you're going to put money in the ICEs and then you're going to take some of that money and put it in EVs and it's going to be like an easy shift. That doesn't sound very easy.
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Arno Antlitz6:01
It's not an easy shift. What I said, from the 180 billion, about a third still goes into projects like keeping our combustion engine cars absolutely competitive, basically the last generation. So, we will have a range of very competitive and great electric cars and we will have a range of still very competitive combustion engine cars. And eventually it's up to the customer to decide. So, this is what I was talking about flexibility. This strategy is a little bit more costly, but it will give us the flexibility in the years to come going forward. But don't get me wrong, the future will be electric. That's clear.
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Matt Miller6:39
I want to get back to the Volkswagen brand specifically here in the US. You know, people think of Audis as very technical, cutting-edge vehicles. BMW, obviously, the ultimate driving machine. Mercedes, very luxurious in terms of service. What does Volkswagen mean to the consumer?
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Arno Antlitz6:59
First of all, Volkswagen is a great brand. It's a loved brand. It has a great heritage. Think of the Transporter. Think of the Beetle. And we will bring this heritage into the future. Volkswagen is also about democratization of innovation. For example, you mentioned the CES. From summer 2024 onwards, we will be, I think, one of the first OEMs at Volkswagen to bring ChatGPT in the car. You can talk to the car. So, this is about Volkswagen.
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Matt Miller7:27
I wonder what your relationship with the unions is going to be like here. We've just had, obviously, the end to a long and painful strike for Ford and GM as well as Stellantis. And now they're pushing in, or trying to push in, to BMW and Tesla and other foreign automakers here. Volkswagen, obviously, in Chattanooga and you're talking about the Scout factory as well. Will you work with the UAW? How do you see that playing out?
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Arno Antlitz7:54
Look, we have a great factory in Chattanooga. We have a great workforce there, more than 5,000 very skilled and motivated people. And they have great working conditions there. So, we make sure they have great working conditions. They can participate and decide also in the factory without intermediary third party. Of course, we respect the right of our workers to vote. But as I said before, we have very good working conditions, very good pay. So, this is where we stand.
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Matt Miller8:24
You don't have to pay them more?
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Arno Antlitz8:26
We actually increased already by about 11% in Mexico.
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Interviewer8:31
Well, listen, it was really great to have you here. Thank you so much for coming. Matt, it's really great to see you. Thank you for bringing the interview to us.
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Matt Miller8:37
Thanks so much for having us.
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Interviewer8:38
Arno Antlitz, Volkswagen CFO and COO, and Matt Miller.