Volkswagen chief executive Matthias Müller suggested the world’s biggest automaker is not too late to the electric car party.

Mr Mueller, speaking at the Vienna Auto Show on Friday, said media got a little carried away with its “New Beats Old” headlines after Tesla’s market value surpassed GM earlier this month.

“This has little to do with the reality on our streets: the Volkswagen Group produced 10.3m vehicles last year — Tesla around 80,000,” he said. “And the fact is, electro-mobility continues to be a niche.”

Mr Mueller said 750,000 electric cars were produced around the globe last year, or just 0.9 per cent of the total car market.

He conceded that “the future of driving is electric,” but projected that by 2025 three out of four VW cars would still be run by diesel or petrol engines, so it was important to invest across the spectrum.

He said the VW Group will spend €20bn by 2022 on more efficient, cleaner engines. By contrast, the VW Group has invested €3bn in “alternative” drive technologies in the last five years. “Over the next five years, we will triple this figure to around €9bn,” he said.

Analysts have been concerned that the German carmakers have not been doing enough to compete with Tesla. Despite the US upstart’s low sales, it has built massive brand value around its vision of future mobility, with its network of charging stations, its “Gigafactory” battery plant in Nevada and self-piloting technology.

Meanwhile, China, the world’s largest market for car sales, is so quickly building its own electric car market that “it could prove a structural threat to the German auto industry,” wrote auto analysts at Evercore ISI earlier on Friday.

But Mr Mueller said VW is ramping up its own plans on electric cars, and next year it will begin to offer low-price electric vehicles in China. He said battery technology will have to become a “core competency,” as it accounts for nearly a third of an electric car’s value.

Starting in 2019, he said VW will offer customers with electric cars with a range of 600km “at the price of today’s diesel.”

Meantime, VW is pushing to reduce complexity in the production process, so that by 2020 engine production should be 10 to 15 per cent more efficient.

One motor VW introduced last year can be used in 45 models across the group’s Audi, Seat and Skoda brands.

“Expensive and nonsensical parallel developments are a thing of the past with us,” he said.

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