Volkswagen AG’s Chief Financial Officer Arno Antlitz indicated this week that the company is seeing significant demand for electric vehicles, which has allowed the company to expand not just in size but also in profitability.
According to Antlitz (via Bloomberg), some of the Volkswagen Group’s battery-electric vehicles (BEVs) are sold out until 2023, with extended wait times for other models that are still available. This is the same with Tesla reporting wait times up to 3 months for the widely popular Model Y and as much as 12 months for the Model X Plaid.
The Volkswagen Group, which comprises the Volkswagen brand as well as Audi, Porsche, Skoda, and SEAT, believes that electric car economics are improving far quicker than they projected. The key reason for this is because there is a stronger than anticipated demand, which has only been exasperated by the war in Ukraine and resulting spike in global gas prices including the stoppage raw materials coming out of Ukraine.
In 2021, The VW Group sold around 762,400 plug-in electric cars (an increase of 81% year on year), including 452,900 all-electric vehicles (up 95.5% year-over-year).
That’s great news for The VW Group and the EV industry as a whole. However, this news comes with an increased pressure on the supply of raw materials for batteries, leading The Volkswagen Group to contemplate raising EV prices just like Tesla has done in recent months.
According to Colin Langan, an auto analyst at Wells Fargo, automobile output in Europe might drop by 700,000 due to the Ukraine/Russia conflict in the first half of 2022. The biggest issue is that Ukraine has 17 wire-harness facilities (only Romania and Morocco have more in the area) – as far as we know, those factories are all down right now. Experts estimate that it will take at least 2-3 months to ramp up manufacture of these wire harnesses in other nations.
First it was semiconductor chips, then it was battery raw materials, now it is wire harnesses. One of the key differentiators of EVs is that they require fewer parts. However, we are now realizing that this could also become an Achilles heel for EVs because those fewer parts now play a more outsized role to the overall viability of the vehicle.
