February 22, 2017 / 12:04 PM / 5 months ago

VW looks to east Germany in switch to electric cars

4 Min Read

A workers walks in the factory inside the Glaeserne Manufaktur (transparent factory) where Germany's car maker Volkswagen AG assemble the luxury model Phaeton, in Dresden May 14, 2013.Fabrizio Bensch/File Photo

DRESDEN, Germany (Reuters) - Volkswagen (VOWG_p.DE) wants to build more electric cars in eastern Germany and backs a Tesla (TSLA.O)-style expansion of charging stations in the city of Dresden, evidence of efforts to reshape its business after a diesel emissions scandal.

VW, which has regained the status of the world's largest carmaker, is pursuing a multi-billion-euro investment in battery-powered cars and new mobility services as Europe and China seek to encourage sales of plug-in cars and regulators tighten emissions rules.

VW's glass-walled factory in the eastern city of Dresden embodies the company's post-dieselgate transformation better than any of its 120 plants worldwide.

Before the scandal broke in September 2015, VW's smallest plant built the 12-cylinder Phaeton saloon, the brand's most expensive model which was dropped last March. Now it will instead produce a version of the all-electric e-Golf from April.

"We want to play a major role when it comes to launching further electric vehicles," said Kai Siedlatzek, finance chief at Volkswagen Sachsen GmbH, which employs 10,000 workers in Dresden, Zwickau and Chemnitz in eastern Germany.

The Zwickau factory will use a new modular platform for electric vehicles (EVs) to build the I.D. hatchback from 2019.

In the short-term, VW will start delivering the new e-Golf with a battery range of 300 km (185 miles). The car will also be produced at its headquarters in the western German town of Wolfsburg.

It already has 2,000 orders for the 35,900-euro ($37,770) model from Norway which grants some of the world's most generous incentives for electric cars, Siedlatzek said.

"We want to make electric mobility available to the masses," he said.

A general view shows the Glaeserne Manufaktur (transparent factory) where Germany's car maker Volkswagen AG assemble the luxury model Phaeton in Dresden May 14, 2013.Fabrizio Bensch/File Photo

Taking on the Skeptics

Industry analysts are yet to be convinced that the market for electric cars can grow as quickly as VW and rivals hope.

The VW brand may fail to meet its goal of selling 1 million EVs per year by 2025, according to IHS Markit. The brand's share of global all-electric car production could jump to 15 percent or 554,062 vehicles by 2025 from 3.7 percent or 20,972 last year, IHS said.

FILE PHOTO: The Volkswagen logo is seen at the Frankfurt Motor Show (IAA) in Frankurt, Germany, September 10, 2013.Pawel Kopczynski/File Photo

To further its electric ambitions, VW is partnering with Dresden, the state capital of Saxony and home to around 540,000 people.

The city administration wants to multiply the number of public charging stations and improve parking to boost the number of zero-emission cars on its roads.

Established carmakers are trying to catch up with Tesla, the Silicon Valley-based e-car leader, which maintains its own network of charging stations. Tesla's chargers are the fastest in the industry, and are incompatible with existing electric cars made by rivals.

Property group Vonovia (VNAn.DE), owner of 38,000 flats in Dresden, will help create charging points, Siedlatzek said.

To foster public acceptance of EVs, VW wants Dresden drivers to be able to use mobile payment services for parking provided by VW-owned Sunhill Technologies.

VW has also developed an app to route drivers swiftly to parking spaces and will subsequently add trip-planning services similar to Google-owned (GOOGL.O) traffic software.

($1 = 0.9506 euros)

Reporting by Andreas Cremer; Editing by Keith Weir

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