Can Volkswagen Compete with Tesla (NASDAQ: TSLA)?

Written By Jeff Siegel

Posted March 14, 2016

It’s being pitched as a rival for the Toyota Prius.

I call it a dud in the making.

Last week, Volkswagen revealed images of its new XL3 hybrid. Check it out …


As reported in Autoexpress, it’s a mix of an electric motor with a detuned version of VW’s 1.4-litre turbocharged petrol engine.

John Voelcker from Green Car Reports suggested the XL3 could deliver 94 miles per British gallon on the European test cycle. That translates to about 50 to 60 mpg in the US.

Pardon me for a moment, while I yawn.


Given what we know is possible today with electric and plug-in hybrid electric technology, the XL3 seems a bit underwhelming on fuel economy.

We know that VW is trying to re-invent itself after the “Dieselgate” scandal, and certainly I was happy to see that the company is looking to accelerate its investment in a set of all-electric and hybrid components. But trying to compete with the Toyota Prius is silly.

If VW really wants to up the ante, it should be competing with Tesla (NASDAQ: TSLA), GM (NYSE: GM), and Nissan (OTCBB: NSANY). It should be developing cars to rival the Model S, the coming Model III, the Chevy Volt, the Chevy Bolt, and of course, the Nissan LEAF.

In all seriousness, am I really supposed to get excited about a VW version of a Prius? Who cares?

Interestingly, I remember writing about VW’s XL1 back in 2011, after the company unveiled the two-seat plug-in hybrid at a car show in Qatar.

It was touted as delivering as much as 261 miles per gallon. With a two-cylinder diesel engine and the extensive use of carbon fiber in the body, the 2.6 gallon fuel tank was believed to deliver a driving range of 341 miles.

Here’s what it was supposed to look like …


Granted, this is a small car and not really good for folks with families, lots of pets, or folks that need to a haul a lot of stuff around. But I’ll tell you this much …

If Volkswagen could put one of these in the showrooms today, and price it competitively, they’d fly out of the showrooms.

Now here’s the interesting part …

Volkswagen showed off this car in 2011. That was five years ago.

And what’s management showing us today?

A VW version of the Prius.

Now consider how quickly Tesla – company that’s never had anywhere near the same resources as VW – delivered the Model S. A car, by the way, that’s won major awards in the auto space, including car of the year.

Consider how quickly GM upgraded the Chevy Volt or built the all-electric Bolt. Or consider how quickly Nissan is upgrading the LEAF.

While GM, Nissan, and Tesla were busy offering real solutions to an outdated internal combustion engine, VW was tinkering with software so as to avoid complying with emissions standards.

As far as I’m concerned, until VW makes a real effort to deliver a truly impressive vehicle that’s less pollutive and technologically superior to its previous offerings, any PR effort about the “New VW” will fall on deaf ears.

Volkswagen has the ability to do something very big right now. Whether or not it chooses to do so remains to be seen.

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