In it’s quest to avoid its obligation to meet mandated emissions controls, Volkswagen made some bad decisions.
These bad decisions will result in fines that could reach up to $18 billion. As well, about $17 billion of the company’s value has been wiped out since news broke that management intentionally violated clean air laws.
It’s uncertain as to how much this will cost Volkswagen when all is said and done. But I’ll tell you this much …
It’s a hell of a lot cheaper these days to deliver less pollutive vehicles to the marketplace than to continue to believe the conventional internal combustion engine will have much value in the future.
Well that was stupid!
Truth be told, this is one of the dumbest moves I’ve ever seen taken by a company that wanted to skirt pollution laws. Although I prefer free market solutions to environmental problems over government-mandated ones, in the absence of a real free market, only an idiot would risk billions of dollars just to rig some emissions tests.
This holds particularly true with Volkswagen, as the company actually has the products, experience and capital to deliver truly game-changing, low-emission and zero-emission vehicles.
Take Volkswagen’s XL1, for instance. This is a two-seat plug-in hybrid that was initially shown to deliver 261 miles per gallon. With a two-cylinder diesel engine and extensive use of carbon fiber in the body, the 2.6 gallon fuel tank would deliver a driving range of about 340 miles.
To put that in perspective, you could drive from Philadelphia to Boston on a single tank of gas – which would cost you about six bucks.
Volkswagen put the XL1 into limited production in Europe – mostly just to test the waters, as the retail price would be quite high. About $150,000. For a two-seater, that’s probably not going to fly.
But consider this …
Imagine what $15 billion in research and development could’ve bought this project? Instead of blowing that kind of cash on fines because management was incapable of operating in an honest capacity, it could’ve developed the XL1 project into something that could actually be a viable product offering.
Hell, Tesla (NASDAQ: TSLA) did it, and with a lot less than Volkswagen has.
The old guard must go!
What happened with Volkswagen is just another example of the old guard of the auto world refusing to break free from the shackles of an outdated internal combustion engine.
Sure, Volkswagen has been working on the XL1 for years, and we know that the company is now offering its e-Golf, which delivers about 80 miles of all-electric range on a single charge, but you know they can do better. To suggest otherwise would be naïve.
Tesla, GM (NYSE: GM) and Nissan (OTCBB: NSANY) will be delivering electric vehicles delivering 200 miles on a single charge over the next couple of years – all of which will be priced between $30,000 to $35,000.
Volkswagen? Well, they’ll be licking their wounds from this nightmare for years to come.
If the new CEO of Volkswagen is smart (because there’s no way this other guy’s going to be able to keep his job after this), he or she would be wise to quit dicking around with mediocrity, and get in the game by upping the ante on a real and viable electric vehicle offering. Because mark my words, the days of internal combustion are numbered, and any car maker that’s not making the appropriate adjustments now will be on the chopping block in another ten years.
Volkswagen has been around since 1937. That’s nearly 80 years. But whether or not it’ll be around for another 80 depends on how committed the company is to embracing the future, instead of running from it.