Next 5 to 10 years could be 'really tough' for our competitors, VW chief says

  • The transition towards the electrification of vehicles is a challenge for car industry and whoever manages it best will succeed, the CEO of German automaker Volkswagen Group told CNBC Tuesday.
  • VW has said it will spend 44 billion euros ($50 billion) on new plants, electric cars, autonomous driving and mobility services between 2019 and 2023.
  • It faces the potential threat of U.S. tariffs on European car imports.
The Audi Q4 e-tron concept is presented at the Geneva Motor Show on the first press day. The 89th Geneva Motor Show starts on 7 March and lasts until 17 March.
picture alliance | picture alliance | Getty Images
The Audi Q4 e-tron concept is presented at the Geneva Motor Show on the first press day. The 89th Geneva Motor Show starts on 7 March and lasts until 17 March.

The transition towards the electrification of vehicles is a challenge for car industry and whoever manages it best will succeed, the CEO of German automaker Volkswagen Group told CNBC Tuesday.

"We are really getting into a transition period of the automotive industry and, reading between the lines of all the communications our competitors are doing, it will be tough times because we have to invest in new technology, not only electric drive trends but autonomous driving, connectivity," Herbert Diess, chief executive of Volkswagen, told CNBC's Annette Weisbach at the Geneva Motor Show.

"So, this period of the next five to ten years will be very tough for all our competitors," he said, adding: "I think the company that manages this transition best will succeed."

Volkswagen showcased an all-electric dune buggy at the Swiss car show on Monday and announced last November that it will spend 44 billion euros ($50 billion) on new plants, electric cars, autonomous driving and mobility services between 2019 and 2023. VW has also said it is looking to partner with other manufacturers on electric vehicles in a bid to lower development and production costs.

Earlier this year, VW and Ford announced a plan to build commercial vans and medium-sized pickup trucks together as early as 2022. They also announced plans to work together on autonomous vehicle research.

VW Group is one of the world's largest automakers and comprises twelve brands including VW, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini and Porsche. In the last few years the company has had to deal with the fallout of the diesel emissions cheating scandal, and more recently has faced the threat of U.S. tariffs on European car imports and car parts. EU and U.S. officials are due to hold trade talks on Wednesday with Europe keen to avert the threat to its car industry. German-listed shares of Volkswagen have fallen 5 percent in the last six months reflecting investor concerns.

Diess said that all automakers were seeing their shares trading at a discount and said this was because of the transition taking place in the industry. Diess believed VW had the best chance of success in the transition towards electric vehicles but conceded that the group should be more efficient.

"We think we have the best story, we have to explain it probably a bit better maybe and for sure it's also about efficiency, we have still a lot of synergies in the group, it's big with all the different brands, but that takes time. But I think we're on the right way and I think once the market understands our story the share price will go up," he said.

Commenting on the threat of higher taxes on European car imports, Diess said VW had done everything it could to "convince the U.S. administration that we're really committed to investing further into the U.S."

"It is a critical situation for us," Diess said, "because mostly our premium brands here in Germany are depending on the import market of the U.S. So, Audi and Porsche have significant market share there so this is a threat," he said.

"We do what we can but at the end of the day it's a negotiation of tariffs which not only cover the automotive sector but also other entities so it's hard to predict what's the outcome," he said.