Volkswagen begins transition to a mobility company

German carmaker Volkswagen has talked about its strategy to realign itself around electric mobility, through a combination of manufacturing shifts and canny acquisitions – its story holds lessons for all auto brands contemplating their futures.

Why it matters

In the face of climate crisis, the traditional, internal combustion-driven auto industry is collectively under pressure to clean up its act while shoring up its future.

Few companies have been called out and re-shaped quite like Volkswagen in the wake of the 2015 emissions scandal. VW used the crisis as a boost into an electric future and now it is taking significant steps toward a future of bringing ‘mobility’ under one brand.

What’s happening

Electric vehicles (EVs) are difficult to make, requiring a totally different set of skills to put together than traditional cars. But Volkswagen wants to democratise EVs, meaning that it has needed to work out how to build its own batteries in order to sufficiently reduce costs. Here, it is making progress, and plans six large battery factories in Europe by 2030.

Mobility services, meanwhile, have proved similarly tough: ridepooling service Moia, which launched in London, now only runs in Hamburg and Hanover ; car-sharing service Quicar soon closed; and electric car-sharing service WeShare is Berlin-only. The path to alternative ways of accessing mobility has not been smooth, let alone profitable.

Now, however, the company is setting its sights on a less techy, but ultimately more trusted business: car rental service Europcar.

“Europcar provides advanced fleet management capabilities as well as a broad network of stations at major airports, railway stations and city locations and will help accelerate Volkswagen’s delivery of its ambitious mobility services targets,” explained Volkswagen CEO Herbert Diess in late July.

In raw numbers, that’s a presence in 140 countries, and a fleet of 350,000 vehicles. Demand is also more stable, and can be tapped without the need for an expensive and difficult new brand launch.

Because ultimately, the aim of the game is a scale from which Volkswagen can build itself into a platform, not only in the much-talked about digital experience side of things, though creating something consistent and useful across owned and accessed vehicles will be crucial. But that experience will likely be as fundamental as the experience of using the VW charging network to top up a VW-made car battery.

What this all points to is that besides brand, experience across physical and digital products will now come under intense scrutiny as car companies must now sustain an ongoing relationships with customers in their ecosystem. The quick sale is likely to be a relic of the past in a networked, electric world.

Sourced from WARC, WSJ, Reuters, Volkswagen. Image: Volkswagen