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Upcoming Hybrids First Play in VW's Electrification Strategy

Executive Summary

A once-hesitant Volkswagen Group, more diesel-engine than electric-vehicle advocate, is beginning to embrace hybrids and pure EVs in a big way. Although it will continue to push for broader acceptance of diesel and explore other alternative powertrains as a solution to higher mileage and lower carbon-dioxide emissions, its strategy for vehicle electrification is on the verge of fruition. A handful

A once-hesitant Volkswagen Group, more diesel-engine than electric-vehicle advocate, is beginning to embrace hybrids and pure EVs in a big way.

Although it will continue to push for broader acceptance of diesel and explore other alternative powertrains as a solution to higher mileage and lower carbon-dioxide emissions, its strategy for vehicle electrification is on the verge of fruition.

A handful of full hybrids — initially utilizing two generations of technology — are set to debut over the next year, with the first pure-electric vehicles due in 2012.

VW officials say the auto maker will tap outside suppliers for advanced battery cells, but will keep packaging, energy management, safety and systems integration as core in-house technologies.

And while the auto maker will continue to offer micro-hybrids that rely on simple stop/start technology in some markets, VW will not produce any mild-hybrid vehicles similar to the Honda Insight that add boost from electric motors but can't run solely on battery power.

“We will make no mild versions,” declares Michael Dick, Audi AG executive board member-technical development. “Because that's not a version that works in terms of (limiting carbon dioxide). Direct-injection engines with gas or diesel can make better progress (than a mild hybrid) in terms of efficiency under all conditions.”

Driving VW and its assorted brands in the battery-power direction is growing financial support from governments around the world, each eager to corner the market on at least a piece of the technical expertise and infrastructure emerging for battery-powered vehicles.

In addition, VW is on a mission to leapfrog Toyota Motor Corp. and General Motors Co. to become the world's No.1 auto maker by 2018. With Toyota's leadership in hybrids and GM banking a bundle in reputation on its upcoming Volt extended-range EV, establishing a solid beachhead in the electrification sector may be critical to achieving that goal.

Among the first hybrids on the way are the Audi Q5 (slated to bow in early 2011), Volkswagen Toureg and Porsche Cayenne.

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