Herbert Diess, VW’s chief executive, made electric cars the theme of his Bloomberg interview today from the World Economic Forum in Davos, Switzerland.

Diess heaped praise on Tesla as leading the way on EVs and car connectivity. But he emphasized Volkswagen’s giant scale as the means to one day become the world leader for electric cars. He said the transition to EVs is still “an open race.”

Diess ceded EV leadership to Tesla, at least for the time being.

I think Tesla is paving the way. It’s modeling something new for the industry. I think we are close to follow. We are quite optimistic that we can keep the pace with Tesla and probably at some stage overtake.

Diess was asked about how Tesla was able to surpass Volkswagen in market valuation, despite concerns about profitability.

The market valuation tells you something about the future and future expectations. Tesla has a product that describes the future of the auto industry — a fully connected, electric car.

When challenged about the battle between legacy automakers and tech companies for the future of the auto industry, Diess said he would “take Tesla more seriously than Google.” But he added, “There are very competitive companies like Toyota.”

The company which adapts fastest and is the most innovative, but also which has enough scale in the new world, will make that race.

The Bloomberg interviewers posited that gas-powered cars will dominate for the long-term future. Diess immediately disagreed.

No, the future will be electric in the passenger car world for sure. That’s pretty clear now. This train is moving. It’s gaining speed and getting momentum. We are preparing for this world. We will see a car that is emission-free basically.

Volkswagen's EV lineup

Volkswagen’s EV lineup

While in Davos, Diess met with Donald Trump to discuss the state of the auto industry, trade tariffs, and investment in US manufacturing. Diess said the meeting was “positive.”

It’s very difficult to read President Trump, but he stated that he’s still not happy with Europe. We’re doing what we can to avoid tariffs.

We just had the ground-breaking of our plant in Chattanooga to double up capacity. We will soon put all the machinery there for the production of a new electric vehicle for the United States. We are investing in battery capacity in the States. So we’re doing what we can to avoid tariffs.

He said that in addition to “heavily investing in EV battery cells,” VW is ramping up its software capability and buying companies. He said that the automobile is “the most precious and still prestigious and innovative internet device.” On that front, Diess again pointed to Tesla. “It’s something we need to learn, but Tesla is quite advanced already.”

Diess believes this year will be critical for the future of electric vehicles both in terms of investments, execution, and meeting regulation.

2020 will be a breakthrough for electric cars because legislation is demanding a percentage of electric cars in Europe and China, and later in the United States. 2020 and 2021 should be decisive years.

We have to make sure that our electric vehicles make their way. We are well-prepared and optimistic.

Electrek’s Take

It was refreshing to hear Diess’ relatively humble tone and respectful position to Tesla. Gone are the days when VW assumed that it will automatically lead on EVs, like when it promised in 2013 to be the biggest electric-car maker by 2018. VW is now saying that it needs to catch up with Tesla and that “possibly, at some stage,” it could surpass them.

Bloomberg challenged Diess on the high cost of going electric and otherwise reaching its goal to be carbon-neutral by mid-century. He said no. “The future is electric.” He added, “Renewable energy is already as cheap as carbon-based energy.”

We will continue to hear the right rhetoric from VW about its EV plans. But the question remains: Will Volkswagen deliver? We will start to get an answer this year.

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