VW goal: 1 million electrified vehicles by 2025

WOLFSBURG, Germany -- Volkswagen Group expects it will have to sell about 1 million battery electric and plug-in hybrid vehicles a year worldwide by 2025 to fulfill increasingly strict carbon dioxide emission limits in major markets.

"It's simple -- the CO2 legislation in the various regions will mean every OEM is compelled to offer e-mobility," said Thomas Lieber, VW brand's head of complete vehicle development for electrified cars.

The 1 million figure is extrapolated upward to meet CO2 targets that VW Group expects to have in 2025, he said, "for example through draft legislation in China."

Currently VW Group offers three electric cars in the VW e-Up, e-Golf and Audi R8 e-tron, as well as six plug-in hybrids: the VW Golf GTE, Passat GTE, Audi A3 Sportback e-tron, Q7 e-tron quattro, Porsche Panamera S E-Hybrid and Cayenne S E-Hybrid.

By 2020, the automaker wants to expand the range with 20 new electric and plug-in hybrid cars including two Tesla fighters -- Porsche's Mission E electric car and the Audi e-tron quattro, the brand's first mass production EV.

VW Group's sales of EVs and plug-in hybrids are small. VW brand expects to build about 12,100 e-Golfs and 13,400 Golf GTEs this year. Including the e-Up that launched in 2013 and the most recent addition, the Passat GTE, total cumulative volumes of all VW brand electrified cars since the start of their respective production is expected to be about 103,000 by year end.

By comparison, Toyota last year sold 75,400 Prius plug-in hybrids, the automaker's only plug-in hybrid, while Renault-Nissan sold 85,000 electric vehicles worldwide.

To reduce costs, production of the e-Golf and Golf GTE is integrated into the brand's manufacturing lines in Wolfsburg. They are assembled bumper-to-bumper with four Golf-derived models, including the Tiguan crossover and Touran minivan. Only about one hour of additional work goes in to producing the cars, an increase of about 5 percent over conventionally powered Golfs. Executives say this gives VW flexibility to increase supply of the e-Golf or Golf GTE if demand increases substantially. 

BMW took a different approach to build its electrified cars sold under the i subbrand, investing heavily to give its i3 electric car its own dedicated assembly in its factory in Leipzig, Germany, with heavy fixed costs and current underutilization. Sales of the i3 city electric car and i8 plug-in hybrid sports car dropped 23 percent to 5,100 units through March. 

VW could build as many as 75,000 battery electric and plug-in hybrids a year if demand rises and potentially many more, VW brand production chief Thomas Ulbrich told reporters at a press event in Wolfsburg. VW could quickly double the capacity in its three European plants that build EVs, he said. 

While designed to be more affordable to manufacture, VW's EVs such as the e-Golf have a disadvantage because they are a compromise. For example, the e-Golf's big and heavy 705-pound lithium ion battery pack is molded to fit the shape of a conventional drivetrain, which engineers admit is not ideal. 

VW said in October that it will develop a modular architecture for battery electric cars, called the MEB. The standardized system will be designed for all body structures and vehicle types and will allow the company to build emotionally appealing EVs with a range of up to 310 miles, VW said.