Volkswagen’s Priority List Starts With Pair of SUVs and Electric ID 4

Scott Keogh has a lot of product to prioritize. The CEO of the Volkswagen Group of America still wants a pickup truck, the electric dune buggy, and Microbus, but first he must concentrate on more immediate and crucial product launches to best use limited resources.

Keogh talked to MotorTrend in Chattanooga, where the new 2020 Atlas Cross Sport rolled off the line. It is the two-row version of the seven-passenger Atlas midsize SUV and gives Volkswagen a second entry in a 2.2-million-unit segment, of which 45 percent of sales are five-passenger crossovers.

The Atlas Cross Sport goes on sale in the spring of 2020. Keogh recognizes VW may be a bit late to this party but Tiguan is now the top seller in the U.S., the Atlas continues to increase sales, and Keogh sees opportunity with the Atlas Cross Sport as the brand reduces its reliance on cars. In 2016, only 14 percent of VW’s U.S. sales were SUVs; today utility vehicles account for 52 percent of sales and the Atlas alone has increased the average transaction price of a VW by $4,000, so it is good business.

The doubling down strategy in key areas will continue in the compact crossover segment. The Tiguan is on the large side and VW sees room for a second, smaller entry. The smaller crossover will be made at the Puebla, Mexico, plant and will go on sale in early 2021.

It will get a distinct name, Keogh says, so don’t expect a Tiguan Cross Sport. And it will be an American-market name which rules out T-Cross, the small crossover for sale in Europe. China and Brazil.

Meanwhile, the CEO is working on the proposal and business plan for a VW pickup for North America which must then be sent to the supervisory board for approval. Nothing has been sent to the board yet, Keogh says.

He has a lot of choices: he could slap a bed on the Atlas as VW did with the Tanoak concept but the challenge is creating an affordable pickup on a more expensive vehicle platform. There is the option to use the partnership with Ford to make a pickup on the next-generation Ranger platform. And there is the Tarok concept, a small car-based pickup that has a market in South America but would create a new segment in the U.S.

The first electric vehicle for North America will be the ID 4, based on the ID Crozz concept, which is larger than the Golf-sized ID 3 hatch slated for Europe (pictured above) and will have more power and range. The ID 4 will be revealed at an event in February (not an auto show) and will go on sale at the end of 2020.

Early models will be built at VW’s Zwickau, Germany, plant that is dedicated to building electric vehicles. But there will soon be a groundbreaking for the $800 addition of a new EV assembly line in Chattanooga to start building the ID 4 locally in 2022, alongside the Atlas, Atlas Cross Sport, and Passat that are currently being built in Tennessee. A new Passat goes on sale early next year.

At this point, the ID 4 is the only electric vehicle planned for production in Tennessee but the MEB (modular electric drive) platform will spawn other models for this market. “Once we have the platform we can add in the future,” Keogh said, but for now the plan is to assemble just one model.

The electric Microbus is expected in 2022. And there is a lot of interest in the ID Buggy, a cool electric dune buggy with no roof or doors that Volkswagen AG Chairman Herbert Diess wants to put into production. Early talks with German startup e-Go Mobile led to a Memorandum of Understanding for contract manufacturing but a contract has not yet been signed to get production started. Keogh said the buggy got a positive reaction at Pebble Beach this year and it is a cool brand opportunity but he needs to look at pricing, volume, and variations and the low-volume buggy is lower on the priority list.

Work has begun on the next-generation Atlas and that includes discussions of whether to electrify it. The additional cost and weight of a pure electric three-row vehicle might not make sense. A plug-in hybrid is likely the way VW would go with Atlas if the decision is made to add motors and batteries, Keogh said.

VW is also deciding whether to add battery assembly to the Chattanooga complex or have the battery packs come from a nearby supplier.