Thomas Schäfer is Volkswagen brand CEO and head of the brand's core group (including Skoda, Seat and Cupra). He joins The Independent in Volkswagen's latest new car, the VW Tayron, to discuss everything from the Chinese challenge to the restructure of the Volkswagen business and the role of plug-in hybrids in the transition to electrification. And his passion for a certain British rock band...Watch more from Drive Smart on Independent TV.
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00:00Volkswagen is changing. It has had to. From scandals to an underwhelming response to its EVs, plus the need to restructure the business.
00:09What is Britain's favourite car brand has had some tough times recently.
00:14But the man whose job it is to change that is Thomas Schaeffer.
00:18And we've been given an exclusive opportunity to take him for a drive and ask him absolutely anything.
00:31Thomas, thank you very much for letting me be your chauffeur this morning. Very grateful.
00:36Tell me about this car. Firstly, is it Tayron or Tayron?
00:40We call it Tayron. It is the successor of the Tiguan Allspace.
00:44We used to have the Tiguan and the Tiguan Allspace with the seven seats.
00:47This car is not an extended Tiguan. It's a proper developed new vehicle on its own platform.
00:54So it comes with five or seven seats, front wheel or rear wheel drive. It sits between the Tiguan and the Touareg.
01:02And it has plenty of drivetrains from efficient petrol and diesel engines to mild hybrid to plug-in hybrid.
01:10100 and 130 kilometre range. So very efficient.
01:13And this is the plug-in hybrid version?
01:16It's the plug-in hybrid with 130 kilometre range.
01:18How important is a plug-in hybrid to you and your customers at the moment?
01:23Very important actually. And it's gaining momentum.
01:25It is a brilliant transitional technology that on the way to electrify.
01:30Certain countries are going slower, some faster in electrification.
01:34The sort of final point is clear. The question is how quickly do we get there.
01:38And such technologies now, this one with like 130 kilometre range, fast charging.
01:44So it's a brilliant technology that you can use for every day.
01:48But you can also use it for long distances.
01:51And most people don't do anywhere near that sort of mileage anyway.
01:54No.
01:55Each day.
01:56No, no. It's exactly true.
01:57We drove from the airport to here yesterday, full electric.
02:01We don't even realise we've driven electric.
02:04So it's a brilliant technology for the transition.
02:08In the next 10 years we'll at least see this transition happening.
02:11We've had a lot of conversations over the years about electrification and the importance of this sort of technology.
02:17But talking about electrification as a whole, with hindsight do you think you went too fast too soon?
02:23No, I don't think so.
02:24Look, we have countries in Europe that are moving a lot faster than the others.
02:30And some areas that are lagging behind.
02:32And some are somewhere in the middle.
02:34So you have to stay on par with the technology.
02:38You have to do these important leaps in development to stay in the game.
02:43You cannot just wait back and see what's happening.
02:46So we needed to invest in electric mobility.
02:49We did that.
02:50We learned a lot, obviously, also in software-defined vehicles and battery technology in itself.
02:56It was necessary.
02:57And now we have brilliant ICE vehicles, combustion engine vehicles that we have in the market.
03:05They will last us in this transition.
03:07But you also have the next generation of electric cars on the horizon with the SSP.
03:12And have you started putting more emphasis, development-wise as well, on internal combustion engine and plug-in hybrid vehicles because of the way the market is?
03:20Every year we've got our planning round.
03:22We call it where we look at the portfolio the next 5 or 10 years.
03:25And then we do adjustments as the markets develop.
03:29These global developments that you see, China, America, geopolitically, what's Europe's position within Europe, policy, and so on.
03:37So we're trying to adjust this as best as we can from a financial perspective but also from a policy so that it all fits together.
03:44It's challenging, but I think we have made a good plan.
03:47We put some more into electrification, hybrids.
03:51But quite confident that what we have now as a portfolio serves everybody.
03:57And why should people go electric?
03:59It's convenient.
04:01Most people don't drive more than 100 km per day.
04:05If you have your charger at home, you've got your solar system at home.
04:09Most people have that nowadays.
04:11It even works in Ireland.
04:13Plug it in at home, you never go charging again.
04:15The technology is brilliant.
04:17The convenience of driving.
04:19It's fun to drive.
04:20I'm not going to go back.
04:21That's the feeling of a lot of people when they buy plug-in hybrids.
04:24They think, why don't I just buy electric?
04:27The problem part with the plug-in hybrid is that you have two technologies in one vehicle, which makes it usually expensive.
04:33But again, for the transition, it's definitely the right technology to go.
04:37Governments are pushing people towards electrification.
04:40They're certainly pushing you guys towards electrification.
04:44What do they need to do more?
04:46Is it just about incentives?
04:47Is it about messaging?
04:49What do you want to see from government to make people accept electric and buy electric?
04:54It's probably a multitude of measures that we need to get into electrification.
05:00From policy to the positive image of it going forward.
05:06It's not always about, you must do this, you must do that.
05:09It's supported.
05:10The center point is the cost of electricity.
05:14The real reason why China is going so fast in electrification is electricity is cheap.
05:20People prefer to drive electric over a combustion engine.
05:25It's much more efficient than going and filling your car with petrol.
05:29In most European and also UK countries, electricity is still too expensive.
05:36We need it cheaper to accelerate the movement here.
05:39Then comes support in stuff like purchase benefits, bonuses, incentives of that sort.
05:47First and foremost, it's cost of electricity.
05:50In the UK, we have the Zero Emissions Vehicles, ADV mandate.
05:53There are similar legislative conditions across Europe.
05:56Do those conditions need to be relaxed slightly?
05:59Are the governments pushing too hard, do you think?
06:02I think we rather need the right framework to really get the acceleration of electrification going.
06:09At the moment, the take-up rate is not high enough to match the targets and the adoption rate.
06:16We need to accelerate this rather than penalize it going forward.
06:21There's a number of challenges that you face.
06:23I'm going to talk about products and the stuff you're building in a minute.
06:26Let's talk about the challenges because you've got a really tough time at the moment.
06:31Let's talk about the home market, particularly in Germany.
06:34You're sorted in terms of what's happening with the plants now.
06:38You're not shutting any plants. You're repurposing plants. Is that right?
06:41Correct.
06:42Other challenges that you face in particular, we have Mr. Trump with tariffs.
06:47How much of a headache is that for you and your business?
06:50Automotive industry is a global industry.
06:53Any kind of tariffs, closing supply chains, and so on, is always not great for business.
07:02For us, we are not a major importer of Volkswagen brand into the U.S.
07:07We are highly localized in our factory in Chattanooga.
07:10We have major factories in Mexico, battery factory in Canada.
07:15We are in North America.
07:16I still think that most of the discussions that are happening at the moment will hopefully end in an amicable solution.
07:27It always has.
07:28We have worked with the previous administration.
07:30We'll work with this administration.
07:32For us, we are working with what we see at the moment.
07:37You've said the same in tariffs in terms of China.
07:40You want free trade.
07:42I want free trade.
07:43Tariffs into Europe helps nobody.
07:46It gives you a false sense of safety and security.
07:49We need to be competitive.
07:50That's what we worked on last year specifically.
07:52The brand needs to be competitive.
07:54Tariffs will only make everything more expensive.
07:57It's not going to help.
07:58How much of a concern is the slowdown in China at the moment?
08:02It's still growing, but the rate of growth of sales is much slower.
08:06Yes, but it's still the biggest car market in the world.
08:09We're doing comparatively well.
08:12We are renewing our In China for China strategy with Volkswagen.
08:15We are now with partnerships with new models lined up and so on.
08:20I think we are putting the future plan well together.
08:23In the combustion engine space, we are gaining market share quite nicely.
08:27China needs to be watched, but at the moment, the plan that we put in motion is the right one.
08:33We put it in time together.
08:35One of the things we've spoken about in the past, and I really like,
08:38is your honesty around the product and the fact that some of the product,
08:43I'll use my words rather than yours, just hasn't been good enough in a number of different ways.
08:49When are we going to see the first Schaefer Volkswagen?
08:54This car is much improved, and I see areas that you've mentioned in the past.
08:58Buttons on the steering wheel, hooray!
09:00Things like that, but when do we see the first real Schaefer?
09:04And Schaefer's team Volkswagen?
09:06Most stuff we already see now on the roads.
09:09We have reworked features, we have a button on the steering wheel,
09:12stuff like that to get the car, the user experience of the vehicles right.
09:16We worked on quality, on software stability, so that's all there.
09:19The first car that will be the series version of the ID.2.
09:24When will we see ID.2?
09:26We'll do a cover drive to the media at the end of the year,
09:30and then we'll present the vehicle to the world public at the beginning of next year.
09:34And you've also committed to, shall we call it ID.1, a €20,000 car?
09:40Yeah, so there was now a very long debate whether we should go into that territory.
09:46It's obviously a challenge to get that car in quality, in performance, into that price bracket.
09:54We've been fighting for this, now we've decided we're going to go for it.
09:58We'll show the first glimpse next week to the public.
10:03It's a show car, but it shows the direction, and it'll come in 2017.
10:08Another thing we've spoken about quite often is your naming strategy.
10:11How are you getting on with that?
10:13What happens to those iconic names, Polo 50 years?
10:18Polo 50 years is a great story, this year.
10:22Polo is now, the main factory is now in South Africa.
10:26An iconic car for the world, so we'll probably do something in South Africa around the Polo anniversary.
10:33The naming, just got to be a little bit more patient.
10:36It's coming just now.
10:38We're reviewing how we can bring our naming into the future.
10:43But a little bit more patience, if I may ask.
10:46What does Volkswagen really stand for in terms of summing up what the brand means
10:51in a market that is ever more competitive, with ever more challenges?
10:56In a few words, what does the Volkswagen brand mean to people, to buyers?
11:01Volkswagen is probably one of the only global iconic brands that everybody has a story with.
11:07People grew up with Volkswagen in one way or the other.
11:10Everybody can tell a story with Volkswagen.
11:12You're part of people's lives, so it's achievable.
11:16But in the same sense, it's value, it's stability, quality, safety.
11:22We've always been, not the funkiest in a necessary sense, or not the cheapest,
11:29but we've always been in the middle of society, but also from a positioning,
11:34with great quality that lasts you a long while and carries you through your life.
11:40That has to be brought into the future now,
11:43no matter what the propulsion system is, whether it's electric or a combustion engine.
11:48Everyone's got a Volkswagen story.
11:50Yeah, it's amazing. As you know, I've lived around the world in so many places.
11:56I can surely say that the love that people have for this brand is unique.
12:02Yeah, it's very different.
12:04The main part we've been working on is to position the brand correctly.
12:08Volkswagen needs to be the technologically leading volume brand.
12:11We always have to lead in functions, features, but also in stability and quality.
12:18We've made a clear plan from now until 2030.
12:22Now it's the phase where we get our basics right, the foundation.
12:28It's the advance phase, where we advance along the line.
12:32We get the portfolio, the lineup, then.
12:35And the attack phase, nine new EVs coming in until 2027.
12:41And then make sure that this gets executed until 2030.
12:46By then, we've got software-defined vehicles.
12:49What is your view of a software-defined vehicle?
12:52Is it simply a car built around a computer, rather than a computer being put into a car?
12:57The main point of it is, in the past, you were thinking of a nice body shape,
13:03and then you use one of the engines that you had in your portfolio and put it in there.
13:07In the future, the electronic architecture of the software is a leading point,
13:12and you have sort of upgrades from one version to the next version.
13:16And that really defines what kind of car you put on it.
13:19So it's not you think of a body shape, and then you put an engine in.
13:24It's the other way around.
13:25You must make sure that you have a functioning electronic architecture,
13:29that you then put a couple of vehicles on top.
13:33So that's the only magic in it.
13:35I know there was a big debate about it, but software is becoming a leading factor in anything we do.
13:41And a differentiator?
13:42And very much a differentiator.
13:44Because if you think it from the customer, what does a customer need,
13:47which we will show now with the ID1, ID everyone that we show the show car,
13:53it is thought from a customer point of view.
13:55We spend a lot of time on thinking, you know,
13:59how does a customer look like a pizza service, a nursing service?
14:04How do a young person see a car like this and an old person?
14:08And then you think it through, what kind of features do you need?
14:10What kind of support systems do you need?
14:12And it's quite enlightening when you go through it from a customer's perspective.
14:17So we spend a lot of time on that, and I think in the future,
14:19that will become a more and more differentiating factor.
14:21I have two very quick questions for you now, Thomas.
14:24Now, clearly we are in a car.
14:26There's a good audio system in this car, Harman Kardon.
14:30I'm not going to ask you to sing.
14:32You can if you want.
14:33But if you were listening to some music in here,
14:35what would be your choice of music to set you up for the day?
14:39To set me up for the day?
14:40Probably listen to Queen.
14:42Queen?
14:43Yeah, I love Queen.
14:44Which track?
14:45Oh, like, you know, Under Pressure, for example.
14:46Okay.
14:47So quite apt, perhaps.
14:49And my second question, now, I will mark this car out of 10.
14:53I've been very privileged to be your chauffeur,
14:56but you've got to mark me out of 10 as well.
14:58So how's my driving on these particularly narrow southern France roads?
15:04Considering that you are driving, what you say, on the wrong side,
15:08I say we're on the right side.
15:10But anyway, you're driving, actually, quite well.
15:12Marks out of 10.
15:14I'll give you, I'd say, a solid eight.
15:17Okay.
15:19Solid eight I'll take.
15:20Okay.
15:21Thomas.
15:24Thomas, thank you very much.
15:25Pleasure.
15:26I really appreciate your time.
15:27Good to see you, as always.
15:28Cool.