Volkswagen has revealed plans to cut 30,000 jobs as it finally turns its attention to electric cars. But is it too late?
VW “will have to invest billions in new electric cars and digital services”, said Herbert Diess, chief executive of the VW brand, but added: "up to this very day, Volkswagen was not prepared for that.”
Here is a question for you to ponder. Why? Why was it not prepared for that?
It is planning to invest 3.5 billion euros in new technologies but has had to set aside 18.2 billion euros for diesel emission related fines and other associated costs.
So that's 3.5 billion to safeguard the future, more than five times that much to right past wrongs.
The company reckons it can save between 1.5 and two billion euros from the cost cutting.
But why wasn't it preparing for an electric car future two, or more, years ago?
Okay, back in early 2015, it didn't know it was going to be rocked by an emissions scandal, but it should have known about the rise of electric cars.
It is now predicting that by 2025, one-quarter of its cars will be electric.
But in early 2015, this company had a market cap in excess of $120 billion, more than double its market cap today. That was when, or ideally sooner, it should have been planning for the electric future.
In the age of autonomous cars, you will be able to fall asleep at the wheel and still be safe, but much of the auto industry has been asleep at the wheel regarding electric cars for many years.
Volkswagen is also planning a battery factory, how very Elon Musk of it.
But contrast VW with Tesla: market cap $28 billion, but then Tesla has raised over $4.6 billion since its 2010 IPO.
Critics accuse Tesla of being absurdly ambitious, but maybe Volkswagen could have done with some of that ambition years ago ,it's in real danger of being left behind in the technology stakes, just as those stakes are about to get interesting
This is why companies get disrupted by technology.