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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Growing EV demand concern to forcing automakers to scale bank production,

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Speaker 2: with some making a pivot to hybrid vehicles in China.

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Speaker 2: Shares with BYD falling in Hong Kong trading after the

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Speaker 2: EV makers earnings missed estimates amid aggressive price cuts. Competitor

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Speaker 2: to Volkswagen saying GET expects to fall behind in China.

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Speaker 2: Quote along with our value over volume growth strategy, we

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Speaker 2: are deliberately prepared to give up market share in order

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Speaker 2: to find a sound compromise between margins and volume. For more.

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Speaker 2: Pablo de c, Volkswagen Group of America President and CEO,

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Speaker 2: joined us now. Pablo, good to see you, Good morning,

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Speaker 2: Thank you for coming into the studio. I know it's

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Speaker 2: an important couple of days for you and the team

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Speaker 2: here in New York City. I just want to reflect

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Speaker 2: on the events of yesterday in Baltimore, important hub for

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Speaker 2: auto makers. Can you walk us through the potential disruptions

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Speaker 2: for you, the team, and the company.

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Speaker 3: Yeah. First of all, regarding yesterday, our hard goes to

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Speaker 3: the families. Yeah, it's quite unfortunately everybody's putting birth. Looking

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Speaker 3: at this from a business point of view, we are

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Speaker 3: on the side of the sea level, so you know

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Speaker 3: when the ships come into Baltimore, we're not going to

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Speaker 3: be affected by this event. Obviously we're going to get

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Speaker 3: some disruption because of the trucks, but it's not going

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Speaker 3: to be a disruptive as other automakers.

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Speaker 2: Supply certainly has been the problem in this industry. Unfortunately,

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Speaker 2: it's been demand. Can you walk us through way seeing

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Speaker 2: things wasteeing, things strengthened, and whether you're able to lean

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Speaker 2: into what's handing with hybrids and the demand for it

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Speaker 2: in America.

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Speaker 3: Absolutely, So let me start talking about the industry February today.

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Speaker 3: The demand is very strong as an industry. The North

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Speaker 3: American market, which is Canada, US and Mexico, grew eight

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Speaker 3: percent februyear to date versus last year, and we grew

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Speaker 3: twenty one percent, so we're tripling the growth of the market.

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Speaker 3: But still eight percent is quite strong and what we're

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Speaker 3: seeing the data from March is still strong. Having said that,

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Speaker 3: the TV has flattened, the curb remains around seven and

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Speaker 3: a half eight percent of the tour industry. But we

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Speaker 3: as BW, we still have twelve percent of ourselves are

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Speaker 3: in the ID four in the electric vehicle space, so

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Speaker 3: we're still having higher growth than the average market.

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Speaker 4: Do you expect to ramp it up though more slowly

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Speaker 4: and maybe put a greater emphasis on hybrids. Are you

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Speaker 4: starting to sort of sow the seeds for that right now,

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Speaker 4: because you have a couple of years or potentially months

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Speaker 4: to really get that up and running.

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Speaker 3: Yeah. So our factory is highly localized in the US,

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Speaker 3: and we have both combustion engines and electric vehicles in

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Speaker 3: Chattanooga in Tennessee, and we're the only point automaker that

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Speaker 3: qualifies for the seven five hundred dollars credit for the consumer,

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Speaker 3: which means that we're localized within the region, So that

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Speaker 3: gives us our flexibility going forward. I think the pace

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Speaker 3: of growth will be slower, but we still grow in

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Speaker 3: the EV space. Other power trends will be a good

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Speaker 3: alternative for the consumers, so the consumers will be able

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Speaker 3: to choose electric vehicles, planning hybrids, hybrids and combustion engines.

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Speaker 4: How important was that subsidy to you to not only

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Speaker 4: build a factory but also just in terms of your

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Speaker 4: decision of the product mix to sell well?

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Speaker 3: First, I think the iled Inflation Reacting Act is a

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Speaker 3: great piece of legislation for the US because it's transforming

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Speaker 3: the industrial base of the US. So you see all

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Speaker 3: these new factories and battery factories being built in the

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Speaker 3: US over the next three or four years. So the

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Speaker 3: benefit is not only for us, but also for the

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Speaker 3: consumer by the fact that we're localizing and we're bringing

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Speaker 3: all the jobs of Bozagen and also the suppliers. You know,

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Speaker 3: we create an ecosystem that provides more jobs here, and

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Speaker 3: then the consumer gets a seven thousand, five hundred dollars credit.

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Speaker 1: If Trump were to come back in power, though, he

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Speaker 1: can rewrite those Treasury laws which makes a subsidy, which

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Speaker 1: could make the subsidy basically impossible to get. How are

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Speaker 1: you thinking about that kind of impact when all this

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Speaker 1: money has been put towards the evening market.

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Speaker 3: Yeah, so we have a long term vision on these topics.

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Speaker 3: I mean, we know that and we believe where we

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Speaker 3: mean committed to the eb strategy in the long term,

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Speaker 3: and the pace will depend on the consumer. Now, is

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Speaker 3: it possible that the rules will change. It's possible, but

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Speaker 3: he would need a vast majority in the Congress and

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Speaker 3: the Senate to change his laws. And also when you

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Speaker 3: look at the map where all the factories have been built.

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Speaker 3: They're not built only in states that are Democratic or Republican,

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Speaker 3: and they're being built all over the US. I think

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Speaker 3: in the interest of jobs and growth in technology, I

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Speaker 3: think it would be wise to maintain this long term vision.

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Speaker 2: Do you think it would be wise to wait until

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Speaker 2: after the election before you make decisions about your manufacturing

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Speaker 2: footprint in this country?

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Speaker 3: I don't think so, And I'll give you an example.

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Speaker 3: And this are not only words. We decided to localize

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Speaker 3: the ID four way before the Inflection Reaction Act, which

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Speaker 3: goes back to your question. Right, So, we believe so

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Speaker 3: much in the transition to elective vehicles and in localizing

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Speaker 3: our footprint in the US that we made decisions before

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Speaker 3: and after that we're going to continue to localize.

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Speaker 2: Want to push over the last year or so by

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Speaker 2: this President, by this White House is to push and

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Speaker 2: support union workers. You mentioned Chattanooga at the plant, there's

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Speaker 2: going to be a vote on whether the workers join

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Speaker 2: UW that specific union. Can you walk us through what

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Speaker 2: that could do to your cost space?

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Speaker 3: Now, first of all, we respect the freedom of our

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Speaker 3: workers to choose how they're represented. Having said that, We're

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Speaker 3: constantly talking to our workers on how to improve the

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Speaker 3: working conditions, the salaries and the benefits. It would be

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Speaker 3: up to them how they want to be represented in

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Speaker 3: the future. So will respect now and.

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Speaker 2: The cost space. You just assume that it would increase off

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Speaker 2: the bank of that.

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Speaker 3: I'm not so sure. I mean, we have a very

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Speaker 3: competitive cost space, competitive in terms of the employees. We

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Speaker 3: have wages around twenty three dollars an hour which are

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Speaker 3: compatible to Michigan with the lower costs of living. So

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Speaker 3: we will see Pablo.

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Speaker 2: Thank you, sir. Hopefully we can catch up again soon.

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Speaker 2: I appreciate your.

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Speaker 3: Time, thanks for the invitation, See you next time.

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Speaker 2: Play the VW North America CEO