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Speaker 1: I'm joined now by Arno Antletz, Volkswagen Group CFO and Coo.

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Speaker 1: Volkswagen is home to portfolio brands of Audi, por Schlamborghini

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Speaker 1: and Bentley, and Bloomberg's Matt Miller is also here, back

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Speaker 1: from paternityly for one time only. Not by the way, Congratulations,

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Speaker 1: it's so good.

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Speaker 2: To have you.

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Speaker 3: Thank you very much. I'm I'm very happy to be

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Speaker 3: back and I'm happy to talk to Arno. I have

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Speaker 3: a long history with Folkswagen myself as a as a driver,

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Speaker 3: as a fan, and the brand here. I mean, I've

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Speaker 3: been to the factory in Chattanooga, I've been to Wolfsburg

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Speaker 3: obviously a lot in Germany as well, but the brand

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Speaker 3: here hasn't really picked up in a way I would

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Speaker 3: have expected with some of the new products you've had

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Speaker 3: in the past few years. How do you plan to

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Speaker 3: build a bigger presence in America?

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Speaker 2: No, thanks for having me here, and it's a great question.

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Speaker 2: Look where are we coming from. Looks, as you said,

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Speaker 2: have some of the broadest and most fascinating brand portfolios

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Speaker 2: in the industry, Porsche, Lamborghini, Bentley, volkswag Kukatti, Dukati as

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Speaker 2: well Dukati as well. We have a market leading position

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Speaker 2: in Europe, we have a strong position in China, but

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Speaker 2: yet we have only four percent in the US in

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Speaker 2: terms of market chair and five percent in North America.

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Speaker 2: So what's the reason. You need great products to be

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Speaker 2: successful locally, but you also need scale, and in the

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Speaker 2: combustion engine world, we never really had the scale, and

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Speaker 2: now the market is turning electric and this is a

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Speaker 2: great opportunity for us to grow. We have all ingredients

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Speaker 2: we need to grow successful. We have great products with

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Speaker 2: great heritage, we have the technology. We decided on a

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Speaker 2: local battery capacity in Canada Ontario, which will be very competitive.

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Speaker 2: We have the financial resources and the will, so this

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Speaker 2: is really our time to grow. And there's also an

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Speaker 2: addition to that, there's a once in a lifetime opportunity

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Speaker 2: with our new brand. I would say new brand Scout

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Speaker 2: to end one of the most promising segments in America

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Speaker 2: to see pick up with all electric car.

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Speaker 3: Can you give us any more details on that? I

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Speaker 3: mean International Harvester Scout. It's a very storied four by

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Speaker 3: four from the sixties and it's been away for a

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Speaker 3: long time now. Scott Keo, who run ran Audi and

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Speaker 3: Folks trackcking here in the US is taking over that project.

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Speaker 3: When are we going to see the first ones on

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Speaker 3: the road where you're gonna get your battery supply for that?

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Speaker 2: No, I mean as enthusiastic about the project as you.

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Speaker 2: Scout has a great heritage. It will be an all

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Speaker 2: electric pickup truck in the C pickup segment and also

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Speaker 2: B rocket suv. Actually I saw the designs just before Christmas.

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Speaker 2: They are great there. It's a really great, great car

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Speaker 2: with a lot of heritage, but also very very very modern.

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Speaker 2: It looks pretty similar to the to the richmal Scouts.

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Speaker 2: It will We will produce it in North America. We

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Speaker 2: will spend two billion dollars on investment. The capacity will

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Speaker 2: be about twenty one thousand a year in South Carolina,

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Speaker 2: and we get the better is from from Ontario, from

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Speaker 2: Canada going to buy them.

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Speaker 1: What has been so striking is the lack of real

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Speaker 1: pick up once you get the early adopters, like where

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Speaker 1: is all the demand?

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Speaker 2: No, No, you're quite right. We see some reluctance right

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Speaker 2: now in Europe kind perhaps also in the US. Early

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Speaker 2: adopt board already and now it's the next wave of customers,

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Speaker 2: and of course it depends on charging infrastructure. Is it

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Speaker 2: there is enough charging infrastructure. Of course, of pricing, we

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Speaker 2: had quite higher raw material prices, so prices for eb

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Speaker 2: so high. But we're convinced that in the long term

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Speaker 2: the market will be electric, and we have the great

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Speaker 2: baroque we will by twenty thirty we will have thirty

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Speaker 2: all electric costs in the US, a lot of them localized.

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Speaker 3: Well, I wonder about if you gave us more details

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Speaker 3: about the battery production, because I know power Co, which

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Speaker 3: is one of your investments in battery production, is breaking

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Speaker 3: ground on his first North American plant in Ontario. You

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Speaker 3: mentioned you'll get your batteries for the Scout there, but

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Speaker 3: Scout's supposed to come out before you'll be producing batteries there.

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Speaker 3: So where will the power come from?

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Speaker 2: No, No, Scout will be one of the first casts

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Speaker 2: who get the betteries from power Cord. There will be

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Speaker 2: a small there might be a small part where we

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Speaker 2: have to bridge some bettery supply from Europe, but Scout

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Speaker 2: will definitely be part of the customer group. And to

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Speaker 2: deliberate a little bit more in our strategy, as you mentioned, so,

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Speaker 2: we are convinced that having our own battery supply in

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Speaker 2: the company is very important, and this has really three pillars,

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Speaker 2: one unified cell, then our own production and we secure

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Speaker 2: our raw materials and this will lead to a very

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Speaker 2: competitive offer in terms of battery and Scout will be

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Speaker 2: basically one of the first customers of that of LED

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Speaker 2: plant in Ontario.

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Speaker 3: You mentioned the investment there two billion dollars in overall,

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Speaker 3: Folk Stocking Group has always had the most eye popping

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Speaker 3: numbers in terms of EV investment from when d started

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Speaker 3: until now at Pluma, I think you're planning on putting

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Speaker 3: one hundred already billion dollars into EV and digitalization. Are

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Speaker 3: you still pushing ahead that hard because you know demand

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Speaker 3: for evs has fallen off. There's even a little bit

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Speaker 3: of backlash as Alex mentioning.

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Speaker 2: Now, this is a great question exactly as you mentioned,

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Speaker 2: our total spent R and DKAP is combined for the

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Speaker 2: next five years, and one hundred eighty billion and one

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Speaker 2: hundred and thirty billion of that is going into electrification

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Speaker 2: and digitalization of our products. We're still absolutely committed to

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Speaker 2: ramp that up, of course, but we also build in

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Speaker 2: some certain flexibilities, so about a third of the upfront

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Speaker 2: investment goes into combustion engine cost deals. So we have

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Speaker 2: a flexible strategy to keep our combustion engine casts competitive.

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Speaker 2: So on the way, and we are fully convinced that

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Speaker 2: the future will be electric on the way. Our strategy

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Speaker 2: is rather flexible and provide also robustness and flexibility going forward.

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Speaker 1: This might be a really dumb question, but that just

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Speaker 1: means like you're going to put money into ices and

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Speaker 1: then you're going to take some of that money put

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Speaker 1: any these and it's going to be like an easy shift.

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Speaker 1: That doesn't sound very easy.

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Speaker 2: It's not an easy shift. What I said, from one

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Speaker 2: hundred eighty billion, about a third still goes into projects

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Speaker 2: like keeping our combustion engine cars absolutely competitive basically the

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Speaker 2: last generation. So we will have a range of very

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Speaker 2: competitive and great electrical cars, and we will have a

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Speaker 2: range of still very competitive combustion engine cars. So and

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Speaker 2: eventually it's up to the customer to decide. So this

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Speaker 2: is when I was talking about flexibility. So this strategy

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Speaker 2: is a little bit more costly, but it will give

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Speaker 2: us the flexibility in the years to come going forward.

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Speaker 2: But don't get me wrong, the future will be electric,

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Speaker 2: that's clear.

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Speaker 3: I want to get back to the brand, the Folkswagen

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Speaker 3: brand specifically, and here in the US. You know, people

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Speaker 3: think of Audis as you know, very technical, cutting edge vehicles,

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Speaker 3: BMW obviously the ultimate driving machine, Mercedes, very luxurious in

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Speaker 3: terms of service. What does Volkswagen mean to the consumer?

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Speaker 2: First and foremost, folks One is a great brand, It's

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Speaker 2: a love brand, has a great heritage. Think of the transport,

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Speaker 2: the thing of the beetle, and we will bring this

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Speaker 2: heritage into the future. Folks One is also about democrat

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Speaker 2: democratization of innovation. For example, you mentioned the CS from

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Speaker 2: summer onwards, Summer twenty twenty four onwards, we will be

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Speaker 2: I think one of the first oms at folks One

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Speaker 2: to bring Chet Gibt in the car. You can talk

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Speaker 2: to the car. So this is this is about folks When.

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Speaker 3: I wonder what your your relationship with the unions is

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Speaker 3: going to be like here, you know, we've just had

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Speaker 3: obviously the end to a long and painful strike for

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Speaker 3: Ford and GM as well as Stalantis, and now they're

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Speaker 3: pushing in or trying to push into PMW and Tesla

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Speaker 3: and other foreign automakers. Here Volkswagen obviously in Chattanooga, and

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Speaker 3: you're talking about the Scout factory as well. Will you

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Speaker 3: work with the ua W How do you see that

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Speaker 3: playing out?

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Speaker 2: We have a great factor in Chattanooga. We have a

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Speaker 2: great work for there, more than five hundred thousand very

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Speaker 2: skill and motivated people, and they have great working conditions there.

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Speaker 2: So we make sure they have great working conditions they

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Speaker 2: can participate and decide also in the factory without in

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Speaker 2: the Median party. Of course, we respect our right of

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Speaker 2: our workers to vote. But as said before, we have

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Speaker 2: very good working conditions, very good pay, so this is

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Speaker 2: where we stand.

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Speaker 1: You don't have to pay them more.

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Speaker 2: We actually increased already by about eleven percent some weeks ago.

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Speaker 1: Well, listen, it was really great to have you here.

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Speaker 1: Thank you so much for coming. Matt, it's really great

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Speaker 1: to see you. Thank you for bringing the interview with

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Speaker 1: you so much for having well. Arnold Antlet's Folkswagen CFO

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Speaker 1: and COO and Matt Miller