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VW's Electric Vehicle Plan Is a Step, Not a Panacea

Feb 24, 2017
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SMITH BRAIN TRUST – Can Volkswagen’s recently announced $2 billion spending plan on zero emission and electric vehicles be a tipping point for the U.S. electric car economy? No, says management professor David A. Kirsch at the University of Maryland’s Robert H. Smith School of Business.

“It’s a little bit wishful thinking to believe that punishment for (Volkswagen’s) misdeeds on the diesel side is somehow going to be a panacea for the electric vehicle,” Kirsch told Marketplace radio recently. “This is an incremental advance in the long-term process.”

VW’s recently launched subsidiary, Electrify America, will manage the effort – required as part of VW’s $14.7 billion settlement with U.S. regulators over the German automaker’s rigging about 500,000 of its U.S.-sold cars to cheat emissions standards. VW has indicated that part of the $2 billion will pay for about 500 new charging stations around the United States.

Kirsch, who authored "The Electric Vehicle and the Burden of History," says converging forces prevent an upswing in electric car ownership. “We have consumer preferences. We have energy markets, and policy, and all these things interacting,” he says. “If there was any one, single, attribute… We could focus exclusively on that (attribute) and fix it.”

History has taught us such change takes time. For example, he says, “We didn’t build the gasoline distribution infrastructure overnight.”

”The biggest obstacle is “getting people comfortable with the idea of an electric car, understanding an electric car can do many of the things that an internal combustion vehicle can do, he adds. “That’s where the effort really needs to be – on the uptake.”

And Volkswagen’s outlook? The automaker last November announced – in a move to repair its brand from the emissions scandal – its intention to accelerate its electric vehicle program and sell, including through its subsidiary brands, up to three million electric vehicles by 2025.

“Getting ‘caught’ is maybe helping [VW] in some way to build their future market for a cleaner product,” Kirsch says.

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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty master's, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

Robert H. Smith School of Business