Mlada Boleslav The car manufacturer Skoda is increasing its investments in electric car models by 2026 from 3.1 to 5.6 billion euros and wants to make much faster progress with the electric turnaround than previously planned. In the company headquarters of the car manufacturer Skoda in Mlada Boleslav near Prague, CEO Klaus Zellmer announced in an interview with the Handelsblatt: “By 2026 we will come with three more electric models, more will follow. This is earlier than we previously announced.”
Originally, the Czech car manufacturer wanted to take its time with the presentation of the new e-models until 2030, but it is now being brought forward four years. “Our goal has become more ambitious,” says Zellmer.
Specifically, it is about a small electric car that is expected to be offered for less than 25,000 euros. Most European car manufacturers have not yet offered such a comparatively inexpensive e-mini because of the high production costs.
Skoda is also planning a compact electric mid-range SUV and a large seven-seater, of which the first prototype is already available (“Vision 7S”).
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The electric share of the Czech Volkswagen subsidiary will increase by 20 percentage points from 50 to 70 percent by 2030 with the new models. India is also becoming the central component of Skoda’s foreign strategy.
Skoda is adding billions for new electric cars
The VW subsidiary is spending the majority of its planned investment of 5.6 billion euros on the three new electric cars. Nevertheless, Zellmer does not yet want to commit to a definitive end to combustion engines. “Customers will decide how the market develops,” he emphasized. In Europe, however, because of the EU regulations, it is clear that from 2035 onwards no more combustion engines will be allowed to be sold.
Nevertheless, Skoda plans to keep the model portfolio for combustion engines fresh and up-to-date. Zellmer announced that two key models will be completely new to the market next year: the Superb sedan and the large Kodiaq SUV. “Combustion engines finance the transformation, are popular and highly efficient.” A comprehensive redesign for the Octavia, Skoda’s bread-and-butter model, is planned for 2024.
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Zellmer, who has only been in office as CEO at Skoda for a few months, also wants to ensure a clear distinction from the Volkswagen brand. A key differentiator should be the Skoda vehicle design. “Skoda has never been so stringent with its own design language – the realignment, especially with the electric models, will clearly show that,” emphasized the Skoda CEO.
Whoever spoke of a cheap brand at Skoda in the past was quite wrong. Skoda CEO Klaus Zellmer
The Czech VW subsidiary wants to offer functional vehicles that “express down-to-earthness and honesty”. This does not mean, however, that Skoda vehicles will always be offered cheaply in the future. “Whoever spoke of a cheap brand at Skoda in the past was pretty wrong,” says Zellmer.
A key differentiator between the Czech brand and Volkswagen should also be the digital equipment. “Skoda is more conservative in its digital presence,” said the CEO. At Volkswagen, the topic of digitization has “already been brought almost radically into the cars”. Every car manufacturer must ensure that customers are not technically overwhelmed.
In principle, Zellmer advocated that the individual brands in the group should ensure their independence. “I am convinced that we will ultimately get more money for the group and brand group with higher investments for the differentiation of the brands,” he said.
Klaus Zellmer, who has only been in office as CEO at Skoda for a few months, wants to ensure a clear distinction from the Volkswagen brand.
(Photo: Reuters)
Industry observers such as Stefan Bratzel from the Center of Automotive Management (CAM) at the Bergisch Gladbach University of Applied Sciences agree with this course. “Skoda must not get too close to Volkswagen,” said the university lecturer. This can best be achieved if Skoda is priced well below VW. At the same time, the Czech subsidiary must also meet certain quality standards in order not to be perceived as a cheap brand.
Bratzel certified the VW Group that the separation of the two brands was “really successful”. The automotive professor expects this course to be continued under the new CEO Oliver Blume. Blume stands for a rational approach when it comes to brand separation. An emotionally charged conflict between Skoda and Volkswagen is therefore not to be expected.
>>Read here, how the new CEO Oliver Blume wants to reform Volkswagen.
According to Bratzel, Skoda must be present above all in the entry-level segment. In a second step, customers could be introduced to the model range of the entire group via the Czech subsidiary. Especially with real electric cars, Skoda must fulfill this entry-level function. Below Skoda there will be no cheaper electric models in the VW Group for the foreseeable future.
Skoda: India is of central importance
Skoda also performs this function as an entry-level brand for the entire group outside of Europe. After several failed attempts, Volkswagen is now present on the difficult Indian car market with Skoda. The Czech VW subsidiary has developed its own combustion engine models especially for India, which are now also produced locally there.
“India has the greatest growth potential for us,” confirmed CEO Zellmer. After Germany and the Czech Republic, India has now become Skoda’s third largest sales market. In the first half of 2022, the manufacturer sold more cars there than in all of 2021.
Skoda is also using the vehicles developed for India to expand into the Middle East and Southeast Asian countries such as Vietnam. Sales losses, such as in Russia, could be compensated for in the future.
In addition, Skoda has received another test order for India from the group. The Czech VW subsidiary is to investigate the extent to which a cheap electric entry-level model could be developed for the Indian market. Skoda should draw on its own expertise from the combustion models specially developed for India. However, the automaker expects that the transition to electromobility in India will take significantly longer than in Europe. The VW subsidiary expects an electric share of between 20 and 25 percent there for the year 2030.
More: Skoda Vision 7S: A preview of the new top model from the Czechs.