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Volkswagen Gets a Big Boost in Its Fight Against Tesla

Volkswagen says that Siemens is investing $450 million in the electric charging company Electrify America.
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It was called "The Diesel Dupe."

In 2015, the U.S. Environmental Protection Agency accused Volkswagen  (VWAGY)  of violating the Clean Air Act after the German automaker was caught installing "cheat devices" in 490,000 of its diesel-powered vehicles. 

Emission Control

The devices were able to detect when cars were being tested and control its Co2 emissions to their lowest degree. The devices would switch off under normal driving conditions and the emissions would increase dramatically. 

Volkswagen had deployed this software in about 11 million cars worldwide, including 500,000 in the United States.

The scandal rocked the company as its stock price fell, top executives resigned, and its reputation was left in tatters.

As part of a settlement agreement with the EPA, Volkswagen created Electrify America, an electric car charging subsidiary in Reston, Va. 

Doubling the Charge

The automaker agreed to spend $2 billion over ten years on Zero Emissions Vehicle infrastructure and education programs.

On June 28, Volkswagen said that Siemens, the German multinational corporation, is investing $450 million in Electrify America, valuing the company at $2.45 billion.

The investment makes Siemens a minority shareholder in Electrify America and gives the company a seat on the board. The company is making the investment through its Siemens Financial Services unit.

"The plan is to more than double Electrify America's charging infrastructure to 1,800 locations and 10,000 fast chargers by 2026," Thomas Schmall, Volkswagen Group Board Member for Technology and CEO of Volkswagen Group Components, said in a statement.

Electrify America has more than 3,500 charging ports in the US and Canada at 807 stations, according to the Department of Energy.

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Tesla  (TSLA) , the electric vehicle company that Volkswagen is looking to surpass, has over 30,000 superchargers throughout the world, according to the company's website.

Expanding U.S. Operations

Volkswagen said the capital investment will support Electrify America’s accelerated growth plans through advancements in charging and energy solutions across public, home, and commercial offerings.

Volkswagen is also boosting its capital investment in Electrify America beyond its original commitment of $2 billion through 2026. 

The automaker said it is investing in the development of an open fast-charging network worldwide. By 2025, Volkswagen said around 45,000 High Power Charging (HPC) points are planned in Europe, China, and the US.

The product range also includes charging solutions for private customers and companies, ranging from the company's own Volks-Wallbox and flexible fast charging station to charging services and smart green electricity tariffs. 

Last year, Siemens said it was expanding its U.S. operations to support e-mobility infrastructure in America with a goal of making over one million chargers by 2025.

Volkswagen has said that it wants to launch more than 25 new electric models in the USA by 2030 and achieve an electric vehicle share of 55% of its U.S. vehicle sales.

Filling the Gap

In March, Siemens said it was spending $54 million at its electrical infrastructure hub in Grand Prairie, Texas, to make EV charging equipment. Siemens USA CEO Barbara Humpton joined President Joe Biden to make the announcement. 

In February, the DOE and the Department of Transportation said nearly $5 billion will be spent over five years to help states create a network of EV charging stations as part of the $1 trillion federal infrastructure bill.

The issue of charging stations came up on social media, with several commenters saying they looked forward to the expansion.

In an interview with the MIT Technology Review, Jeremy Michalek, a professor at Carnegie Mellon University and director of its Vehicle Electrification Group, said that America's charging infrastructure lags far behind what’s needed for the whole country to transition to electric driving.

 Michalek said that the U.S. needs to prioritize bulking up the number of chargers at rest stops along well-traveled highways.