Executive Speeches
12 March 2009
The Automobile Industry: Challenges, Solutions and Sustainable Mobility
University of California - Los Angeles Anderson School of Management Distinguished Speaker Series
Stefan Jacoby
Thank you, Dean Olian for that kind introduction.
I was impressed to read your ambitious growth campaign and goal of increasing your school's global presence and partnerships. I think the Anderson School of Management and Volkswagen have much in common. But more on that later.
Thank you also to all of you for joining us today.
I'm honored to be here at the Anderson School of Management.
I'd also like to thank the sponsors who helped make this event possible — Net Impact and the UCLA Sustainable Resource Center.
Net Impact is a great example of how collective action by committed individuals can lead to positive change.
The UCLA Sustainable Resource Center is proof positive that business, government, and nonprofit sectors can come together in an impactful way.
My visit today brings back fond memories of my own experiences as a business school student at the University of Cologne.
I remember what it's like to be on the other side of the podium in this kind of setting.
I can say with some certainty that many of the skills and lessons you learn here will be invaluable in your future careers.
I can say with equal certainty that others will be useless — and I hope my remarks don't fall into that category.
You are fortunate to attend one of the top business schools in the world.
As someone who has worked in Europe, Asia and the U.S., I am particularly impressed by UCLA Anderson's global focus. I also appreciate its emphasis on entrepreneurship.
And its commitment to advanced technologies.
That sounds a lot like Volkswagen.
UCLA created this business school in 1935, in the middle of the Great Depression.
I'm sure someone at UCLA advised against it. Someone must have said, "You can't take a risk or try something new in times like this."
It is always easy, in difficult times, to seek safe ground… to hide from challenges.
That's the easy way….but it's the wrong way.
It is no secret that the automobile industry is dealing with an extremely difficult economic environment.
Like our competitors, the Volkswagen Group of America sold fewer cars in the United States in 2008.
Fortunately, we increased our market share.
Globally, our company defied industry trends and increased sales, despite the international economic problems.
We have done better than most car companies, but we are not immune to economic realities.
Our strategy is simple: We want to turn challenges into opportunities.
We want to take steps now to ensure that when the economy rebounds, we will be ready.
We can't do that by taking the easy way.
Instead, we are taking the approach that the founders of this school took during the Depression.
We're building a new production facility.
We're making a one billion dollar investment in the future.
Our new factory in Chattanooga, Tennessee, will create at least 2,000 jobs and nearly 10,000 more at suppliers and related businesses.
That's how confident we are in the American economy. That's how confident we are in Volkswagen's future in this country.
We're not just building a new plant, we're building a new company.
The transformation of our company began in 2007, when we announced we would move our corporate headquarters to Herndon, Va.
This move reflected our desire to hit the "reset button" at Volkswagen as part of an effort to grow our business in the U.S.
With our move and new leadership, we have created an atmosphere that encourages innovation, creativity and collaboration.
From our U.S. headquarters in Herndon, we see a clear way forward.
In these challenging times, the economy and customers are sending the same message.
Consumer tastes are in line with economic reality.
To thrive, we have to respond — Now. Not sometime in the future after the economy recovers.
We have to accelerate our efforts to achieve sustainable mobility.
That's not the easy way in this economic environment…but it's the right way.
Our industry changed the world by offering mobility to rich and poor alike.
Mobility brings freedom, opportunity and economic development.
It enriches the human experience.
It breaks down barriers. It opens new possibilities.
However, those positive changes have come at a cost to our environment.
Our industry has been part of the problem; now we are determined to be part of the solution.
We have the knowledge, the technology and the desire to change direction.
Our customers want us to change direction.
For Volkswagen, our commitment to sustainable mobility covers the entire lifespan of a car.
It starts in the earliest stages of the manufacturing process. It ends in the vehicle's final trip to the recycling yard.
We've designed our new plant in Tennessee to reduce energy consumption.
We also designed it to limit environmental impacts at every step of the manufacturing process.
We'll use environmentally friendly refrigerants in the air conditioning system.
We will employ water-saving technology.
We will recycle whenever possible.
And, we will implement manufacturing processes that reduce emissions and hazardous waste.
And when waste is produced, we'll clean up after ourselves.
All of these measures will cut costs and make our new facility a better workplace for our employees.
By the way, we are not just taking these steps in Tennessee.
We're doing it in production facilities around the world.
We know that everything we put into our cars during their production can ultimately impact the environment.
We use biodegradable hydraulic oils whenever possible.
We're researching carbon-fiber vehicles, which could include materials made from wood pulp and cellulose.
But the key to sustainable mobility is not at the beginning or the end of a car's lifespan. It's during the service years — when it is on the road.
At Volkswagen, we are taking a long-term and a short-term approach to fuels.
Our goal is a carbon-neutral car, but we are not letting that long-term goal distract us from improvements we can make right now.
Before fossil fuels can be completely phased out, we have to make sure that we get maximum efficiency from gasoline and diesel engines.
Our direct injection diesel technology — TDI clean diesel — dramatically reduces greenhouse gas emissions when compared to traditional gasoline engines.
And it's more fun to drive.
I'm extremely proud that our clean diesel Volkswagen Jetta TDI won the Green Car of the Year Award at the Los Angeles Auto Show last November.
The judges included representatives from the Sierra Club and the Natural Resources Defense Council.
Clean diesel is 45 percent more fuel efficient than gas-powered engines.
Going forward, we will offer clean diesel in up to 30 percent of the cars that have a diesel option. This also includes the new mid-size sedan that we'll build in Chattanooga.
Clean diesel is a big step in the right direction, and it's the right technology for today.
But, we are also looking to the future.
We are working on multiple tracks to develop zero-emission vehicles.
We're perfecting a diesel hybrid that uses an electric motor as the main source of propulsion.
The batteries that power our Golf Twin Drive can be recharged from an ordinary electric socket.
Some car experts have called our prototype Golf Turbo-Diesel Hybrid a "super hybrid."
Its fuel efficiency and emissions levels beat anything on the market today.
We've also developed the all-synthetic SunFuel for diesel engines.
It cuts greenhouse gas emissions by 90 percent.
We are working on second generation biofuels.
They are produced from straw and other biomass that does not serve as a food source.
And, they can be produced in a carbon-neutral or nearly carbon-neutral process.
We are working on a practical zero-emission hydrogen fuel cell car.
Last summer, our HyMotion Tiguan traveled from Portland, Maine, to Los Angeles to demonstrate the potential of this fantastic fuel source.
Working with the California Fuel Cell Partnership, we have established the largest fleet of fuel cell cars from a single manufacturer in one location.
The 24-car fleet includes 16 Passat Lingyu vehicles that came to California after providing transport at the Olympic Games in China.
The cars logged nearly 50,000 miles in Beijing and the only byproduct that came from their tailpipes was water.
Some of the most exciting work on the car of the future is occurring here in California.
The Volkswagen Design Center in Santa Monica is coming up with designs that take full advantage of the new fuel sources on the horizon.
You may have seen drawings of the Volkswagen Nanospyder.
This vehicle envisions the use of nanotechnology. It combines hydrogen fuel cells, solar power, electric motors and inflatable organic body panels.
And, I might also mention that our designers in Santa Monica are helping develop the new midsized sedan we will build in Chattanooga.
Our Electronics Research Laboratory in Palo Alto is experimenting with concepts to improve fuel efficiency, safety and comfort.
For example, cars on auto-pilot could be programmed to move smoothly through coordinated traffic lights.
We don't know precisely where all this experimentation and innovation will lead, but we know the general direction.
If we keep moving, if we keep innovating — even in challenging times — we will get where we want to be.
There is widespread agreement in our society today that we need to move to sustainable mobility.
As President Obama said in his inaugural address, quote:
"… everywhere we look, there is work to be done….
We will harness the sun and the winds and the soil to fuel our cars and run our factories."
We will not achieve our goals overnight. It will take time, hard work and cooperation from other stakeholders.
During this transition period, it is critical to maintain a shared commitment to the goal of sustainable mobility.
The automobile industry has changed many times over the course of its 120-year history.
We are in a period of profound change now. And we will emerge better for it.
The economy will rebound. That is a fact.
And when it does, the winners will be the companies that avoid the easy way and take the road toward sustainable mobility.
You can help us reach that goal.
You can help by working within your chosen field to find solutions that are good for the environment as well as the bottom line.
You can help by choosing a career in the automotive industry.
We need smart, creative, energetic, dedicated people to help us turn challenges into opportunities.
But, no matter what field you choose, you can help by taking your creativity and idealism to work with you every day.
Thank you for having me here today. I wish you all the best, and I look forward to your questions.
