Weekly Brief: Volkswagen Prank Proves a BEV Can Backfire

Volkswagen tried to pull off an April Fools’ prank last week but no one ended up laughing, least of all VW.

The German automaker may now be facing an investigation from the Federal Trade Commission as a result. The debacle started Monday, three days before April Fools’ Day, when someone on VW of America’s marketing team prematurely published a press release on its website stating that, in honor of the carmaker’s newfound commitment to electric vehicles, VW would officially be changing its name to “Voltswagen”.

The company quickly pulled the press release down but then republished it Tuesday, complete with a new logo and a quote from VW of America’s CEO, Scott Keogh, who insisted the name change was for real. “We might be changing out our K for a T but what we aren’t changing is this brand’s commitment to making best-in-class vehicles for drivers and people everywhere,” Keogh said. At this point credible journalists from trusted publications started reaching out to the company to confirm the news. Remarkably, despite the fact that it wasn’t April Fools’ Day, and despite the questionable ethics of lying to journalists, the company swore that the name change was for real. Genuine excitement ensued. Consumers were intrigued. Investors were enticed. VW’s stock shot up 5% in a single day.

That’s when folks at VW headquarters in Germany started to think that maybe this whole April Fools’ prank wasn’t the best idea. They permitted anonymous sources to tell Reuters that “Voltswagen” was a big joke after all; a mere marketing ploy to promote VW’s new crossover, the ID.4. Yet VW of America executives continued to maintain that it wasn’t a gag until a spokesman for the company came out on Wednesday, still the day before April Fools’ Day, to confirm that this was an ill-timed April Fools’ joke after all.

The Securities and Exchange Commission, for one, isn’t laughing. Recall that the SEC filed security fraud charges against VW back in 2017 for defrauding investors in the midst of its Dieselgate scandal. Now VW has once again misled investors and the general public, this time in a cheap attempt to get eyeballs on its new EV.

Even if the SEC doesn’t pursue charges, one has to wonder what VW was thinking. Why make a joke about your commitment to EVs so soon in the wake of a major scandal that led to the embarrassment of your brand, more than $30Bn in fines and a widespread impression that you willingly screwed over the environment for the sake of your bottomline? The subtext of VW’s April Fools’ prank was We’re going all in on EVs.

That’s not the best look, especially at a time when so many carmakers really are going all in on EVs. Tesla is now the most valuable carmaker in America thanks to investor interest in battery technology. General Motors pledged to eliminate all gas-powered vehicles by 2035 and to achieve carbon neutrality by 2040. It redesigned its logo to look like an electric plug. Other carmakers have made similar pledges and now the US federal government is poised to follow suit.

Last week President Biden laid out a blueprint for a $2.25Trn investment in US infrastructure. The aim is to create jobs and stimulate the economy by ushering in the green revolution. While the plan doesn’t call for an outright ban on gas-powered cars, it does earmark $174Bn to build 500,000 charging stations by 2030, with the hope that charging stations will become as ubiquitous as gas stations. It also calls for point-of-sale rebates for EV purchases. No more waiting to write off an EV purchase on your federal taxes. If the blueprint is written into law, customers would get $7,500 back from the federal government on the spot, including for Tesla and GM vehicles that no longer qualify for the current EV tax credit.

Against this backdrop, VW’s April Fools’ Day prank is all the more perplexing. When the whole world is standing up to a global challenge, it doesn’t look great to be the one joking around.