UPDATE 1-Volkswagen says 3 pct of sales to be electric cars

* Electric cars to account for 3 pct of sales by 2018

* To launch all-electric vehicles in 2013
(Adds quotes, detail)

By Poornima Gupta

PALO ALTO, California, July 19 (BestGrowthStock) – Volkswagen
(VOWG_p.DE: ) plans to launch all-electric vehicles in 2013 and
expects these zero-emission vehicles to account for 3 percent
of its sales by 2018, Chief Executive Officer Martin Winterkorn
said on Monday.

“We aim to boost the share of E-vehicles in our annual
sales to 3 percent by 2018,” he told reporters ahead of an
event showcasing the redesigned Jetta sedan. “In urban centers,
this share could be a lot higher.”

Winterkorn said the company is planning to launch an
all-electric vehicle such as the E-Up and E-Golf by 2013. In
the meantime, Volkswagen will launch hybrids like the Jetta
Hybrid in 2012.

The challenge to mass producing electric vehicle was still
the high cost of the battery, he said, adding that battery
costs are currently between 500 euros and 1,000 euros ($647 and
$1,294) per kilowatt hour today.

“Batteries must not only get smaller and lighter, above all
they must get cheaper,” he said at the automaker’s Electronics
Research Laboratory in Silicon Valley.

Volkswagen is researching and developing electric batteries
at the lab and has roped in Martin Eberhard, the co-founder and
former chief executive of recently listed electric car maker
Tesla (TSLA.O: ) to run its battery lab.

Eberhard is researching into packaging off-the-shelf
lithium-ion batteries, similar to those found in laptop
computers, to power cars. Eberhard’s former firm Tesla also
uses similar technology.

He was, however, was quick to say that while the concept is
similar, the technology being researched is much different from
the one used by Tesla.

The group’s flagship unit Volkswagen would be the main
brand leading the drive toward mass market launch of electric
vehicles but its other brands such as Audi also plans to
introduce electric-powered cars.

“Ultimately we do see a large percent of our cars as
electric drive, “Eberhard said, adding that the industry is
spending a huge amount of money to make the battery better.

Volkswagen has ambitious plans for the U.S. market. The
company has said that it expects the redesigned Jetta to help
U.S. sales of the car by as much as 25 percent by 2012.

Volkswagen has said higher sales of the Jetta could also
boost the company’s share to between 3.5 percent and 4 percent
in the next two to three years.

The company’s U.S. market share is about 2.2 percent
through the first half of 2010, according to Autodata.

Investing Analysis

($1=.7728 Euro)
(Editing by Lincoln Feast)

UPDATE 1-Volkswagen says 3 pct of sales to be electric cars