By Andreas Cremer

BERLIN (Reuters) - Volkswagen <VOWG_p.DE> will launch its first battery-powered van later this month as it shifts to zero-emission vehicles following its diesel cheating scandal, but customers are still skeptical about the benefits of going electric.

"If electric drives offer no distinct benefits to cost-oriented entrepreneurs, they will not join in," Eckhard Scholz, chief executive of VW's commercial vehicle unit said.

Scholz said practical issues with the day-to-day use of electric vans as well as concerns about the total costs of ownership make it harder for battery-powered vans and commercial vehicles to take off.

"The typical customer for commercial vehicles has yet to be convinced," he added in emailed comments to Reuters.

VW, facing billions of dollars in fines and customer compensation linked to its tainted diesel engines, is cutting costs across group to fund a transformation focused on electric cars and on-demand mobility services.

Electric vehicles have become the holy grail for carmakers, with new entrants such as Tesla and technology giants like Alphabet's Google posing a competitive threat.

The van division, accounting for no more than about 2 percent of VW's 213 billion euros ($239 billion) of annual group sales, will use the Sept. 21-22 Hanover trucks show to present its first battery-powered model, the e-load up! mirco van.

Scholz complained that representatives and owners of mainly privately-run small businesses such as electricians and plumbers had been excluded from talks between the German government and carmakers such as VW and Daimler, who earlier this year agreed on sales incentives and more charging stations to spur demand for electric cars in Europe's biggest auto market.

VW is making an aggressive push into electric cars at its core namesake brand and its Audi and Porsche premium divisions, with the goal of launching more than 30 zero-emission cars across the group by 2025.

EUROPE DRIVES DEMAND

Separately, Scholz said he was positive on sales prospects for the remainder of 2016, counting on strong demand in Western Europe to outweigh tough conditions in South America, Africa and the Asia-Pacific region.

"Our order books are well stocked, our factories are busy. I believe the positive trend in European markets will continue."

VW commercial vehicles' seven-month global sales were up 6.4 percent to 273,300 units.

Scholz said a redesigned version of the Crafter large delivery van will be premiered at the Hanover trucks show and may underpin the sales momentum.

After using a Daimler plant for years to build the model on the same platform as the Mercedes Sprinter van, VW has outsourced production of the next Crafter to a new Polish factory.

Once the ramp-up of production at the Polish site has been completed and all model variants launched, VW aims to sell 100,000 units of the new Crafter line per year, Scholz said.

(Editing by Alexander Smith)