How the Volkswagen Group wants to reinvent

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How the Volkswagen Group wants to reinvent-wants

The Volkswagen Autoconzer has presented its plan for the transformation to the software-powered mobility company. The focus is on the twelve strong brands of the Group and its global technology platforms that enable synergies and scaling and develop new profit pools. “We set ourselves the strategic goal of becoming world market leader for electric vehicles – and we are on a good way. Now we are setting new parameters, “said CEO Herbert this at the presentation of New Auto, the Group strategy up to 2030.

The Volkswagen Group sets new priorities to use the opportunities in the electrical and digital mobility age. Sustainability and decarbonization are an integral part of the new strategy. Compared to 2018, the Group plans to reduce its CO2 footprint per car throughout the lifecycle by 2030 by 30 percent by the Paris Agreement. In the same period, the share of sales of electric vehicles will rise to around 50 percent. By 2040, nearly 100 percent of new Group vehicles should be emission-free in the main markets. At the latest in 2050, the Group wants to be completely climate-neutral.

“On the basis of software, the next, far more radical change of transition to significantly safer, smarter and eventually autonomous vehicles. This means for us: technology, speed and scaling will play a central role than today. The car has a shiny future!”- Herbert this, CEO Volkswagen

Volkswagen expects a gradual shift in sales and profit pools: first of cars with internal combustion engine (ICE) towards battery-electric vehicles (BEV) and later stronger in the direction of software and services. This trend is accelerated by autonomous driving. The ICE market is likely to go back by more than 20 percent over the next ten years. At the same time, the sales of electric vehicles will grow quickly and overtake combustion vehicles as a leading technology. With an estimated turnover of 1.2 trillion euros, software could account for around one third of the total mobility market by 2030 in addition to the expected business with BEV and ICE. This could sometimes more than doubles from today about two more than five trillion euros. Individual mobility is expected to make up 85 percent of this market as well as the business of Volkswagen in 2030.

Rowing of e-mobility will improve margins for e-cars

Today’s robust, margin-strong ICE business with its high cash flows will finance and accelerate the conversion to BEV. A consistent drain of electromobility that is powered by synergies from lower battery and factory costs as well as rising scaling will improve the BEV margins. This development is likely to be strengthened by increasing CO2 and Euro7 costs as well as tax disadvantages that increasingly burden the ICE margins. Overall, it can be assumed that the margins of these two technologies will be equal to the similar level within the next two to three years.

The new strategy is also reflected in a raised ambition level for the operating sales yield of the Volkswagen Group in 2025: As the basis for the planning round 70 next November, the Group has increased the original range of 7 to 8 percent to 8 to 9 percent.

“Our goal is to establish industry-leading platforms across our strong brands. So we can create higher scales and realize more synergies in the future, “said CFO Arno Antlitz. “We will scales our BEV platforms, we want to develop a leading automotive software stack. And we will continue to invest in autonomous and invest mobility services. During this transition, our robust ICE business will help generate the necessary gains and cash flows.”

€ 73 billion has already provided Volkswagen from 2021 to 2025 for future technologies, which corresponds to 50 percent of total investment. The share of investments in electrification and digitization should be further increased in the future. In addition, the Group wants to increase its efficiency increasingly and sees itself on course to meet the fixed cost reduction program of 5 percent for the next two years. Volkswagen has also set itself the goal of reducing the material costs by another 7 percent and to optimize its ICE business with fewer models, a reduced ICE drive portfolio and a better price mix.

Unique platform model for the scaling of future technologies

The comprehensive approach to the four major technology platforms is to enable the Volkswagen Group to generate unprecedented synergies for all car brands and the light commercial vehicles as well as partly with the truck area. These synergies include numerous fields: from a universal BEV product architecture through the global software platform of Cariad, its own extensive cell and battery production to a mobility platform, which combines a variety of services seamlessly.

With the SSP (Scalable Systems Platform), the next-generation Volkswagen Mechatronics platform, the complexity will gradually decline. As a succession platform of the three burner architectures MQB, MSB, MLB, as well as the E-car platforms MEB and PPE, SSP will promote the consolidation of today’s platforms: three ICE platforms are initially reduced to two BEV platforms, finally one Single architecture for the entire product portfolio. From 2026, the Group wants to start the production of pure electric cars on the SSP. This next vehicle generation will be fully electrically, fully digitally and highly scalable. Over the entire service life, more than 40 million vehicles are planned on the new Mechatronics platform. As already in the MEB, the SSP should also be accessible to other car manufacturers.

To improve and accelerate his Mechatronics platform competencies, the Group wants to invest around 800 million euros in a new center for technical development in Wolfsburg, where the heart of the SSP and its modules will arise.

“The introduction of SSP means that we use our strengths in platform management and build on our skills to maximize synergies across all segments and trademarks. In the long term, our SSP will significantly reduce complexity in mechatronics. It is not only a central prerequisite for Capex, F&To reduce E and unit costs compared to MEB and PPE and to enable the Group to achieve its financial goals. It is mainly pioneering that we can successfully master future challenges in vehicle development as cars are increasingly software-oriented.”- Markus Duesmann, CEO Audi

Software in turn will enable the seamless integration of the new car into the digital life of customers and generate even higher scale effects. The Automotive Software Unit Cariad of the Volkswagen Group pursues the goal of developing a leading software platform as a backbone for all Group vehicles by 2025.

The software is also standardized

CARIAD is currently working on three software platforms: the first software platform 1.1 (E³ 1.1) Allows upgrades and over-the-air updates for the MEB product portfolio, for example for the Volkswagen ID.4, the Skoda Enyaq or the Cupra Born. In the year 2023 Cariad wants the premium software platform 1.2 (E³ 1.2) Start: It offers a variety of features, including a new, unified infotainment system and over-the-air updates for vehicles from Audi and Porsche. In 2025 Cariad then wants to introduce a new uniform and scalable software platform as well as an electronic end-to-end architecture: the software stack 2.0 (E³ 2.0) Become a uniform operating system for the vehicles of all Group brands. Another essential feature should be the level 4 capability to drive to autonomous, so that the customer can leave the driving completely the car.

“Software plays the crucial role in transformation from a pure automaker to the integrated mobility group. By 2030, software – based on autonomous driving – can become a significant source of income in our industry, “says Dirk Hiltenberg, CEO of Cariad. The new uniform 2.0 Platform for on-board connectivity and software that is rolled out with the SSP Group-wide paves the way for a whole new digital ecosystem and thus also for new data-based business models.

The complete group fleet can then be continuously updated with new features and services that are tailored exactly to the user’s mobility needs. The basis for this is the evaluation of a comprehensive pool of real-time data of the fully networked, autonomous vehicles. This so-called Big-Loop process for millions of vehicles should significantly expand the product life cycle. By 2030, up to 40 million vehicles should be based on all Group brands on the Group‘s software platforms.

Battery & Charging – Circular economy as key for sustainability

Own battery technology, charging infrastructure and energy services are central success factors in the new mobility world. Therefore, energy should be a core competence of the Volkswagen Group by 2030, with the two columns “battery cell and system” as well as “loading and energy” under the umbrella of the new “technology”.

The Volkswagen Group plans to build a self-controlled battery type chain by building new partnerships and the coverage of all sub-areas from the raw materials to recycling. The goal: a closed circulation in the value chain as a most sustainable and cost-effective way to make batteries.

To achieve this goal, the Volkswagen Group expands its battery competence and reduces complexity. For this purpose, the company introduces a unit cell, with a cost reduction potential of up to 50 percent and at the same time with up to 80 percent application cases in the Group up to 2030. Six giga factories in Europe with a total capacity of 240 gigawatt hours up to 2030 should secure the battery supply.

The first location in Skelleftå, Sweden is operated by Northvolt. The Volkswagen Group has just invested another 500 million euros in its premium cell partner and works with Northvolt on a production start in 2023. For the second location in Salzgitter, the Group has only a few days ago signed a contract with the Chinese cell specialist GOTION high-tech as a technology partner for a production start in 2025. Together, both partners will develop and industrialize the volume segment of the unit cell in the German plant.

As a third location, the Volkswagen Group wants to make Spain a strategic pillar of his electrical offensive and is considering to establish the entire value chain of electric cars in the southern European country. As part of a larger transformation program, such localization would ensure the supply of planned BEV production in Spain. Thus, the Volkswagen Group currently checks the option for building a GIGA factory together with a strategic partner. In the last stage of the expansion, at the end of the decade, the work could have an annual capacity of 40 gigawatt hours. It is also planned to produce the so-called Small Bev Family of the Group with favorable streamers in the entry segment from 2025 also in Spain. The final decision depends on the general framework conditions and state funding.

Loading infrastructure complete solutions from a single source

In addition, the Group wants to offer its customers a comprehensive solution from a single source, from the products needed for the charging process to energy management services. Thus, Volkswagen ultimately wants to build a complete energy ecosystem around the vehicle and the charging infrastructure, which allows the customer a comfortable loading and opened up the company further business potential. These technologies and services are to become a core competence of the Group.

In addition, the Volkswagen Group wants to further expand the public charging infrastructure in Asia, Europe and America, based on its successful initiatives such as CAMS in China or Electrify America in the USA. Electrify America, for example, has announced that it is its current charging infrastructure in the US and Canada to a total of 1800 fast charging stations and 10.000 installed charging points should almost double up to 2025. The planned expansion should lead to an extended use of 150- and 350 kilowatt charging columns – the highest speed available today – and help to pave the way for more electric cars in North America.

Parallel has the Group U.a. With BP, Iberdrola and ENEL, new partnerships closed to allow the European Customer to enable comfortable loading. The Volkswagen Group and ENEL X today announced a new joint venture to promote the market success of electric cars in Italy. The joint venture wants to own and operate a high-power-charging (HPC) network infrastructure with more than 3,000 charging points, each with up to 350 kilowatts each. Overall, the Volkswagen Group wants 18.000 HPC charging points in Europe, 17.000 in China and 10.Build 000 in the US and Canada.

Mobility Solutions – Autonomous Driving becomes Game Changer

By 2030, the Volkswagen Group also wants to build system skills for autonomous shuttle fleets, possess some of them and thus significantly expand its range of mobility services and financing. Mobility as a service (MAAS) and transport as a service (TAAs), fully autonomous, should become the integral part of New Auto. The value chain consists of four business areas: the self-propelled system, integration into the vehicle, fleet management and the mobility platform.

The Volkswagen Group is already a leader in developing a self-propelled system for autonomous shuttles, together with its strategic partner Argo AI. Cariad develops parallel automation driving skills of levels 4 for cars. On this basis, the Volkswagen Group could create the largest neuronal network of vehicles on the streets worldwide.

With pilot projects in Munich, Volkswagen is currently testing the first autonomous buses and wants to establish similar projects in other metropolises in Germany, China and the USA. In 2025, the Volkswagen Group plans to offer its first autonomous mobility service in Europe, followed by the USA. The expected profit pools are very promising: by 2030, the overall market for mobility as a service should be $ 70 billion in the five largest European markets alone, converted to $ 59 billion.

In the coming years, a platform should bundle all the Group’s mobility and its brands and enable Volkswagen to develop a significant market share and additional sources of revenue. A vehicle fleet that covers all different services of rentals, subscriptions to sharing and ride-hairing, should ensure high availability, utilization and profitability.

Europe, China and the US remain the focus regions of the Group

Based on a strong basis in the two Volkswagen home markets Europe and China, North America is to be the main focus of the Group in order to further expand its market share. China, where the Volkswagen Group as a longtime market leader have high profitability, games a crucial role for the success of the New Car Strategy. With the ID.4, ID.6 and the ID.3 Rolls Volkswagen – Together with its partners – his electric product portfolio swiftly and makes his new NEV joint venture Volkswagen Anhui for the local hub for the SSP. This also includes a new research and development center that is currently being built. The Group wants to further strengthen its activities in China and expand with local skills and capacities. Already today working around 1000 software engineers for Cariad in China.

In the US there was never a better time for Volkswagen to significantly expand its market share. “The Government’s electrification plan opens up the unique opportunity to start a better position than the competition, as we have built an open shop network throughout the US and have already invested in Chattanooga in the transition to BEV,” said Herbert this. Volkswagen brings in the USA a wide range of BEV tailored to the market, such as the middle class SUV ID.4 or the electrobus ID.Buzz on the street. On this basis, Volkswagen is well positioned to participate disproportionately from future growth of an increasingly electrified market.

Group-wide transformation program in progress

Since about half of its 660.000 employees work in traditional automotive production today, the Volkswagen Group will implement a massive transformation program in the coming ten years. To ensure that employees are conducted responsibly by the change, the Management Board works closely with the works council. Among other things, extensive resources for qualifications are provided for acquiring software-based capabilities. Volkswagen has already made his German locations fit for the future, transforming the Group’s component business and transformed the plant in Zwickau to the e-mobility stroke. The Group plans similar transformations for the works in Emden and Hannover.

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3 thoughts on “How the Volkswagen Group wants to reinvent”

  1. Above all, this has said that until 2025, Tesla is expected to be outdated in the worldwide sales of BEV. I have to admit, I can hardly imagine that. It will be the case sooner 2024. When the quantities are highly scaled, you have to integrate the major customers in many markets. For this, Tesla has no concept and above all, there is not the earnings situation. So you will not find a concept so easily.

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  2. I have picked up this point.

    By 2040, nearly 100 percent of new Group vehicles should be emission-free in the main markets. At the latest in 2050, the Group wants to be completely climate-neutral.

    Climate change should not play with this timetable, VW should urgently improve.

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  3. In principle, Mr. Den from my point of view for the VW Group has set the right priorities (presumably also against not insignificant resistors in-house). This speaks for its foresight in contrast to all those who continue to propagate “technology-offness” after the race has long since decided in favor of the BEV in the area of individual traffic. Whether the undertaking, Tesla is to overtake, is realistic, will show the future. Personally, here was first very skeptical – but now I am quite impressed by the pace of catching up from VW. Especially in the field of software, however, all German manufacturers still have their problems. For VW, it would certainly be a priceless profit if it has been able to recruite some leading Tesla software experts. The decision of VW to set up a new model line for combees in 2026, I consider a heavy mistake that will burn a lot of money again. To question very critical, from my point of view, the concept of “stupid”, which one wants to turn to the cost of further developing e-mobility as long as it is possible as long as possible, as long as possible. It’s hardly trusting if I’m a brand new burner bursting in 2030, the a few years later “unawellable” is.

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