The newly created Technology Board position will be responsible for the following focus areas: all activities of Volkswagen Group Components, the marketing of the Volkswagen platforms and components to third parties, the development, manufacturing and procurement of battery cells (Cell and Battery Strategy initiative), the areas of charging and energy with the corresponding joint ventures worldwide (Charging and Energy Services initiative).
The aim is further improvement of future viability and competitiveness through cross-brand management of technology activities and a value creation strategy coordinated throughout the Group. Synergies are to be leveraged across both traditional technologies and future areas to advance the transition to e-mobility.
The Volkswagen Group presented its technology roadmap for battery and charging until 2030 at its first Power Day in March 2021. The objective of the roadmap is to significantly reduce the complexity and cost of the battery so as to make electric vehicles attractive and affordable for as many people as possible. Volkswagen is establishing a European stock corporation (Société Européenne) to consolidate activities along the value chain for batteries – from processing raw materials to developing a unified Volkswagen battery cell to managing the European gigafactories. The company’s scope will also include new business models based around reusing discarded car batteries and recycling the valuable raw materials they contain. The Group is thus creating efficient and future-proof structures for the rapidly growing battery business.
Baterie
By standardizing properties like format and geometry, the unified battery cell provides the basis for a competitive orientation of electric mobility at Volkswagen. There are plans to introduce unified battery cells in 2024. Six gigafactories will be required in Europe alone to meet our needs until 2030. Two of the six gigafactories planned for Europe have already been decided. In addition to the site of its partner Northvolt AB in Skellefteå, Sweden, Volkswagen is building its own gigafactory in Salzgitter.
One of the most modern laboratories for cell research and development in Europe was opened at the Salzgitter site in the second half of 2021. In the future, some 250 experts will conduct research in the areas of cell development, analytics and testing at a total of four laboratories. For the Volkswagen Group, Salzgitter is also a pioneer in sustainable responsibility throughout the service life of the battery and opened the Group’s first facility for recycling high-voltage vehicle batteries here. The objective is industrialized recovery of valuable raw materials such as lithium, nickel, manganese and cobalt in a closed loop, as well as aluminum, copper and plastic. In collaboration with partners, Volkswagen will achieve a recycling rate of more than 90 % percent in the future through mechanical and hydrometallurgical processes.
Volkswagen expanded its shareholdings in different companies again in 2021 within the framework of its electric mobility strategy. The primary transactions in the past fiscal year were the capital increase at Swedish battery partner Northvolt AB for continuing the stake of about 20 %. Volkswagen also increased its stake in QuantumScape with the goal of driving forward the joint development of solid-state battery technology. In the future, solid-state batteries are
expected to significantly increase range and shorten charging times further. The partnership with Gotion High-Tech Co., Ltd. was deepened in the reporting period on the basis of a substantial buy-in in May 2020. The Volkswagen Group entered a strategic cooperation framework with the major Chinese battery manufacturer headquartered at Hefei. The goal of both partners is to industrialize the planned battery cell production at the Salzgitter site.
Vertikální integrace
Vertical integration, which is a strategic component of the newly created Board position, targets key success criteria of the electrification strategy, such as maximizing customer benefit, ensuring competitive cost structures and achieving transparency in the supply chain to safeguard channels critical for supply and crucial to sustainability.
In the current business model, overall responsibility for all input materials in the battery cell lies with the battery cell manufacturers. Volkswagen’s involvement in the supply chain gives it access to costs and capacity for the materials and raw materials needed for battery production, particularly for lithium, nickel, manganese and cobalt (vertical integration). The objective of intervening in the supply chain is to influence costs and capacity so as to maximize the benefit for the Company.
Charging and Energy
Since early 2021, all activities in the Charging and Energy area have been combined and managed by the Technology Board position, which will thus play a key role in the Group’s electric mobility strategy in its bid to become the leading provider of a smart charging and energy ecosystem.
As part of the Group’s strategic alignment, the Charging and Energy area is focusing on two key areas. Firstly, sales of electric vehicles are being underpinned by the international development of a widespread charging infrastructure. As part of the joint participation of our Group brands Volkswagen Passenger Cars, Audi and Porsche in the pan-European high power charging (HPC) joint venture IONITY, an extensive charging infrastructure is being developed to safeguard long-distance mobility, which already consisted of 1,586 charging points at the end of the reporting period. The number of public fast charging points in Europe is to be increased to 18,000 by 2025. At the same time, the charging network in North America is to be increased to 10,000 fast charging points in collaboration with Electrify America, while the charging network in China will be expanded to 17,000 fast charging points in conjunction with CAMS. Secondly, sustainable business models are being developed by expanding value creation, such as smart and energy market-integrated charging.
Drivetrain and Platform
The independent corporate entity Volkswagen Group Components, under the umbrella of Volkswagen AG, employs around 70 thousand people worldwide. The focus of their expertise is the development and manufacture of vehicle components. As part of the restructuring of Group Components, the former business unit structure was transferred to the Drivetrain and Platform area in a modified form as product lines (conventional powertrain, chassis and electric drivetrain) with effect from April 1, 2021. The product lines assume responsibility for product management and product costs across all locations, covering Volkswagen Group Components’ conventional portfolio.
Besides the product lines, the development areas of Group Components are combined in the Drivetrain and Platform area. The development portfolio focuses on the following areas: chassis components, steering systems, drive shafts, transmissions, electric drives and thermal management systems in the electric drivetrain. The new Systems and Innovation Development department, which was created when all components were bundled at organizational level, is working on the holistically optimized electric drivetrain across all business areas. Close integration of product management and development in the Drivetrain and Platform area are expected to optimize product costs, further sharpen the portfolio of Group Components and play a key role in shaping the electric drivetrain of the future.
Platforma podnikání
Since January 1, 2021, Group-wide responsibility for external sales of platforms and components has been combined in the new Technology Board position. This effectively concentrates the existing activities and resources in one place in the Group. The scope of this new Platform Business organizational unit extends to successful initiation and acquisition (including contract design) as well as to support of customer projects including the related order processing (logistics, billing). In the current cooperation project with Ford, the necessary cross-brand structures and processes have been created within the Volkswagen organization so that other external customers can also be efficiently served in the future.
Volkswagen is accelerating its transformation into a software-driven mobility provider. By rolling out the ACCELERATE strategy that it has just unveiled, the company will systematically prepare for the profound changes in the automotive industry in good time. Just as Volkswagen resolutely led the way with its global electric offensive, now it is also accelerating the other big issues of the future: integration of software into the vehicle and the digital customer experience will become crucial core competencies. In implementing data-based business models, the company is seeking to attract new groups of customers and tap additional sources of income. Volkswagen also will make autonomous driving available to many people before the end of the decade. “E-mobility was just the beginning: the real disruption has yet to come. With our strategy we will ACCELERATE towards the digital future,” said Ralf Brandstätter, CEO of Volkswagen. “In the coming years, we will change Volkswagen as never before.”
Back in 2016, Volkswagen kicked off its far-reaching transformation and the industry’s biggest electric offensive with the TRANSFORM 2025 + strategy. With URYCHLIT Volkswagen now aims to transform itself into “the most attractive brand for sustainable mobility”. The company is pursuing three strategic value drivers for the accelerated transformation – “brand value”, “scalable platforms” and “valuable enterprise”, each of which is underpinned by specific measures and ambitious goals.
Software integration to become a Volkswagen core competency
The company’s high volumes will ensure the necessary scaling of the software in the Group. Integration of software into the vehicle and the digital customer experience will thus become core competencies of Volkswagen. To this end, Volkswagen is spearheading the development of the customer-centric digital ecosystem, with the ID. Family blazing the trail. For this, Volkswagen has established the ID. Digital agile project unit that will provide “over-the-air” updates every 12 weeks starting in summer 2021. These will enable the vehicle to remain up to date throughout its life cycle and become better and better with new functions. A fully networked fleet of over 500,000 vehicles is expected to be on the road in just two years’ time, through which Volkswagen will be able to transmit direct customer feedback to new functions.
Business model 2.0: new customers and additional sources of income
By turning the vehicle into a software-based product, Volkswagen is setting the scene for new, data-based business models aimed at lowering entry barriers to individual mobility while offering very attractive service packages for the customers. Volkswagen thus aims to generate additional revenue over the service life of the vehicle through charging and energy services, through software-based functions that customers can reserve as needed, or through automated driving.
The company will also make the structure of the vehicle portfolio much less complex. Future vehicle generations will be produced with a much small number of versions. The individual configuration will no longer be set through the hardware when the vehicle is purchased. The vehicle will have virtually everything on board and customers can add desired functions on demand at any time using the digital ecosystem in the vehicle. This will significantly reduce production complexity.
Clear plan for driving up profitability
Volkswagen has earmarked around 16 billion euros for investment in the future trends of e-mobility, hybridization and digitalization up to 2025. To be able to finance the sizable future investments, the company will systematically work on increasing its efficiency with URYCHLIT. The targeted operating margin of at least 6 percent is expected to be achieved by 2023 and also secured long term.
The focus here will be on becoming more resilient to fluctuations in the market. To achieve this, Volkswagen is seeking to trim its fixed costs by 5 percent before 2023, increase factory productivity by 5 percent per year, optimize material costs by 7 percent and bring all regions into the black in the long term. In South America and the United States, Volkswagen is striving to break even in the current fiscal year. The company can now post a profit in North America with a decrease in sales volumes of around 15 percent and in South America with sales volumes down by as much as 30 percent.
Faster e-mobility expansion
Volkswagen plans to rapidly accelerate the global e-campaign once again: by 2030, the brand will increase the share of its all-electric deliveries in Europe to over 70 percent – double the previous planning target of 35 percent. In the United States and China, the brand is targeting an EV share of over 50 percent in the same period. To achieve this, Volkswagen will bring out at least one new BEV model every year. The all-wheel-drive ID.4 GTX will kick things off in the first half of 2021, followed by the sporty ID.5 in the second half of the year. The ID.6 X / CROZZ , a seven-seater electric SUV for the Chinese market, will be launched in autumn. Plans for an electric car under the ID.3 are pushed up by two years to 2025.
Volkswagen will continuously optimize the Modular Electric Drive Toolkit (MEB) with improvements in acceleration, charging capacity and range. Volkswagen will also play to its strengths as a platform champion in the next generation of a high-performance all-electric drive toolkit for flat vehicles – the Scalable Systems Platform . This will be deployed in 2026 for the first time in the Volkswagen’s flagship project, Trinity.
The combustion engine fleet will also be developed further in parallel to the acceleration of the e-campaign. All of the core models, including the Golf, Tiguan, Passat, Tayron and T-ROC, will get another successor. Ralf Brandstätter: “We will still need combustion engines for a while, but they should be as efficient as possible, which is why the next generation of our core products – all of which are world models – will also be fitted with the latest generation of plug-in hybrid technology, with an electric range of up to 100 kilometers.”
