At the “Global Board Meeting” of the Volkswagen Group on January 16, 2020, CEO Herbert Diess warned that it was time for change. “The world is on the move”, Volkswagen is in the middle of the storm of the two largest transformation processes and has to react. Climate change and the associated pressure to innovate for emission-free driving, as well as digitalization, which is fundamentally changing the automobile product, must be addressed.
At the beginning of his speech, this indicates that the “The group does not always have the best conditions to react quickly and consistently enough to these developments.” Judging by that, the group has not done badly so far. But it has to be considered: “The storm is only just starting.” As the CEO of the VW Group more than clearly understands. But they already have the right solutions ready.
VW ID.3 as a pillar when CO2 fleet values are reached
One of them is that the ID.3 has to hit the road. To do this, challenges must be overcome in the start-up phase: the challenge is software and electronics complexity. A VW spokesman last indicated the following about the software problem: “The schedule remains: the market launch is planned for summer 2020.” The VW spokesman said the company plans to build around 100,000 electric cars in its Zwickau plant this year. A reasonable basis to meet the CO2 fleet values.
However, this also shows that not all of the CO2 fleet values can be shouldered by the ID.3: “In addition, in order to comply with the limit values, we also have to supply, build and bring Seat Mii, VW Up !, e-Golf, e-tron and Taycan with batteries into customer hands.” In his view, these challenges are perhaps the most difficult task that Volkswagen has ever had in mind.
Implementation of the e-strategy without loss of profitability
It is now clear that VW’s future can be seen in China and e-mobility has a high priority at VW. How high that can be seen from the VW delivery plans for China: by 2020, 300,000 electric cars; one million vehicles per year from 2025. However, this forecast was brought forward by a further two years in December 2019. China alone will invest four billion euros. A total of 11 billion euros are to be invested by 2024. Worldwide.
This strategy has to be implemented consistently. Without, however, accepting losses in profitability. “The margins in 2020 must at least hold. We have the potential if we really take the seriousness of the situation as an opportunity to fully exploit the potential of this group and where necessary also to slaughter holy cows ”, says the CEO of the VW Group on this topic.
An important component for this is the modular electric drive kit (MEB) – the key for “electric cars for everyone”. Economic production is the top priority. It can already be said today that progress in production is more efficient and sustainable. However, price parity between the combustion engine and the electric car can only be achieved with the 2nd generation of the MEB-Stromer.
“We will use the synergies in the group much more consistently and have to reduce the complexity even more. For this we form the synergy families. The idea of using the greatest possible synergies in the model development between the brands is not new. ”- Herbert Diess, CEO VW Group
Another example of the synergy in the group is the collaboration between Audi and Porsche. In order to reduce costs in the long term, this cooperation is to be expanded, among other things. A common vehicle architecture from Audi and Porsche is the first step in advancing electromobility in your own company, although this will probably be delayed until 2022.
Reduction to the essentials: fuel cells hardly relevant
In a post from mid-November 2019, VW already showed where, according to the current status, the decisive advantages of the electric drive lie over the fuel cell. And why the manufacturer considers the decision to consistently promote e-mobility to be the right one. The VW CEO emphasized this in his speech by announcing that the fuel cell and liquid fuels will be further developed at the basic level.
“They are not an alternative for car engines over a foreseeable time horizon of at least a decade. We need full concentration on the breakthrough of electromobility ”, Diess continues. The Volkswagen Group’s decision is clear: as a large volume manufacturer, it relies on battery-powered electric cars for a broad target group. Because the turnaround in mobility, however, has to take place in large volumes – if only for the sake of climate protection and the Paris Treaties. In just a few years, Volkswagen plans to sell more than a million electric vehicles a year.
“We need a common understanding of the radical nature of change. The size of our task. And in a short time. ”- Herbert Diess, CEO VW Group
Source: Volkswagen AG – Speech by VW CEO Herbert Diess at the Global Board Meeting on January 16, 2020
