Europe’s largest carmaker Volkswagen is setting more ambitious goals on the way to becoming a software-driven mobility company and says that by 2030, every second vehicle it sells will be an electric car.

The new strategy comes hot on the heels of the latest set of fines dished out to European carmakers VW, BMW and Daimler for illegally colluding to delay the supply of clean vehicles in the wake of the 2015 Dieselgate scandal. In a live-streamed event on Tuesday, Volkswagen CEO Herbert Diess said:

“We have set ourselves the strategic goal of becoming the world market leader for electric vehicles – and we are on the right track,” presenting the group’s new corporate strategy for the rest of the decade entitled “New Auto.”

What exactly is new in the German carmaker’s grand plan is that it wants to generate revenue with software updates and additional services and collaborate with new partnerships. Compared to 2018, the group wants to reduce its carbon footprint per car over the entire life cycle by 30% by 2030.

In that same period, it is targeting a share of sales of e-cars to increase to around 50%, and by 2040 almost 100% of new vehicle sales from the VW Group will be emission-free in its main markets. The group says it wants to be completely climate neutral by 2050 at the latest. According to Diess, the priorities are shifting because “technology, speed and scaling will play a more central role than they do today”.

The high-margin business with internal combustion engines is intended to finance and accelerate the conversion to e-mobility, with the margins of electric cars being improved through lower battery and production costs and increasing unit numbers. They should converge over the next two or three years, according to Diess.

The Wolfsburg-based group intends to make greater use of its economies of scale across all brands with four standardized platforms from which the subsidiaries can use. This involves the basic technical architecture of e-cars, the increasing use of proprietary software in vehicles, in-house battery cell production and mobility services. By 2030, the market for mobility services is likely to grow from below ten billion dollars today to over 100 billion dollars (almost 85 billion euros), said Diess, powered by driverless robot taxis that transport people in cities and suburbs.

Electric cars to help stabilise power grids

Diess has also come to the view that electric cars can function as a key stabiliser of the electricity grid. Acting as a buffer with bidirectional charging capabilities, they can ensure a stable network.

Chinese partner for battery cell factory

VW also announced that it would build its planned battery cell factory in Salzgitter together with its Chinese partner Gotion High-Tech, with production slated to start in 2025. VW acquired a stake in the Chinese battery manufacturer in May 2020, with a plan to develop and commercialise the volume production of battery cells. Diess also commented:

“We look forward to expanding our partnership with Gotion High-Tech as an established, high-profile battery company in order to jointly advance battery cell technology. This is the first step on the way to our goal of becoming one of the three largest battery cell manufacturers in the world together with partners.”

Growth in partnerships

In Europe alone, the VW Group will work with partners to build six giga factories with a total production capacity of 240GWh by 2030 in order to secure the battery supply.

In Sweden, they are working with partner Northvolt to start production in 2023. At a third location, VW wants to make Spain a strategic pillar of its electric offensive. The group intends to locate the production of the planned small electric car series there from 2025 onwards.

With this, Volkswagen will ultimately build a complete energy ecosystem around the vehicle and the charging infrastructure, which will enable customers to charge comfortably and open up further business potential. From 2021 to 2025, Volkswagen will invest around 73 billion euros in future technologies, which corresponds to around 50 per cent of total investments.

The share of investments in electrification and digitisation will also be increased further in the future, says Volkswagen. The plans for the workforce are also ambitious: around half of the 660,000 employees currently work in traditional car production. In the next ten years, VW plans to implement a “massive transformation program” at its German auto factories, securing jobs until 2029.

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