Volkswagen Group CEO Matthias Müller last week announced an all-encompassing strategy that will see the automaker through the next 10 years and hopefully leave behind any lingering thoughts of the recent emissions cheating scandal, which incidentally VW is close to settling in the United States.
The new Together - Strategy 2025 is to transform VW and its various brands into a very different automaker to the one we know today, with the focus being on vehicle electrification, digitization, and autonomous driving. Part of the strategy also includes improving the environmental impact of the automaker’s internal combustion engines.
Müller on Wednesday presented the strategy to shareholders for the first time, providing more details on just what the automaker is planning.
Müller reiterated VW’s plan to launch more than 30 new electric cars between now and 2025, something the CEO described as “second to none in the industry.” These will be battery-powered electric cars, which Müller said would account for roughly one out of every four new cars the group sells by 2025. He estimated that by that date VW will be selling 2-3 million electric cars annually.
Volkswagen Budd-e Concept
Specific details on models weren’t revealed but already we have some clues. VW has at least one modular platform designed for smaller electric cars, which it previewed in the Budd-e concept car earlier this year. The automaker has also committed to an electric SUV from Audi in 2018, an electric sports car from Porsche due towards the end of decade, and an electric Phaeton from its namesake brand also due towards the end of the decade. We’ve also heard VW is looking at a second modular platform for larger electric cars and its own battery factory, and there should also be a successor to the current e-Golf.
Müller said the group is also ready to deploy fuel cell technology but added this will depend on the market reception and developments in hydrogen infrastructure.
Digitization and new business areas
Digitization, essentially bringing the Internet of things to cars, will revolutionize the business model for major automakers, something Müller said many people “still fail to appreciate.” This can open up new sources of revenue for VW, for example through the streaming of online services or mobility services like car- and ride-sharing.
Already we’ve seen Porsche establish a whole department focused on digitization, and we’re sure the other group brands will follow suit. VW also plans to set up a standalone division to focus on mobility services. Already it’s secured its first foothold in the segment at the end of May, when it invested in a strategic partnership with on-demand mobility company Gett.
Another new business area will likely be battery production, the economic importance of which Müller said is “plain to see” due to the mass adoption of electric cars spurred on by stricter emissions regulations, improvements in technology, and changing trends. Müller said VW will examine the entire process chain, from raw material right through to battery production. Already we’ve seen Mercedes-Benz and Tesla Motors [NSDQ:TSLA] commit to volume battery production.
Audi RS 7 Piloted Driving concept at Sonoma Raceway, July 2015
Perhaps the most disruptive of VW’s future plans is autonomous driving, as it has the potential to forever change the car ownership model. Once the domain of science fiction, fully autonomous cars are now on the cusp of entering the mainstream. According to Müller, the technology will be on the market “by the beginning of the next decade.” And Müller is not alone in his thinking. Senior executives from Fiat Chrysler Automobiles [NYSE:FCAU], Google and Tesla have provided similar timelines—and IBM and Local Motors are already ready to commercial a fully autonomous minibus.
VW is developing its own autonomous car technology, primarily through Audi, and plans to license the technology to other firms. General Motors Company [NYSE:GM] and Google have similar plans, including offering on-demand autonomous taxi services.
But even with all these new areas of focus VW isn’t abandoning its current competencies. The automaker says vehicles with internal combustion engines will still account for around two thirds of the global new car market by 2030.
Müller said VW will continue to reduce the emissions of its internal combustion engines. For example, the automaker will start installing particulate filters on its gasoline models from June 2017. And in the future, VW will rely on independent third-party testing of its emissions.
Finally, Müller provided some initial detail on cost-cutting measures at the automaker. It’s been rumored VW might sell Ducati and some commercial vehicle brands as well as drop more than 40 models from its vast portfolio. However, Müller in his most recent presentation only mentioned consolidating the various component operations, which at present includes 67,000 staff and 26 locations around the globe.
The consolidation “will improve transparency while boosting internal competition,” Müller said. “Anyone familiar with Volkswagen will know that the realignment of the components business is a big step for our company—as is the transformation of our core business as a whole.”