He’s just got his contract get extended until autumn 2025 – Now Volkswagen group boss Herbert Diess (62) wants to really set the pace with the conversion towards a tech group: With its eleven vehicle brands, the Volkswagen group is preparing to play a leading role in the new mobility world, Diess said at the presentation of the next stage of the corporate strategy by 2030.
In the coming years, Volkswagen aims to reduce the carbon footprint per car by a third over its entire life cycle. Today’s robust and high-margin business with internal combustion engines is intended to finance and accelerate the switch to e-mobility. At the same time, the margins of e-cars are to be improved through lower battery and production costs as well as increasing unit numbers. In two to three years, the margins of the two technologies will have roughly equalized, the car company estimates.
The role that electric cars and software will play in the group in the coming years – Diess explained in great detail today. He almost left the transformation from combustion to electric car behind. The plans are in place, but there is a catch. He makes another great promise in the “New Auto” strategy. Volkswagen wants to achieve what Apple, Google and Amazon have achieved in the tech world: develop the car, the most networked device in the world, into a rolling business model.
VW should overtake Tesla as early as 2025
The clear challenge from Diess: Volkswagen also wants to become the market leader in electric cars, the share of electric cars should reach around 50 percent globally by 2030. He wants to overtake his rival Tesla. The vehicle concepts were slowly converging, and the technology was also consolidating for the components, said Diess in the direction of Elon Musk. “In 2025 we should have a good chance to overtake”.
In addition, Diess has ambitious goals. He is aiming for eight to nine percent as early as 2025 for the group, which today usually has a six to seven percent return on sales. This promise is based on the assumption that sales in the auto industry could more than double by 2030. The Volkswagen strategists assume that an additional two trillion euros in software revenue across the industry will then be realistic. The turnover of the entire automotive industry could increase from a good two trillion euros today to around five trillion euros in 2030.
The basic idea: based on the future SSP corporate architecture, the functions of the Volkswagen electric models should be almost completely unlockable via software updates for autonomous driving and other mobile services, always at an additional cost. Mobility services with autonomous cars, for example, could be “highly profitable” for the group on several levels, says Diess. Volkswagen does not even necessarily have to operate the fleet services itself.
The problem: Volkswagen is not there yet. The software units in particular are having a hard time. The IT subsidiary Cariad is still being set up; the group invests around 2.5 billion euros annually here. The Argo joint venture run jointly with Ford has not yet reached its goal either.
Like his predecessor Matthias Müller (68), Diess used corporate initiatives to ensure that everything works. For example, CFO Arno Antlitz (51) should look after fixed costs optimization and improved working capital and secure the billions in investments that are due. Head of Technology Thomas Schmall (57) is to organize the roll-out of the battery cell plants; the third of the announced six giant factories is likely to be built in Spain.
New cooperation aims to eliminate weakness in China
In the group initiatives, the responsible board members must also take care of the problem regions. North America, for example, has been a zone of failure for 20 years; Volkswagen intends to significantly increase the rate of electrification there in the future. The hope lies in US President Joe Biden (78), who wants to tighten the CO2 targets and increase electricity subsidies.
Diess does not want to be satisfied with the weakness in the USA. The CEO said he was aiming for a future market share of around 10 percent for the entire Volkswagen group in the USA. That would roughly double the current share.
But China, too, has recently developed into a crisis zone; the heels develop unusually weakly. And they are not used to that in Wolfsburg. Diess wants to expand there, especially in the field of electricity, so he is expanding its cooperation with the Chinese battery cell company Gotion: Volkswagen wants to build the battery cell factory planned in Salzgitter together with its Chinese partner. The CEO welcomed the cooperation with the announcement that he wanted to develop Volkswagen into one of the top 3 battery cell manufacturers in the world.
From 2025, production of the standard cell for the volume segment is to start in Salzgitter, which Europe’s largest car manufacturer expects to achieve significant cost reductions. In Sweden, Volkswagen is already planning the production of premium cells together with the battery cell specialist Northvolt.
As a location for a third large battery cell factory, Spain is an option, VW has now confirmed. Together with a strategic partner, the group is examining the option of building a gigafactory with an annual capacity of 40 gigawatt hours. In addition, the VW Group wants to locate the production of its planned small electric car series (“Small BEV”) in Spain from 2025. A concrete investment decision in this case depends, among other things, on whether there is state support for this.
Works council calls for second battery cell plant in Germany
The southern European country, the VW management now emphasized, will be “a strategic pillar in the electrical strategy”. A strategic partner is still being sought.
The works council issued a statement in favor of a second battery cell plant next to the planned gigafactory in Salzgitter. The group has come a decisive step closer to this second cell factory with the new strategy.
Specifically, it had been agreed that the board was basically ready to build another cell factory in Germany. For a corresponding decision on such an investment, the “necessary economic efficiency and political support from a future federal government are crucial”. The board of directors will sound out appropriate possibilities for a German location. The aim is to achieve competitive conditions for a second gigafactory in Germany.