Synergies and Alliances
Leveraging synergies increases efficiency
When developing vehicles, we cooperate closely with our brands to leverage synergies. The joint strategy of our development alliance aims, for example, to make the Group more competitive and viable in the long term by deploying resources more effectively and efficiently in the research and development of new mobility-related technologies, products and services. In our Group-wide development alliance, the brands not only work with each other, but also for each other on key technologies, forming cross-brand networks of expertise to address the topics of the future. For example, we consolidated the Group’s activities and responsibility for the development, procurement and quality assurance of all battery cells centrally in a Center of Excellence under the umbrella of the Volkswagen Passenger Cars brand. There, a pilot line for cell production will be put into operation in 2019 to build up expertise for the Group in cell design, as well as throughout the entire value chain.
Our modules are also managed centrally to reduce costs, capital expenditure and complexity. With the aid of a Group initiative, we are seeking to reduce expenditure in the toolkits, while at the same time implementing a wide-reaching electrification offensive and focusing on autonomous systems. We will achieve this through a considerable reduction in complexity using streamlined platforms that synergize but do not overlap. The individual Group brands are using the modular toolkits, thus creating synergies between the various models of a model line and across model lines. The streamlined toolkits are creating the financial leeway for development of the future trends of digitalization and autonomous driving. As part of the TOGETHER – Strategy 2025 program, the high-volume passenger car brands have introduced model line organization through a Group initiative, consequently strengthening the brands’ responsibility for the success of vehicle projects, improving project work across different cross-departmental areas, accelerating decision-making and intensifying the focus on results of projects.
We are also creating synergy effects by continuing to widely share best practices, for instance in virtual development and testing. Finally, the centralized development and consolidation of IT systems is also helping to strengthen cooperation across brands, make development activities more comparable and reduce the Group’s IT costs.
Pooling strengths with strategic alliances
The future program TOGETHER – Strategy 2025 plans to transform our core business and to establish a new mobility solutions business area at the same time. It is decisive to the success of this plan that we place our great innovative strength on even broader foundations.
Growth in the mobility sector is currently a global phenomenon, above all in the economy segment. As part of a Group initiative, Volkswagen is therefore increasingly entering into local partnerships to develop and offer economy products in line with the market. This is helping us to identify regional customer needs more precisely, to adjust our product range accordingly and to establish competitive cost structures. We are therefore concentrating to a greater extent on partnerships, acquisitions and venture capital investments and managing investment selection centrally so as to generate maximum value for the Group and its brands. In light of this aspect, we have formed a large-scale alliance with the Ford Motor Company. The first step involves a collaboration regarding the development of vans and mid-sized pickups starting in 2022. This alliance allows us, in addition to making optimal use of manufacturing capacity, to share the development costs and improve the performance and competitiveness of the vehicles. This generates cost savings, while further strengthening our innovative power. Beyond this specific agreement, we are considering collaboration for additional mobility and vehicle concepts.
Thanks to our strategic partnership with Microsoft, we are accelerating our transformation into a mobility service provider with a fully connected vehicle fleet and our digital ecosystem “Volkswagen We”. Working together, we aim to press ahead with software development for the automobile of tomorrow and new services for our customers. This enables the comprehensive strengthening and expansion of our IT expertise and solutions.
Developing battery technology as a core competency has also been defined in a strategic initiative of the Volkswagen Group. The battery accounts for 20 to 30% of the cost of materials in electric vehicles; in future, it will be one of the most important components for differentiating between products. We have already pooled our in-house expertise in battery cells in a Center of Excellence and also plan to accelerate the building up of expertise and technological change through intelligent partnerships. We anticipate that our own electric fleet with lithium-ion batteries will require a battery capacity of more than 150 GWh a year in the period to 2025. To cover this enormous demand, we have defined strategic battery cell suppliers for our most important markets and the first MEB models, and we aim to initiate further long-term strategic partnerships in China, Europe and the USA. Looking ahead, we are already preparing for the next generation: together with partners, we aim to develop solid-state batteries to market readiness.
As part of the joint involvement of our Group brands Volkswagen Passenger Cars, Audi and Porsche in the pan-European High-Power Charging (HPC) joint venture IONITY, a comprehensive charging infrastructure is being built to safeguard long-distance mobility: by 2020, we aim to jointly build and operate fast-charging stations at 400 locations along major transport arteries in Europe.
As part of forward-looking mobility concepts, the Volkswagen Group is also working on robot-based service solution for a variety of tasks. Rapid charging of an electric vehicle for example – be it in the user’s garage at home, in underground car parks or in car parks – is something that could be done by a service robot in the future: when the driver gets out of the vehicle in front of the car park, their self-driving electric car autonomously looks for a free parking space and is charged there by “CarLa” – a charging robot that the Volkswagen Group and automation specialist KUKA presented at the Geneva International Motor Show in 2018.
In view of the growing importance of e-mobility, lightweight automotive engineering is considered a key technology for future competitiveness because a lighter vehicle weight increases the range of electric vehicles. Our Material Research team plays a major role in the Open Hybrid LabFactory, a public-private partnership in which various industry and research partners work together to develop lightweight construction solutions for mass production.
We are actively involved in public projects to help shape the framework conditions for the approval and introduction of our own self-driving system. The experience we are gathering here will benefit the Group brands and thus also our customers.