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The global automotive industry is facing the biggest change in the century since the invention of automobiles, with electrification at its core. Emerging companies such as TSLA have taken the lead in the field of electric vehicles, and established multinational car groups are not lagging behind. They are determined to catch up with them with their rich experience in car manufacturing and strong strength. Volkswagen Group, which has ranked first in global car sales for two years, announced its 2030 NEWAUTO strategy on July 13th. Its important content is to accelerate the transformation into a software driven mobile travel service provider. The Volkswagen Group will collaborate with its various brands, focus on platform based strategies, create synergies and economies of scale, and create new sources of profit.

Herbert Dis, Chairman of the Volkswagen Group Management Board, stated at the announcement meeting: Our strategic goal is to become a leader in the global pure electric vehicle market. Based on the development of software technology, the next fundamental change in the automotive industry is to evolve towards safer, smarter, and ultimately autonomous vehicle products. For the Volkswagen Group, this means that technology research and development, accelerated transformation, and large-scale development will be unprecedentedly important. The future of automobiles and the prospects of mobile travel will be bright

Achieve carbon neutrality by 2050

Cars are an important source of carbon emissions. According to relevant statistics, the annual carbon dioxide emissions from global road traffic account for about a quarter of the total carbon emissions, with cars accounting for about 17%. Reducing carbon emissions and achieving carbon neutrality are arduous tasks for the automotive industry.

Volkswagen will make full use of the opportunities brought by the electrification and digital era, and take sustainable development and carbon neutrality as an important part of the group's new strategy. By 2030, Volkswagen will reduce the carbon footprint of each vehicle throughout its entire lifecycle by 30% compared to 2018, as promised by the Paris Agreement. Meanwhile, the share of pure electric vehicles will increase to 50%. By 2040, all new vehicles sold by Volkswagen in important global markets will be close to zero emissions. Achieve carbon neutrality by 2050 at the latest.

The future profit and revenue source of Volkswagen Group will gradually shift from gasoline powered vehicles to pure electric vehicles, and driven by autonomous driving technology, to software and services. In the next 10 years, the fuel vehicle market will shrink by more than 20%. By 2030, software related sales are expected to reach 1.2 trillion euros, an increase of about one-third compared to the expected sum of pure electric and gasoline vehicle sales, resulting in more than double the sales of the entire mobile travel market, from approximately 2 trillion euros currently to an estimated 5 trillion euros. Personal mobile travel business is expected to account for 85%, and these shares will be the core business of Volkswagen Group in the future.

Fuel powered vehicles provide funding for electrification

As a globally leading multinational automotive group, the cash flow generated by the lucrative fuel vehicle business has provided funding for the electrification transformation and accelerated its development.

Volkswagen believes that the synergistic effect brought about by battery and cost reduction, as well as the expansion of production scale, will drive the profit margin of pure electric vehicles to increase. The cost increase brought about by the implementation of Euro 7 emission standards by the European Union, as well as tax disadvantages, will reduce the profit margin of fuel vehicles. In the next 2-3 years, the profit margins of gasoline powered and pure electric vehicles will remain unchanged. Under the new strategic plan, Volkswagen Group has raised its expected operating sales return from 7-8% to 8-9% in 2025, which will serve as the basis for the 70th round of internal planning in November 2021.

The Volkswagen Group allocated 73 billion euros to invest in future technology from 2021 to 2025, accounting for 50% of the total investment. While the group's investment in electrification and digitization has further increased, it will continue to improve efficiency and achieve a 5% fixed cost and 7% material cost reduction plan in the next two years. By optimizing the vehicle model, powertrain system combination, and price combination, the goal of optimizing the gasoline vehicle business is achieved.

Independently control the battery supply chain

According to the strategic plan, electricity will become the core competitiveness of Volkswagen Group by 2030. The "battery cells and systems" and "charging and energy" will become the two pillars under the new technology department of the Volkswagen Group. The Volkswagen Group plans to establish new partnerships to address all issues that arise from raw materials to recycling and build a controllable battery supply chain.

To achieve this goal, the Volkswagen Group is enhancing its competitiveness related to batteries and reducing the complexity of production processes. To this end, the group will introduce standard battery cells, which are expected to reduce costs by 50% by 2030 and begin to be widely used in about 80% of the electric vehicles of various brands under the group.

By 2030, the total annual production of Volkswagen's six super battery factories located in Europe will reach 240 gigawatts per hour, ensuring battery supply. On July 13th, Volkswagen Group and China Guoxuan High tech reached a strategic cooperation framework agreement to promote the industrial production of standard battery cells for conventional vehicle models in Germany.

Volkswagen Group will build charging public infrastructure in Asia, Europe, and the Americas through successful partnerships with joint venture companies such as Camus in China and ElectrifyAmerica in the United States. ElectrifyAmerica has announced plans to build 1800 fast charging stations and install 10000 charging stations in the United States and Canada by 2025. Volkswagen Group will build 18000 high-power charging stations in Europe, 17000 in China, and 10000 in the United States and Canada.

Volkswagen Group Parts CEO Thomas Schmall stated: The battery supply chain controlled by the group can ensure good control of important costs and provide our customers with the best and most sustainable batteries, contributing to the success of the group's electrification campaign. Pure electric vehicles will become intelligent mobile power sources that can be part of the energy system through bidirectional charging. This will enable us to obtain additional profits from the energy market by 2030

Developing new mobile travel services

According to the strategic plan, by 2030, the Volkswagen Group will have the system capability to operate autonomous driving fleets, establish fleets, and expand related mobile travel services and financing businesses. Volkswagen Group is testing the first batch of autonomous buses and plans to launch similar projects in other cities in Germany, China, and the United States. In 2025, Volkswagen plans to provide the first autonomous driving travel service in Europe and will soon provide similar services in the United States. The Volkswagen Group will establish a fleet that covers all travel services, from leasing, booking to sharing, and ride hailing services, to ensure high convenience, occupancy, and profitability.

Christian Dahlheim, member of the Volkswagen Group's management board and head of digital vehicles and services, pointed out that the Volkswagen Group aims to gain a strong competitive advantage in the field of mobile travel solutions. We will directly provide services to customers or collaborate with strong partners based on the specific situation of different markets.

He believes that China, the United States, and Europe are three key markets. The Chinese market plays a crucial role in the success of the group's future mobile travel transformation. Through ID.4, ID.6, and the upcoming ID.3, Volkswagen collaborated with partners to launch the pure electric vehicle series to the market, and transformed the newly established new energy vehicle joint venture of the group - Volkswagen Anhui - into a local production base for the SSP platform, including a new research and development center under construction. Volkswagen Group will also leverage more local talent skills and abilities to further expand its business in China.

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