Synergies and Alliances
Leveraging synergies increases efficiency
When developing vehicles, we cooperate closely with our brands to leverage synergies. The strategy formulated by our development alliance aims, for example, to make the Group more competitive 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 broad networks of expertise to address the topics of the future. In the reporting year, we consolidated the Group’s activities and responsibility for the development, procurement and quality assurance of all battery cells in the Center of Excellence under the umbrella of the Volkswagen Passenger Cars brand. Pilot production will also start here, with the aim of building up manufacturing expertise for our Group.
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, non-overlapping yet synergistic platforms. 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 work on 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 business areas, accelerating decision-making and improving the result-orientation of projects.
Under the umbrella of Volkswagen Truck & Bus, MAN and Scania are continuing to work together on core drivetrain components based on the lead engineering principle. They have expanded their development work in the fields of electrification and autonomous driving.
We are also creating synergy effects by continuing to closely share best practices, for instance in virtual development and testing. Finally, the centralized development and consolidation of IT systems is helping to promote 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 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. In future, we will therefore concentrate to a greater extent on partnerships, acquisitions and venture capital investments, and will manage investment selection centrally so as to generate maximum value for the Group and its brands.
Developing battery technology as a core competency has also been defined as 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 development 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 are inviting tenders for long-term strategic partnerships in China, Europe and the USA with a global order volume of more than €50 billion in the period to 2025. Looking ahead, we are already preparing for the next generation: together with partners, we aim to develop solid-state batteries to market maturity with ranges of more than 1,000 km.
In 2017, MAN and the Austrian Council for Sustainable Logistics consortium signed an agreement to jointly develop and test fully electric-powered trucks. The results will feed into the series development of electric trucks for urban delivery traffic.
Our mobility business MOIA is currently working with Hamburger Hochbahn AG to develop a new, environmentally friendly mobility service for Hamburg: a shuttle-on-demand service with environmentally friendly electric vehicles is due to launch in 2018 to complement public transport and as an alternative to the private car.
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.
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, it is planned to jointly build and operate fast-charging stations at 400 locations along major transport arteries in Europe.
Volkswagen Commercial Vehicles launched the Urban Logistics project initiative in the reporting year together with universities and businesses. The project partners are bringing together a wealth of promising ideas – such as intelligent connectivity, smart mobility solutions, digital communication and control technologies and the use of electric-powered delivery vehicles – to create practical solutions for districts or whole cities.
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. Given the growing importance of e-mobility, automotive lightweight construction is a key technology for future competitiveness. Less vehicle weight increases the range of electric vehicles.