29 Sep 2016 | Sören Amelang

Dieselgate forces VW to embrace green mobility

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The VW Group is a global giant of the automobile industry and comprises a range of different car brands. The company was slow to embrace sustainable transport compared to its German peers BMW and Daimler. But, in the wake of the emissions scandal, it set out ambitious plans to transform itself into a renewable mobility leader. This factsheet provides an overview of the VW Group and its plans for the future.

VW Group key figures 2015

Sales: 213 billion euros (plus 5 percent compared to 2014)

Net loss: 1.4 billion euros due to emissions scandal (2014 profit: 11.1 billion euros)

Vehicle deliveries: 9.93 million (2014: 10.13 million)

Employees mid-2016: 613,600 (thereof in Germany: 278,100)

Market capitalisation in mid-September 2016: 64 billion euros (Sep 2015 - before Dieselgate: 91 billion euros)

 [sources: VW Factbook 2016, Half-yearly financial report Jan-June 2016]

Total cost of Dieselgate remains unknown

Volkswagen (VW) admitted in September 2015 that it had cheated on US diesel emissions tests with secret software for years, causing a wave of lawsuits and fines. The total cost of the “Dieselgate” scandal, which affected nearly 11 million vehicles worldwide, remains unclear. VW said in April 2016 that it would set aside 16.2 billion euros and slash its dividend to finance the costs. In June, the company agreed to pay as much as 15.3 billion dollars in the US alone, with many lawsuits and criminal investigations all over the world still pending. The Group is headed by CEO Matthias Müller. Müller took over from Martin Winterkorn, who left the company in the wake of the emissions scandal.

The Volkswagen Group is Europe’s largest carmaker and comprises 12 brands from seven European countries: Volkswagen Passenger Cars, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN. Its share of the world passenger car market is around 12 percent. In Western Europe, almost a quarter of all new cars is made by a Volkswagen company, according to company data.

The Group operates 119 production plants in 20 European countries and a further 11 countries in the Americas, Asia and Africa. It produces nearly 42,000 vehicle every weekday.

VW is headquartered in Wolfsburg, northern Germany. It also produces large diesel engines for ships, chemical reactors, gear units for wind turbines, and many other specialised products. Its financial operations offer financing, leasing, banking and insurance activities, and fleet management.

VW is a publicly listed company. Its main shareholders include the state of Lower Saxony and Qatar.

VW and new mobility

Most experts consider the VW Group a relative latecomer to future mobility business areas. The core brand VW, for example, has no model that is exclusively electric, but offers electric engines only as an option in existing models developed for combustion engines.

The VW brand started selling the electric city subcompact e-up! in late 2013 and added the e-Golf in 2014. The e-Golf has become a bestseller in e-mobility pioneer Norway. VW plans to increase cumulative sales of the e-up! to 14,000 at the end of 2016, and of the e-Golf to 34,000. The company also plans to boost the battery capacity to increase the range to more than 300 kilometres.

VW managed to catch the public’s attention with the presentation of the BUDD-e, a concept car whose appearance is inspired by the legendary VW Bus.

VW’s premium brands Audi and Porsche have made greater strides when it comes to electric mobility than the core brand VW, according to car experts. Both are currently working on electric models – an electric Audi SUV is slated to hit the road in 2018, and Porsche’s “mission-E” after that.

But VW is currently developing a new technology matrix for electric vehicles – the “Modular Electrification Toolkit” (MEB). It will be the company's underlying electric vehicle platform and can be used to make various e-cars in the future. The development of this entirely new vehicle architecture is very expensive and, therefore, seen by experts as a sign the company is now serious about electric mobility.

VW showcased the electric compact car "I.D." based on the MEB at the Paris car show in September 2016. The I.D. will have a range of up to 600 kilometres, will be launched in 2020, and is “ready for fully automated driving”, according to the company. It will be sold at the price of a Golf diesel.

VW brands SEAT and SKODA have also announced their first e-cars for 2019. VW plans its first large e-car “from 2020”.

To get a foothold in the market of ride hailing, VW spent 300 million dollars in May 2016 to buy GETT, an investment that was ridiculed by some media as a hectic and desperate attempt to catch up with the competition.

Strategy 2025 – “Evolution is much too weak to describe what lies ahead”

In June 2016, still reeling from the emissions scandal, the company announced its eagerly awaited new Group strategy “TOGETHER – Strategy 2025”. According to the company, the plan ushers in “the greatest process of change the company has ever seen”, and will transform Volkswagen into “a world-leading provider of sustainable mobility”. The strategy involves developing further “core competencies” such as battery technology, digitalisation and autonomous driving and artificial intelligence, and will “rely to a greater extent than before on partnerships and venture capital investments”. VW CEO Müller said at the presentation: "The word 'evolution' is much too weak to describe what lies ahead [...] not only automobiles face dramatic changes, but mobility will be defined in a new way."

The strategy’s first pillar is “transforming the core business for the new age of mobility”. One focus is e-mobility, where VW plans a broad-based initiative. Another is automated driving: “The aim is to gain a license for a self-driving system developed in-house for fully autonomous vehicles.”

Volkswagen said it will launch more than 30 purely battery-powered electric vehicles by 2025. “The company estimates that such vehicles could then account for around a quarter of the global passenger car market,” it said. VW aims to sell between two and three million e-cars per year in 2025, “equivalent to some 20 to 25 percent of the total unit sales expected at that time”. VW has not yet decided whether to produce its own batteries, saying it will “carefully examine” the strategic options.

The strategy’s second pillar is “the establishment of a new cross-brand mobility solutions business. The cornerstone and starting point of the new business unit will be the provision of on-demand mobility”. VW plans to offer services including “robotaxis, carsharing, or on-demand transport for the logistics industry”. It hopes the new mobility solutions business unit will generate sales revenue “in the billions” by 2025.

VW aims to fund the new strategy primarily through efficiency gains across the entire group. It said it expected investments “in the double-digit billion range” in future technologies, and Müller promised his company “will be a technology leader and role model when it comes to environment, safety and integrity”.

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