The 12 Group Initiatives of the NEW AUTO Strategy
With NEW AUTO, we are resetting our priorities and developing the necessary expertise as we continue our transition from automotive manufacturer to mobility group. Alongside software development and capabilities in autonomous driving, this also includes areas such as battery technology, battery recycling, charging infrastructure and mobility services.
The new Group strategy consists of a total of twelve Group initiatives across the brand groups. The focus is on the main multidisciplinary topics of mechatronics, software, battery & charging, and mobility solutions, on which the five tech initiatives described below are based. A further seven base initiatives form the foundation for the Volkswagen Group’s strategic realignment. These are ESG, Decarbonization & Integrity, Business Model 2.0, North America (NAR) and China Regions, Group Steering Model, People & Transformation and Financing the Transformation.
To make the progress in the relevant Group initiatives of our strategy as transparent as possible for management and employees, the Group Board of Management decided to structure and regularly measure the strategic goals and milestones using the OKR (Objectives and Key Results) method. This means that, for each Group initiative, achievable
THE 12 GROUP INITIATIVES OF THE NEW AUTO STRATEGY
MECHATRONICS – BACKBONE AND SCALABLE SYSTEMS PLATFORM
Innovation, technology and lasting competitiveness are to be ensured using a future-oriented mechatronics platform. A standard platform known as the SSP – Scalable Systems Platform will enable maximum synergy effects, reduced investment costs and fast, regular technology updates, while also ensuring the necessary product differentiation in the Group’s portfolio. The Backbone and SSP tech initiative forms the basis for autonomous driving and supports us in being able to offer electric cars for all.
SOFTWARE – CARIAD: ONE E3 2.0 PLATFORM AND AUTONOMOUS DRIVING (AD) STACK
Software-based customer functions (such as driver assistance systems) have already improved driving comfort and vehicle safety significantly in the past. As vehicles become fully connected in future and increasingly complex software technologies are developed (for instance with the aid of artificial intelligence), a completely new experience of mobility and additional product differentiation will become possible, due in part to the development of automated driving. To maximize synergies in the development of software platforms and software-based customer functions, the Volkswagen Group combines this development expertise with software subsidiary CARIAD’s new software architecture E3 2.0. The CARIAD: One E3 2.0 Platform and AD Stack tech initiative thus comprises measures to drive the development of software platforms for connectivity and automated driving and their rollout to all Group’s vehicles.
BATTERY – CELL AND BATTERY STRATEGY
We must become a profitable expert along the entire battery life cycle to achieve our objective of transforming into a world-leading provider of sustainable mobility. To this end, the Cell and Battery Strategy tech initiative pools expertise across the Group and drives the transformation process together with our strategic partners. This includes battery management along with cell production and recycling.
CHARGING – CHARGING AND ENERGY SERVICES
We need to ensure coordinated and cohesive cooperation across the whole Group to establish ourselves as a global, comprehensive charging and energy services provider in the future. The Charging and Energy Services tech initiative combines activities across the brands, creates synergies and drives the creation of a dense and extensive charging network.
MOBILITY SOLUTIONS
In keeping with its mission statement, “Mobility for generations to come”, the Volkswagen Group is developing mobility solutions of the future, taking into account global trends and changing customer needs. Autonomous driving, combined with new mobility solutions, is expected to mark Volkswagen’s transformation into a leading provider of sustainable mobility.
ESG, DECARBONIZATION AND INTEGRITY
ESG (Environmental, Social, Governance) refers to the basic principles of doing business sustainably. The Group’s stakeholders (e.g. investors, employees, customers and non-profit organizations) have high expectations of the Company’s ESG performance, including issues such as decarbonization and integrity, but also its conduct as an employer and as part of society. The ESG performance therefore directly affects the Group’s market capitalization, cost of capital and investing activities.
BUSINESS MODEL 2.0
By connecting vehicles, we will be able in future to remain in contact with customers throughout the entire vehicle lifecycle and thus to offer them services and functions for their individual needs. The Business Model 2.0 base initiative is developing a Group-wide portfolio of services that aims to create a seamless and innovative product experience to connect brands, customers, dealerships, our partners and whole markets.
NORTH AMERICA (NAR) REGION
North America is the region with the greatest growth potential for the Volkswagen Group, especially in e-mobility. In the United States, we are putting a wide range of highly attractive electric vehicles on the roads, tailored to the market. We are positioning ourselves for the future and are ready to leverage the growth of an increasingly electrified market using our strong brands, products and services.
REGION CHINA
China is of major strategic significance to the Volkswagen Group as its largest single market, which we expect will continue growing in the future. This base initiative therefore brings together all key measures to continue the success story of Volkswagen in China. It includes a comprehensive program of measures to expand market share in the electric vehicle segment and safeguard market share in combustion engine vehicles. The core component remains a Group-wide localization strategy, which aims to offer Chinese customers tailored products using globally developed platform technologies (hardware and software).
GROUP STEERING MODEL
To achieve the objectives of the Group strategy and, consequently, long-term success for the Volkswagen Group, we need to establish mechanisms for making swift decisions and exploiting synergies at a consistently high level, and to constantly enhance them. The updated Group steering model hones the definition of responsibilities and roles and provides transparency, thus strengthening collaboration within the Group. The Volkswagen Group is creating a future-oriented governance model to match the changing environment.
PEOPLE & TRANSFORMATION
As it becomes a global tech company, the Volkswagen Group will see the biggest transformation of its workforce in its corporate history. To ensure the Group remains competitive in future, we need to attract and retain top talent in the long term and support employees by providing extensive training. Aligning the structure of the workforce with the fields that will be relevant for the future will also be centrally important.
FINANCING THE TRANSFORMATION
The transformation being driven by digitalization and electrification will require extensive investment. To meet the need for financing, this base initiative aims to leverage even more Group-wide synergies across all functional areas along the value chain, focusing on costs and efficiency. The initiative therefore includes multiple action areas, such as productivity increases at plants and measures to optimize cash flows in the Group.