#Strategy

Volkswagen Group is consistently driving its e-offensive in China for China. Volkswagen and XPENG have entered into a Master Agreement on platform and software collaboration, marking a significant milestone in their strategic partnership. In December 2023, Volkswagen completed the acquisition of shares amounting to around 4.99 per cent of the total issued and outstanding share capital of XPENG, at that time following the announcement of the partnership in July. The Master Agreement centres on the initial joint development of two mid-size Volkswagen brand vehicles, which will launch first with a SUV. This will enable the VW brand to expand its existing portfolio quickly, to reach new target customer groups in the fast-growing EV market in China. The two jointly developed e-models will be equipped with state-of-the-art software and hardware, offering Chinese customers an intuitive, connected digital experience and advanced automated driving functions. All parties are contributing their respective core competences to the joint development work.

In the future, digital products based on artificial intelligence (AI) will play a key role for the Volkswagen Group. New infotainment and navigation applications, high-performance speech recognition, extended vehicle functions and the deep integration of digital ecosystems in the car will bring considerable benefits to customers, enhancing the product experience. This is why Volkswagen has established a specialized “AI Lab”. The company will act as a globally networked competence center and incubator. AI Lab will identify new product ideas for the Volkswagen Group, and coordinate them internally within the Group. As the need arises, this will also include collaboration with the tech sector in Europe, China and North America. By adopting this approach, the Volkswagen Group intends to simplify collaboration with technology companies with a view to making optimum use of the innovation potential and speed of the AI sector. The objective is to rapidly develop digital prototypes and transfer them to the Group brands for implementation.

The Volkswagen Group is strengthening its Technical Development Board function in the China region as part of its “In China, for China” strategy. Thomas Ulbrich, former Member of the Board of Management of the Volkswagen Brand for “New Mobility”, will head up Technical Development for the Group in China from April 1, 2024. In his new capacity, Ulbrich, who has already held two management positions for the Group in China, will continue to advance the technological localization of the portfolio. He succeeds Marcus Hafkemeyer, who – with his extensive experience of China – will support the company’s transformation in a new role in the Group.

The Volkswagen brand has achieved an important milestone in the “Accelerate Forward/ Road to 6.5” global performance program, with management and employee representatives reaching agreement on key points to streamline the company, following intensive negotiations. The objective of the three-year program is to secure the Volkswagen Group’s core brand competitiveness, ensure it is future-proof and sustainable in the long term. The Volkswagen brand aims to make a positive earnings contribution totaling ten billion euros by 2026, also to offset negative effects such as inflation and higher raw material costs. The operating return on sales is expected to improve sustainably to 6.5 percent in 2026. The Volkswagen brand projects that the program will deliver positive earnings contributions of up to four billion euros as early as 2024. To achieve this, the Company concentrates on performance-enhancing and cost-saving measures in the program’s three focus areas: optimizing material and product costs, reducing fixed and manufacturing costs and increasing revenues. The Company and the employee representatives have also reached agreement on staff reduction measures to cut personnel and labor costs. These measures will apply throughout Volkswagen AG. As such, from January 2024 the Company will extend its partial retirement schemes to all employees born in 1967 (and for severely handicapped employees born in 1968), to reduce administrative staff costs in particular. The current hiring freeze and access freeze to the Tarif Plus salary group will continue until further notice.

Volkswagen Group-owned battery company PowerCo SE steps up its activities in Canada. Ramping up its cell production activities in Europe and North America, the site of its future cell gigafactory in St. Thomas, Ontario, is now prepared for groundbreaking and start of construction in 2024. Sebastian Wolf, Chief Operations Officer of PowerCo SE, said at an event on site: “We are fully on track. Site preparation, the first phase of Gigafactory St. Thomas, has been completed. We are now ready for the next stage on our path to the sustainable and responsible production of battery cells. PowerCo will be a reliable partner for the people in St. Thomas and Ontario.”

The Volkswagen Group is systematically strengthening its development expertise ‘in China for China’. To drive this strategy, Volkswagen is expanding its site in Hefei in eastern China into a state-of-the-art production, development, and innovation hub. At its heart is the Volkswagen China Technology Company (VCTC) – the Group's largest development centre outside Germany, with a clear focus on intelligent, fully connected vehicles. VCTC aims to reduce the time to market for vehicles and components by 30 percent through efficient development processes and the use of cutting-edge technologies. As a result, the Group will better harness the growth momentum of the Chinese market. The hub is also taking on key development tasks, including the development of a local electric platform for the entry-level segment. Derived from the Group's modular electric drive matrix (MEB), the new platform is intended to open up further market segments in China. From 2026, the platform will form the basis for additional battery-powered vehicles (BEV) specifically tailored to the wishes of Chinese customers. The development time of just 36 months is around a third shorter than the Volkswagen Group's previous timescales.

The Volkswagen Group has systematically continued its transformation in the first nine months of 2023. All-electric deliveries increased by 45 percent to 531,500 vehicles globally, raising the BEV share of total deliveries to 7.9 percent after 6.1 percent in the prior year period. In the third quarter alone, the BEV share climbed to 9.0 percent compared to 6.8 percent one year ago. From January to September, Europe remained the key growth driver with an increase of 61 percent to 341,100 vehicles. BEV deliveries jumped 74 percent to 50,300 units in the USA and surpassed prior year levels in China with an increase of 4 percent to 117,100 units.

Porsche AG is looking back on its first year after its much-anticipated IPO on 29 September 2022. “Today, we can say that our IPO has been a huge success. It’s good for our customers, our shareholders and our employees as well,” says Chairman of the Executive Board Oliver Blume. “With the greater entrepreneurial freedom and flexibility, we are able to set our own priorities. We can also act more quickly and with greater focus. In a dynamic and challenging global environment, that’s more important than ever.”

The Volkswagen Group is modernizing its corporate design, replacing the previous look from 2007. The word mark has been changed from "Volkswagen Aktiengesellschaft" to "Volkswagen Group" to underline the Group's global orientation and increase the distinctiveness of its appearance in relation to the Volkswagen brand. The word mark, font, colors, design elements and visual language were completely renewed among other things. The new corporate design is being introduced successively, starting in Germany. The international markets will follow next year.