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Volkswagen and its boss bet on a single card. Maybe electricity does not kill them.



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The world's largest auto group moved in the opposite direction after the diesel scandal. He has combined his fate with electromobility and is taking that step in development planning that BMW, Daimler and, above all, many suppliers are talking about. Schleswig-Holstein Transport Minister Bernd Buchholz (FDP) even warns that VW is leading a "high-risk gambling strategy."

Bet on (un) certainty

What will be the future of the car manufacturer? It's definitely not the same as the present. This is clear. But should it be one hundred eighty degrees? The group plans to invest € 30 billion over the next five years – investing in new electromodels and production capacity. According to calculations published by the German magazine WirtschaftsWoche, based on information from company managers, another hundred billion will become the purchase of batteries and other components necessary for the production of e-cars.

According to the head of Diesse, a course is defined that can not be changed: "We have invested billions of euros in electromobility in the last years". Only the conversion of the first electric car factory in Zwickau cost 1.2 billion euros. And the other seven races are currently being rebuilt or completely rebuilt.

The new Volkswagen Group platform for electric cars
MEB modular platform for vehicles with electrified drive

VW Group MEB modular platform for electrified drive vehicles

But what if the next strategy stands still or fails? What if new electric cars do not sell well? What if time has not yet died? "There is no way back to the internal combustion engine," one of VW's managers tells WirtschaftsWoche. "Such a reversal would not be economically or economically managed."

To put it another way: the Volkswagen Group, which is now coming to Wolfsburg, is playing in the electric car – and a large part of the German automotive industry. The role of the Volks in the German economy is crucial: every third car on the German roads and every eighth in the world comes from here. If Diess introduces 70 models on the market, as it is said repeatedly, over the next ten years, then it will probably be the most risky bet any German company has ever made.

New models are being created at Wolfsburg's VW headquarters in Walhalla's nicknamed factory: Almost everyone has heard of it, but hardly anyone was inside. In the royal Walhalle, which is the most important monument in Germany and is supposed to be the hall of fame of the German nation, fallen war heroes are buried. At the Walhalle in Wolfsburg, heroes are born and buried. Every few weeks, board members present new models here. In Walhalla, billions of projects are going to travel or fail. Colleagues are celebrated here or dishonored. This is where you decide where the group will go.

Herbert Diess, head of Volkswagen Brands at the Frankfurt Motor Show ...

Herbert Diess bet everything on a card with Volkswagen.

Diess's strategy is to repent for diesel scandals under the motto: take responsibility. "We calculate the share we have in global carbon dioxide emissions. And we have come to the conclusion that for passenger cars is one percent and for freight plus one percent. Two percent, like Germany. Unfortunately, says Michael Jost. The man who speaks as an environmental activist is the head of the company's strategy, intimate colleague Diess.

Therefore, the automaker has made a commitment: to produce a "car of the future". The group is expected to respond to the Paris climate deal. Therefore, all VW vehicles must be climate neutral from 2050. This means that it will not be possible to sell any internal combustion engine from 2040 onwards, so the development department in question must be closed within seven years.

For gasoline and diesel engine enthusiasts, suppliers, competitors and the automotive industry association, VDA is like a clean sky. If the largest manufacturer in the industry turns into electric cars, this will affect the world's internal combustion engines and billions of investments. VW will force its suppliers to follow the same course, and BMW and Daimler will look like gasoline fossils next to it, writes a German magazine.

Even Angela Merkel (CDU) herself, a few weeks ago, has assured that the diesel will be used for decades, is a lobbyist of the past in the light of current events. Federal Finance Minister Olaf Scholz (SPD) is on the side of manager Diesse: he advocates broadening support for electromobility in ten years.

A Forced Visionary

But basically, Diess just begins to realize what is inevitable. "A visionary who has no choice," says VW. Companies like Tesla are coming to market with ever better electric cars. Cars with combustion engines swallow billions. After all, the VW Group itself recently paid a ten-figure figure to adapt the models to the new EU emissions regulations. After 2023, the Euro 7 standard will be implemented, representing a cost of € 5 billion for VW for the necessary technological upgrades. "Every car will cost from one thousand to two thousand euros," says Jost. For large SUVs, customers can still accept price increases. But in the small car class, the variant of the combustion engine will be absolutely economically absurd.

Audi Q4 e-tron
Audi e-tron

Audi, the premium brand of the VW Group, already offers electric vehicles.

And while older technologies are losing profitability and attractiveness, there is another danger to concern: in 2018, Tesla sold five times as many electric cars as VW, and more than 7,000 brand cars leave the factory weekly. And technologically, Tesla has at least five years ahead of VW. They are no longer bothered by the leadership at Tesla and expect to be one of the market leaders. "We've been feeling like Cinderella for a long time," says Jost, head of strategy. "We have a terrible journey."

The crucial breakthrough came October 26, 2018. On this day, VW Board members discussed a variety of propulsion techniques throughout the day: the internal combustion engine, hybrid, gas, electric drive, hydrogen, synthetic materials. The result: only electric cars are promising, politically and socially acceptable in the foreseeable future. October 26, 2018 is the day the technology breakthrough was buried at VW.

What does it mean in practice? "Wait for something that never comes (car to hydrogen). Strategically wrong. However, to talk to pseudo-clean drives, such as plug-in-hybrid, which had a positive response to BMW and Daimler, they are referred to as "somewhat meaningless" in VW. In Wolfsburg, they are happy to be open to technology. That is finally clear, writes WirtschaftsWoche.

A new beginning

Over the next few years, Klaus Bischoff, chief designer of Volkswagen, will continue to focus less on existing models. On the contrary, it is a completely new car architecture, new materials, new features and uses. "Finally, the time when VW was considered a fraudulent company disappeared. Finally, we are back to the beginning of something new, "says the Chief Designer.

In early 2020, the first Bischoff model will be launched on the road. "The first electric car for widespread use will be called ID3," writes WirtschaftsWoche. In the world of electric cars, must be what it is today Golf: a classic of VW for all, high quality, timeless design. By the end of 2020, two more models should follow: compact electric SUVs and SUVs. By 2022, Diess plans to revive the Bulli minibus as an electric car and launch a large e-limousine à la Passat in the market. A year later, a large e-SUV and a small car are on the agenda; should cost less than 20,000 euros and more than 250 kilometers per recharge. And in parallel with the VW brand, there will be an increase in the offer of other brands of the group: Audi, Seat, Skoda and Porsche. Porsche wants to sell almost exclusively electric cars by 2030.

Family Volkswagen I.D.
Volkswagen also has its car batteries: Volkswagen I.D. Buzz

"You can also see a lot of commercials that illustrate the future of the car: the people in them represent how the Group understands itself. It expresses the desire to move forward, but at the same time humility and desire for normality, "the German magazine notes. "People in places are not exceptionally beautiful or overly rich or overly happy but open and motivated: the modern" people of Volkswagen. "They are human and honest, which are the qualities that VW wants to build in the future." As Bischoff says: "We want to be a real advertisement for the future.It's not the perfect world. Retouching is taboo."

Wirtschafts Woch's beautiful words and dots will be difficult to make. Actions will be important. What VW management, thanks to the emissions scandal, understands very well. "If VW's new power source turns out to be fraud, it could be fatal to worry. VW will not have to survive the next dieselgate case, "warns Larr Thompson, who oversees VW in the United States after the Dieselgate case.

For this reason, VW is building a green ecosystem around its new electric cars. To ensure that the cars are perfectly clean: not just when driving. The group wants to test suppliers using exploited raw materials and promises to pay special attention to raw materials for the production of batteries, such as cobalt or manganese, which often violate human rights. VW has produced a catalog of questions on the environment, social issues and corruption that will be presented to all suppliers. From the summer, only companies will be able to deliver to VW to answer the questions and prove the "pure origin" of their products.

And another thing: every car that VW delivers to a customer should not be free of scandalous raw materials in the future, but also climate-neutral. For example, a Korean battery supplier, LG, will in the future produce batteries for VW using renewable energy. If VW can not avoid CO2 with their suppliers or in their own production, offset the emissions by compensatory payments. According to estimates, the financial demands of the company could be enormous. So far, about 20 tonnes of CO are produced per vehicle2. If Volkswagen had to make up ten tons, it would cost 250 euros per car.

However, the car can only be labeled "environmentally friendly" if it is powered by renewable energy. For this reason, VW lobbyists are now struggling in Berlin for an accelerated shift in energy production. VW plans to offer its customers who buy an electric car a home refueling station for several hundred euros – and the green flow now only has three euros per 100 kilometers, according to calculations from VW's marketing department. If the car is discarded in the future, Volkswagen will recycle the car and the battery, even for financial reasons.

According to Bischoff's statements, VW takes green mobility seriously. But he would not be the right designer if he was not even enjoying the aesthetic and pleasurable aspects of the "mobility revolution." So it highlights how much space customers get for their money. "A smaller electric motor, no gearbox, no exhaust system – not the case with an electric car." And a great battery? It's in the car chassis. What is useful for customers who like to sit in a car – like in an SUV.

And the price-performance ratio? The ID3 with the size of the golf is about 28,000 euros in basic equipment. While the customer, in terms of interior space, actually gets the size of a Passat car. The electric "golf" will not be a car, but a "tablet on wheels", according to Bischoff's words.

VW is very popular with the tablet. It is intended to illustrate the revolution that it is. The change to electromobility can not be expressed briefly by the formula: gasoline engine and tank, electric motor and internal battery. The electric car will be an electronic product that can drive and can do much more. VW will be able to download and save any updates and updates tomorrow, as well as connect to other devices – customers will receive a special ID code as well as a cell phone. Bischoff found a symbol for transforming the VW of an automotive corporation into a "techkoncern" symbol: an arrow on the accelerator ID3 – a big "play" button, as we know it from entertainment electronics. Two vertical bars are shown on the brake: "pause" button.

Electronics for VW users

The production of the ID3 series will be released in late 2019 – when things go well. VW's leading tablet developer is Rolf Zöller, an electronics expert who leads the team of some 1,500 engineers and IT specialists. Zöller ensures that cars are easy to use – so drivers feel more like VW users.

That's why your team must adopt the Silicon Valley working methods, be quick and agile. Unlike sheet metal bending machines, the electrician section can not follow the exact steps. They must constantly try something new. They test their latest ideas in a virtual reality glasses simulator. Every few weeks, members of the board of directors visit the development space to experience everything and tour the interior of Tuscany in virtual reality. Over the course of days, things that have been considered for several months have often been decided.

Masked model Volkswagen I.D. Neo

Masked model Volkswagen I.D. Neo

Zöller estimates that the need for IT specialists in the Group will increase tenfold over the next three years. Not an easy task, good programmers go to Silicon Valley. Or for start-ups that attract a more relaxed atmosphere and profitable options in the stock market. VW is trying to gain new talent by working with big names in the IT arena, such as Microsoft and Amazon.

Exciting challenges await IT experts in Wolfsburg: for example, the development of the new E3 electronic platform, which will be deployed for the first time in ID3. "Up to now there are up to 100 controllers in a car, like small computers," explains Zöller. "The new platform has only three to five central computers."

Three, rather than hundreds of controllers, whose software is programmed by vendors – so far there is great potential for savings. The same is true for the rest of the car. A conventional motor consists of more than 1200 parts to be assembled; electric motor of only two hundred. E-cars are simple, so their production can be very advantageous.

Increase performance and reduce production complexity – the creed of a company can also be seen from a second perspective: as a reduction in the number of jobs. The transition to electronic mobility is therefore a great policy in Wolfsburg. The group is a federal state of 20% of Lower Saxony. That's why the important issues regarding VW production are among the best kept secrets: How many hours of work do you lose while making a car? The factory source reveals: VW will build the Golf in 26 hours. This is not very satisfactory. Competitors can produce comparable models in 20 hours. What about the new ID3? Must be done in 16 hours. The production efficiency is about 30% higher for all electric vehicles. If we end the scenario: out of a total of 640,000 employees worldwide, 200,000 of them would be unnecessary after the transition to electronic mobility.

Bearer of hope

The hope of the corporate board now relies on VW launching its own battery production. To do this, VW would need to have the necessary know-how, which is now trying to create a battery center about three miles from Wolfsburg. Frank Blome and his fast-growing team, which currently consists of 460 technicians, are trying to understand what no one has been connecting with the German automotive industry for decades: how to make a good battery?

But many questions remain open: should VW really start producing the battery? And if so, what kind to go? Tesla combines small "pencil" piles into one large. VW, on the other hand, uses a long, flat battery for ID3. The great advantage of Tesla is that Americans have managed to reduce the proportion of rare cobalt from more than ten to two percent in their batteries. Cobalt is not only very expensive but is also often exploited in scandalous conditions in Africa. VW batteries, on the other hand, need 12% to 14% cobalt – this is still not the brand's record.

Meanwhile, Tesla is building a second-largest battery factory in China. Their boss, Elon Musk, is able to adjust the number of employees to current needs during the week. Diess, on the other hand, will have to deal with the situation of thousands, perhaps even tens of thousands of employees in the future, as the VW and Lower Saxony Works Councils will not accept their austerity programs.

What if the whole project, the transition to electromobility, fails? It will no longer be possible to return to the internal combustion engine, sounds of Wolfsburg. But who knows for sure? VW decided to break the future. And he dared to take a decisive step. The race continues, the result is uncertain.

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