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Electric car, here is Volkswagen's plan for world leadership

On hot days of the Dieselgate, a national psychodrama, as well as a history of fraud and technological and intellectual dishonesty, "Spiegel" was relentless in
against the then leader of the class Volkswagen, responsible for the scandal: a North Korea without fields of work.
Thus wrote the German weekly to summarize the hierarchical absolutism imposed by Martin Winterkorn and Ferdinand Pich,
again in 2015, CEO and Chairman of the Supervisory Board, in the chain of command of the Wolfsburg group.

The scandal is still not completely behind schedule and has cost 27 billion euros so far. Their burden on well-managed status and the group was able to fund fines and costs related to resources, especially
with cash flow. It allowed the company to feed new ambitions about the primacy of the car of the future – electric
– and in the fierce competition that will be played above all with the Asian producers.
According to a projection prepared by Reuters major automakers will invest $ 300 billion over the next five to ten years to start production
electric car mass
in China, Europe and North America. Of this flow, one third of which is attributable only to Volkswagen, has
to the Chinese market.
The Dieselgate behind you?

By 2028, new CEO Herbert Diess recently promised, presenting the 2018 budget and development plans, the group will have on the market 70 models powered by lithium-ion batteries. Twenty more respect
to the previous plan to achieve an ambitious goal two years later: the electric car will have to generate 40% of turnover
of sales. This ambition was fueled by a major investment program, EUR 46 billion for the whole
next five years, of which only 30 for the Vw brand and its subsidiaries: The group's new executive team finally
the ideal – says teacher Ferdinand Dudenhfferprofessor of business management and economics of the automotive industry at the University of Duisburg-Essen. They took
the right step and are aware of the challenge that awaits them in electric mobility. Nothing to do with management
of the past, committed to the Dieselgate and still impregnated with an engineering culture linked to the combustion engine


Major automakers expect to spend at least $ 300 billion in development and purchase of batteries and electric cars in the next 5 to 10 years. More than 45% of the budget of these producers is destined for China, according to a projection prepared by Reuters based on data already published by the houses. Data in billions of dollars

Methodological note: Reuters has reviewed the budgets for investments and purchases made public in the last two years by 29 manufacturing companies based mainly in the United States, China, Japan, South Korea, India, Germany and France. The data do not reflect. Relative data and flows do not reflect planned but not yet announced investments and purchases: actual spending by manufacturers on R & D, design, machinery, and procurement would be much higher. The analysis also does not take into account the expenses associated with suppliers, technology companies and other companies in other industrial sectors such as energy, aerospace, electronics and telecommunications.

The road to the electric car also brings with it the challenge of sustainability. Production should be as possible
neutral from the point of view of CO2 emissions, with large space for renewable energy and compensation mechanisms.
Volkswagen has set the goal of becoming "carbon neutral", ie to be able to rebalance the carbon dioxide emissions with a similar weight reduction, by 2050. I
40 thousand suppliers of the German giant will have to do the same and submit to a periodic "Sustainability Index", under penalty of exclusion
for contracts

"" Volkswagen's new ruling class has figured out how to manage the transition to the electric car. "

Ferdinand Dudenhffer, professor of automotive economics

Volkswagen for not one automaker like the others. a corporate crossroads of economic and political interests, perhaps
unique in Europe. In this the company's consideration of social market economy: the Renano model which runs in
the globalization race without wanting to give up some traditional prerogatives, such as the cohesion between
employer, employees and a union that, by law, called to co-manage.

Much in Wolfsburg is played in the halls of the Supervisory Board, in the elegant red brick tower of the 50's in the center
the largest automobile complex in the world, sought by Hitler, along with the city, to build the people's car
designed by engineer Ferdinand Porsche. The heirs of Ferdinand (the Pich and Porsche families, in fact, not always in harmony
among them) control the group with 52.2% of the voting rights through Porsche Automobil Holding SE Stuttgart,
but once seated in the seats of the Supervisory Board, the final count of the strategic choices may not reflect
weight of the reference shareholders. In fact, half of these twenty seats are reserved for workers' representatives,
two are representatives of Lower Saxony, who hold 20% of the voting rights, and the remaining eight go to the others
shareholders, including Qatar's holding company, which holds 17 percent.

It is therefore not uncommon for an axis to prevent the creation of restructuring plans between Lower Saxony and the European Union.
which could have a strong impact on the occupational levels of factories in Germany, where around 110,000
people. And what could happen soon after Diess's recent announcement of 7,700
cuts beyond the 30,000 agreed in a previous plan through early retirement and a partial blocking of billing.

The announcement, along with the bold possibility of allocating a low-cost system for the production of electric cars
in Eastern Europe or Turkey, in addition to the Germans in Zwickau, Emden and Hannover, they disturbed the powerful
labor council, Bernd Osterloh.
The last general assembly of the workers in Wolfsburg was quite tense, but it must be recognized that the union, in this case IG Metall, in the last decades has always shown a certain amount of

It remains to be seen if Volkswagen will be successful, driven by the renewal induced by the investments in electric cars.
to maintain this social pact which, from 1993, the year in which the four-day working week was
until now, staff reductions through layoffs.

The short week was the invention of a distant time, the response to a collapse in the ability to use plants that would have endangered 30,000 places. It was decided
that, in order to keep all employees working, it would be better to make them work less, with the consequent

"" In 2016, with the signing of the "Pact for the Future", the group pledged not to continue the redundancies due to restructuring
company by 2025 ""

Francescantonio Garippo, IG Metall, member of the workers' council in Wolfsburg

In the following years, Volkswagen became the most important industrial relations laboratory in Germany. There were rounds of negotiations between companies and unions with agreements that saw wage freezes and greater flexibility
hours in exchange for maintaining employment levels. And given a certain relief to the creativity, casting at the beginning
of the new millennium the known program with the formula "5,000 x 5,000" (5 thousand gross salary marks for 5 thousand new
recruitment) to launch the production of Touran in Wolfsburg.

In fact, it was a scheme of "internal outsourcing" through the creation of a branch of Volkswagen, "Auto 5.000 GmbH",
which would have hired the workers of the production of the new model with a salary 20-30% lower than that
of the parent company and a weekly schedule that can reach 42 hours.

Among other things, the "laboratory" produced a director of Human Resources, Peter Hartz, a Social Democrat and friend of
Chancellor Gerhard Schrder, author of the most important post-war German labor reform. And often the directors
The human resources that succeeded Hartz came from the union and were still close to the SPD.
We certainly do not want to impede the development of the company, we never did – says Francescantonio Garippo, historian
member of the workers' council, in Vw 43 years ago, one of the many Italians who contributed to the success of the house
automotive and living and working in Wolfsburg for decades -. We only remember that in 2016, with the signing of the "Pact
for the future, "the group pledged not to continue with the layoffs for corporate restructuring until 2025. Then,
we can discuss the rest, but we must be careful to evaluate well what could be the real output, in the market, of the car
electricity. If so much technological and financial effort and the request of sacrifices in the personnel will correspond to the end
demand, also supported by infrastructures that can not be fully supported by the manufacturer.

Unlike the past, however, the personnel problem runs the risk of being structural with the transition to the electric car,
and no longer in the short term, also because the Volkswagen brand continues to suffer from low profitability, with a margin that the
Approximately 4.5% of that of Audi. According to experts, it is enough to raise the hood to realize how this new type of vehicle needs
20-30% less direct work
. And the times dictated by the new administration for the advent of the electric motor are pressing. After e-Tron by Audi
the Porsche will arrive with Taycan and Seat with el-Born. This is not a crisis that we faced and solved more in the past.
at times, "admits Garippo," an industrial revolution.

The challenge in China and against China
The real shock wave of this revolution will come next year with the market entry of the ID range considered
the third era of the Volkswagen brand after the Beetle and the Golf, which will be presented in the form of a sedan, suv, crossover
and go. It will then be that the German company will enter the arena of mass production and e-mobility sales. ID
a family built on the new Meb (Modularer Elektrifizierungsbaukasten) electric platform, whose modularity and flexibility
the render that can be used by at least fifty different models.

The invention of Meb, the number of brands, the considerable financial capacity, the position of absolute importance of the group
in China, where it has a 18.5% share and where the electric car market grows faster than in Europe and the United States
United States, they attest to the group's great competitive advantage: the ability to generate large economies of scale.

These advantages allow us to focus our efforts on innovation and accelerate the pace of production and entry
in the market – explains a senior executive of the group -. We get the right cruising speed and we can not distract ourselves
with major acquisitions: these are painful operations and integration takes a long time.

And also for this reason that the alliance with Ford remains commercial and technological, focusing on the possible supply to the
Americans from the Meb platform in exchange for know-how in autonomous driving, where it remains instead of the German house

OIn this enormous technological, productive and financial effort, there is a parallel and obsessive attention to China and partly to South Korea, where according to Dudenhffer there are real competitors: Greatwall and especially Geely, who have
understood the importance of the brand by buying Volvo and becoming a reference shareholder of Daimler and buying 50% of Smart,
they are the most fearful. Kia Motors also moves well and quickly.

Herbert Diess took direct responsibility for activities in China, which accounts for 39% of global sales and where
the group hopes to replicate the enormous success of the last decades in the electric sector. Over the next two years he plans to present
in the market 30 new models, half of which were built on site thanks to two historic joint ventures. here as always
The ambitious Volkswagen will play the double challenge for the world record: in China and against China.

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