Volkswagen will focus its firepower to electrification

For the Volkswagen Group in 2020, it may be a little bit regretful that it has lost its four-year global sales champion. The most important reason is that the sudden COVID-19 has caused its European market share to continue to decline. As a result, the Volkswagen Group's sales in 2020 will be the worst performance in ten years, nearly 320,000 units less than Toyota.

Despite the unsatisfactory performance in 2019, the powerful self-driving force and every move of the Volkswagen Group still affects everyone's nerves. On March 16, the group held the 2021 media communication meeting through online live broadcast. The meeting elaborated on the brand's performance and new development direction for the future.

In 2020, the Volkswagen Group delivered a total of 9.2 million vehicles to global customers. Although it was down 16.4% year-on-year, its share in the global passenger car market increased from 12.9% to 13%.

In addition, the Volkswagen Group's sales in 2020 reached 222.9 billion euros, a year-on-year decrease of 11.8%. Operating profit before special items was 10.6 billion euros, a year-on-year decrease of 45%, of which Chinese joint ventures contributed 3.6 billion euros in operating profit.

Frank Witter, member of the management board of Volkswagen Group and head of finance and IT, said: “As the most important single market for Volkswagen Group, China has recovered rapidly from the epidemic, demonstrating its ability to achieve steady development even in the midst of the crisis. All of its brands operating in China have achieved positive results."

Data show that in 2020, Volkswagen Group (China) and its joint ventures delivered 3.85 million vehicles in mainland China and Hong Kong, a year-on-year decrease of 9.1%. It is worth mentioning that its sales in my country accounted for 41.4% of the total sales. In terms of market share, the company achieved a market share of 19.3% in China and continued to maintain its lead.

From the data point of view, if Volkswagen wants to regain the throne, China is still a vital link. With the continuous increase in sales of new energy in the Chinese market, Volkswagen has also increased its investment in electric vehicles.

It is reported that in the Chinese market, the Volkswagen Group plans to launch 25 electric models based on the MEB pure electric platform by 2025, and the sales of new energy vehicles will reach 1.5 million. At the same time, the Volkswagen Group plans to use the joint venture CAMS in this year. In the Chinese market, 500 charging stations and 6,000 charging piles will be built, and 17,000 charging piles will be built in China by 2025, covering most cities.

It has become a global consensus that electrification has become the main theme. The Volkswagen Group, which has always been at the forefront, is concentrating all resources to enter the new energy market. At this media communication meeting, Volkswagen has been emphasizing the importance of new energy and also stated that the group will fully invest in the transformation of electrification by reducing some of its businesses. According to the plan, Volkswagen plans to invest approximately 46 billion euros in electric vehicles and hybrid models in the next five years.

In fact, as early as the beginning of this year, Volkswagen stated that in the next two years, indirect operating costs will be cut by 5% and procurement costs will be cut by 7%. In order to achieve this cost-cutting goal, Volkswagen has already begun to take action.

Not long ago, the news of mass layoffs of Volkswagen Group was exposed. According to a report in the German Business Daily, the Volkswagen Group is negotiating a new labor agreement with union representatives, which may result in the layoffs of up to 5,000 people.

However, this is only one of the means for Volkswagen Group to cut costs. Frank Witter said at the media communication meeting: "The group will reduce expenditures on factories, marketing, and materials to further reduce costs."

In the past two years, Volkswagen Group has always regarded the new energy industry as its core business. Although Volkswagen delivered a total of 422,000 electric vehicles last year, three times the amount of the previous year, Volkswagen had to step up its offensive in the face of its strong rival Tesla.

On March 15, the day before the media communication meeting, Volkswagen Group held the first "Power Day" event. At this event, the Volkswagen Group focused on electrification technology and power batteries.

The event disclosed to the outside world the company's roadmap in terms of battery and charging technology in the next ten years. It is expected that by 2030, Volkswagen will establish 6 super battery plants in Europe with a total capacity of 240 GWh/year, and expand the construction of charging infrastructure in Europe, North America and China.

In addition to battery production capacity, the public at the press conference looked forward to changes in battery technology and expected to launch a new Unified Premium Battery in 2023. According to the plan, this battery will be equipped in more than 80% of Volkswagen Group's models by 2030, and the new battery can be recycled and reused as high as 95%.

With core technology as support, the Volkswagen Group is bound to gain access to the electric vehicle market. It plans to launch a variety of pure electric vehicles this year to achieve the annual sales target of 1 million pure electric vehicles. It is understood that the Volkswagen Group will launch a total of 6 pure electric vehicles in this year: Volkswagen ID.4, Volkswagen ID.6, Audi Q4 e-tron, Audi e-tron GT, Skoda ENYAQ iV, SEAT Cupra el-Born.

However, the ambitions of the Volkswagen Group do not stop there. Diess hopes: "Become a leader in the global electric vehicle market by 2025 at the latest. By 2030, the share of pure electric vehicles in Europe will rise to 60% of their deliveries."

It is worth mentioning that, given the differences in preferred energy sources and regulatory regulations in various regions, the high profits of fuel vehicles are still an important source of profit for the Volkswagen Group. In the future, Volkswagen will continue to develop internal combustion engine models and continue to launch new generation models including core models such as Golf, Tiguan, Passat, TAYRON and T-ROC.

Summary: At present, Volkswagen Group's sales in the electrification field still account for a small proportion. The sales target of 1 million proposed this time is challenging but also promising. After all, the group has made sufficient preparations for the transition to electrification. It is worth noting that whether Tesla is more relevant to the future or Volkswagen is more powerful, and China is still the key market for both parties to win.

my country has become the world's largest new energy market, which is also an important factor for brands to rush to launch new energy models. Faced with the coming of electrification, the answer will be revealed in the near future whether Volkswagen can maintain the same position of fuel vehicles in the market.