Leading the Transformation.
Investor Update, Wolfsburg, 19th August 2019 Digital Car & Services Christian Senger
Board Member Digital Car & Services Volkswagen Passenger Cars Agenda
1 Situation
2 Organization
3 Collaboration Platform strategy is key to technology leadership and scalability
Volkswagen is the pioneer for platform development 70 ECU’s per car … … 200 SW Suppliers … … 8 electric architectures … countless connections between ECU’s and SW-Functions
Car Architecture Mobility Services Drivetrain ADAS/ Info- Connect Energy/ Comfort AD.AP tainment charging Resulting in: Paralyzing amount of complexity Updates are not possible Inability to harvest economies of scale
Electronics
Mechanics … We need CHANGE ! Today the in car software is developed without a unified operating system or a standard platform
Smartphone Architecture Car Architecture Apps Mobility Services Drivetrain ADAS/ Info- Connect Energy/ Comfort AD.AP tainment charging
Universal standard interface Platform Lack of “one language” App Store, iOS, SDK, Framework for communication between apps and hardware Hardware-specific communication Hardware Electronics
Mechanics We need to copy the IT-Industry and develop functions on a group wide platform
Smartphone Architecture Car Architecture Apps Mobility Services Drivetrain ADAS/ Info- Connect Energy/ Comfort AD.AP tainment charging
Universal standard interface Platform Vehicle Software Platform & One DigitalPlatform Volkswagen „VW.os“ App Store, iOS, SDK, Framework Volkswagen AutomotiveCloud
Hardware-specific communication Hardware Electronics
Mechanics Agenda
1 Situation
2 Organization
3 Collaboration Embedding car.SW Org into the Group Structure in 2019
Brands car.SW Org
SW-Unit on equal terms Car Application with the brands Software Requirements
Car Application
SW Platform & Services
Car Application car.SW Org – Structure
car.SW Org Partner Management / Invest / Organization & Culture
Connected Car/ Intelligent ADAP/HAF/ Vehicle Motion/ Service Platform/ Device Platform Cockpit & Body FAS Energy Mobility Services
E³ Architecture /Platform
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Clus
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Integration
Functional-Product Cluster Agenda
1 Situation
2 Organization
3 Collaboration Software contributes to the brand success by its own roadmap and development cycles
Car platform SW-Platform / Cloud / Function Domains
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Mechanical Hardware Smart Hardware HCPs/iCAS Cam/Radar/Lidar We are going through a huge transformation…
© poweredby car.SW OS
… TOGETHER ! Investor Meeting | DWS Invest
Thomas Ulbrich Head of E-Mobility Board Member Volkswagen Brand Climate Change is the biggest challenge of our time
Increasing man-made temperature rise
Constantly rising sea levels
Growing number of natural disasters
Page 2 Besides other economic sectors, the transport sector will contribute to reducing global greenhouse gas emissions Global emissions by economic sector:
25% 24% Electricity Agriculture Generation and Foresty 0 10% Other Goal: Reduce CO2 Sectors 14% emissions from Transport transport to zero by 6% 2050 at the latest. Residential and Commercial 21% Industry
Source: Intergovernmental Panel on Climate Change IPCC Page 3 Retrograde target derivation based on the Paris Climate Agreement requires effective transformation planning
Paris implications and transformation path >10 years Fleet renewal Conventional platforms SOP EOP Conventional projects SOP „Zero Emission“ in the existing fleet
Broad product portfolio Transformation CO2 neutral cars
CO2-Emissions
BEV
2020 2050
Page 4 Volkswagen Group has launched the largest electric offensive in the global automotive industry
Global Market offer 1st wave New full electric
models Mission E MEB Entry 70 Family ~ Cross Turismo
e-tron GT ID. Buzz
bn. invest ID. Vizzion ~30 ID.3 Vision E
e-tron Sportback Taycan ~22 m. cars concept ID. Crozz e-tron
Page 6 Electric for all: The SOP of the Volkswagen ID.3 at the end of 2019 marks the start of a new era.
Page 7 The MEB electric platform is the technological and economic backbone of the e-offensive By 2022, we will be offering pure electric models in all relevant vehicle segments
Compact SUV Bus A B segment segment
Nutzfahrzeuge
Page 8 We are planning up to 15 Million MEB-based vehicles in the first wave…
Sales Volume VW Group Brand VW
Focus 2025
> 1.0 Mio.
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2025
Page 9 Volkswagen consistently implements its MEB strategy in the production sites Ramp up of 8 MEB locations until 2022:
Hannover Zwickau Germany Germany
Chattanooga Emden Germany Dresden USA Germany
Anting China
Mladá Boleslav Foshan Czech Republic China
Page 10 The Volkswagen plant Zwickau will step-by-step be transformed into an MEB-only site
Production Volume
2017 2018 2019 2020 2021 ICE MEB Volkswagen invests more than 1,2 Billion Euros at the Zwickau site.
Page 11 MEB Transformation in Zwickau ongoing
Organizational basis set More than 67% already contracted and spent
D
D D
Direct organisational connection to Head of Brand Board division „E-Mobility“
Construction work in full swing 328 Pre-series cars already built
D D
Page 12 Nevertheless: In society, politics and industry there are concerns regarding the E-Mobility transformation …
1 A lot of CO2 arises from the battery and car production 2 We don‘t have enough power 3 Without green energy there is no difference 4 E-Mobility is too expensive 5 Range is too small, it shrinks in Winter 6 Number of loading facilities is not sufficient 7 Charging takes too long 8 Durability of the battery is short and is then special waste
Seite 13 1 A lot of CO2 arises from the battery and car production
The first steps towards a CO2-neutral society have been taken, the ID. will be handed over CO2-neutral to customers in EU
Handover to customer
Supply Production Use Recycling chain
100 % green power in 100 % green power Volkswagen Naturstrom battery cell production at Zwickau factory by Elli
Page 14 2 We don‘t have enough power
The first steps towards a CO2-neutral society have been taken, the ID. will be handed over CO2-neutral to customers in EU
Handover to customer
2 We don‘t have enough power
Supply Production Use Recycling chain
100 % green power in 100 % green power Volkswagen Naturstrom battery cell production at Zwickau factory by Elli
Page 15 2 We don‘t have enough power 3 Without green energy there is no difference
Talking about green energy – its share is increasing worldwide!
The lights will not go out – There is enough power! The German Federal Government announced 1 million electric vehicles in Germany by the end of 2022. These will increase the power consumption by only 0.5%4 Even today, the global power mix makes e-mobility greener than any combustion engine. According to BloombergNEF the overall share of sustainable energy supply will be 63% by 2040
EU1 US2 China3
Today 2025 Today 2025 Green energy Today 2025 Remaining gray energy
Page 16 4 E-Mobility is too expensive
The ID. will be available on same TCO level as a comparable Golf
Target Positioning Entry price under 30.000 €
Focus on customer loyalty on the total lifecycle (new: Leasing for 2nd lifecycle) ID. affordable* As a VW Golf Diesel First BEV in the volume relevant A-segment price range
Higher sales price versus conventional cars Cost increase ICE cars will be compensated by lower running costs due to EU7 of the BEV
* Leasingraten & Restwerte ähnlich Golf Seite 17 5 Range is too small, it shrinks in Winter The MEB offers scalable range suitable for everyday use, even in bad weather conditions
High battery range 330 km WLTP up to 550 km WLTP
scalable 23° 550 km
35° 90% 490 km*
WLTP = Ø 48 km/h -7° 70% 390 km**
* Heating / air condition; ventilation; light; radio; navigation; seat heating (Winter) ** additional: All season tires Seite 18 6 Number of loading facilities is not sufficient
Volkswagen has defined a use-case derived charging strategy
@Home @Work @Public @Highway
50% of use cases 20% of use cases 25% of use cases 5% of use cases
Page 19 6 Number of loading facilities is not sufficient
Volkswagen offers green charging solutions in a digital environment
@Home
Wallbox Billing
Electric Life
Green Energy Installation 6 Number of loading facilities is not sufficient
VW Facility Charging | Target State 2025
@Work Target number of charging points 2025
AC ~3,950
DC ~50
AFC ~40
AC: Alternating Current; DC: Direct Current; AFC: Autonomous flexible Charging column Seite 21 6 Number of loading facilities is not sufficient
150 thousand available charging points in the ID. Core markets (Feb ’19)
Charging points @Public 6,000 12,000 Focus Germany • Current state 2019: 37,000 3,000 1.5 BEVs / charging point 20.650 20,650 19,000 4.0 BEVs / charging point • Target „Koalitionsvertrag“ 2020: 1,900 25,000 + 100.000
5,000 5,000 • Necessary according to NPE* estimation 2025: 5,00 140.000-210.000 4,000
Master plan E-Mobility instead of “finger-pointing” Seite 22 Source: eafo.eu; * Neue Plattform Elektromobilität: Premise: stock of 2-3 million electric cars; number of charging point outside Germany: rounded 6 Number of loading facilities is not sufficient
Politics has recognized the importance of charging infrastructure
„I want charging to be possible for whoever and whereever. We have to address this issue.“ Federal Minister of Transport Andreas Scheuer, April 2019
„The state has to accompany the expensive investments of the automotive industry with the expansion of charging infrastructure and fiscal benefits.“ Federal Minister of Finance Olaf Scholz, March 2019 6 Number of loading facilities is not sufficient 7 Charging takes too long IONITY is a Joint Venture for the development of a European fast-charging network
@Highway
350 kW charging capacity
2,400 charging points by 2020 along major traffic arteries in Europe
In operation Planned in 2019 Planned in 2020
Page 24 7 Charging takes too long High Power Charging (HPC) enables long ranges with short charging periods. MEB with up to 125kW charging capacity on premium level
50 kW 50 kW E-Golf 60 Min. 60 Min.
233 233 233 700 CCS Standard km* km* km* km Charging capacity up to 50kW
Charging period at 125 kW Charging period: 120 min charging capacity:
125 kW ID. < 35 Min 30 Min. 350 350 700 High Power DC (z. B. Ionity) km* km* km CCS Standard MEB charging capacity up to 125kW
Charging period < 35 min * Driving distance illustrative Page 25 8 Durability of the battery is short and is then special waste Volkswagen guarantees a long performance of the battery, the battery offers additional profit pools through 2nd life applications and recycling
Durablity Value development Battery capacity [%] Residual value [T€] Potential Business Cases End of Life 100 30 vehicle Profits from 2nd Life applications
70 Profits from battery recycling Influence Factors Warranty (>70 %) battery Heat 8 for ≤160.000 km Cold Raw material battery or 8 years Fast charging 3 Driving Profile
Age 160.000 km 15 y. 23 y. Age 8 years End of Life vehicle End of Life battery
1) Drive batteries‘ durability is longer than 1st life lifecycle 2) We‘re aiming to return the batteries at End-of-Use for 2nd use and/or recycling
Seite 26 8 Durability of the battery is short and is then special waste The battery will be used in 2nd life applications outside the car, relevant parts of the value creation process and recyling are in-house
…
Cell assembly Battery system 1st Life 2nd Life Recycling
Segmen- tation
Shredder
Dryer
Sifter
Fraction- separation
Seite 27