Mobility

Operation
Powerhouse

Volkswagen is redefining the car, counting on electric drive systems. Thomas Schmall, member of the Volkswagen AG Board of Management responsible for Technology and CEO of Volkswagen Group Components, is leading the battery, charging infrastructure, and vehicle component activities and thereby mastering major parts of this challenge of the century—the strategic transformation of the world's largest car manufacturer.

04/2022

Volkswagen AG
Confident of the powerhouse's success: "We have a clear plan, and we're following it closely," says Thomas Schmall, member of the Volkswagen AG Board of Management responsible for Technology and CEO of Volkswagen Group Components.Volkswagen AG

Despite all its retro charm, Wolfsburg’s “alte Gießerei” (“old foundry”) con­sti­tutes the con­trol cen­ter of a new world. Its light-filled indus­tri­al halls with a non-hier­ar­chi­cal open-space design house the man­age­ment of the Volk­swa­gen AG Tech­nol­o­gy divi­sion and of “Com­po­nents,” as employ­ees still call the inde­pen­dent Volk­swa­gen Group Com­po­nents unit. With 75,000 employ­ees at 45 loca­tions world­wide, Com­po­nents is a core part of the Volk­swa­gen Group, which has a long-stand­ing and near­ly unpar­al­leled con­nec­tion with Ger­many.

Since its realign­ment in 2015, Com­po­nents has pur­sued a ver­i­ta­bly ground-break­ing course, start­ing from a pro­duc­tion unit for clas­sic vehi­cle com­po­nents like trans­mis­sions, engines, and raw cast­ings and now turn­ing into the nucle­us of trans­for­ma­tion in the era of elec­tro­mo­bil­i­ty. The new Group Tech­nol­o­gy divi­sion, to which Com­po­nents belongs, now also devel­ops and man­u­fac­tures bat­tery sys­tems and dri­ve­trains for elec­tric vehi­cles. It more­over shapes cru­cial future-ori­ent­ed top­ics such as charg­ing infra­struc­tures. Above all, how­ev­er, Com­po­nents is respon­si­ble for the impor­tant new bat­tery busi­ness field, focus­ing on all steps along the entire value chain—from pro­cess­ing raw mate­ri­als to devel­op­ing and pro­duc­ing a uni­fied cell for­mat, man­ag­ing the six planned Euro­pean giga-fac­to­ries, and gen­er­at­ing busi­ness mod­els for recy­cling used bat­ter­ies. To con­sol­i­date all these bat­tery-relat­ed activ­i­ties, Volk­swa­gen recent­ly found­ed a Euro­pean pub­lic com­pa­ny (Société Européenne).

The Volkswagen Group's Technology division has consolidated responsibility for the Battery, Charging & Energy, Components, and Platform Business units. Together with the Mechatronics, Software, and Mobility Solutions units, they are among the core elements of the Group's New Auto strategy.Porsche Consulting/Clara Philippzig

In this inspir­ing ambiance of the “old foundry” Thomas Schmall has his office. Born in 1964, this mem­ber of the Board of Man­age­ment respon­si­ble for Tech­nol­o­gy is guid­ing what may be the largest restruc­tur­ing project in Germany´s eco­nom­ic his­to­ry. “We’d rather take on new top­ics active­ly than wait­ing pas­sive­ly to see how long we might sur­vive with the old ones,” is his maxim. For Volk­swa­gen, elec­tric mobil­i­ty is the future of the auto­mo­tive indus­try: a jour­ney down a road with no chance to turn around—a jour­ney that must not fail. Mar­ket fore­casts are bright, with glob­al mobil­i­ty sales expect­ed to dou­ble by 2030.

Trans­form­ing the Com­po­nents unit requires rad­i­cal changes that Thomas Schmall has to cope with: new exper­tise and fields of busi­ness need to be estab­lished. Inter­na­tion­al plants have to be grad­u­al­ly adapt­ed and net­worked in effi­cient ways. Entire work­forces need to be realigned and retrained to be ready for an elec­tri­fied world.

The suppliers have to undergo an analogous transformation. There'll be an interchange between internal and external suppliers.

Thomas SchmallThomas Schmall
Volkswagen AG Board Member responsible for Technology and CEO of Volkswagen Group Components

Not every­one will be involved in the Group’s rede­f­i­n­i­tion project; how­ev­er, most peo­ple will. “Fifty per­cent of our employ­ees will already be work­ing on elec­tric mobil­i­ty by 2025,” says Schmall. Many exist­ing skills will still be need­ed in the future. After all, a facil­i­ty man­ag­er for engine pro­duc­tion is not far removed from an expert who over­sees high­ly auto­mat­ed bat­tery cell pro­duc­tion.

Strategic Transformation

We will need to change how we think about cars. By 2030, the world of mobil­i­ty will have under­gone fun­da­men­tal change. Zero-emis­sion elec­tric dri­ves and fully con­nect­ed autonomous vehi­cles will dom­i­nate the ways we get around. It is no coin­ci­dence that the Volk­swa­gen Group’s strat­e­gy is called “New Auto—Mobility for Gen­er­a­tions to Come.” If this strat­e­gy suc­ceeds, the world’s largest car maker will have evolved from a vehi­cle man­u­fac­tur­er to a lead­ing glob­al soft­ware-dri­ven mobil­i­ty provider. Schmall’s sphere of influ­ence is play­ing an impor­tant role in this trans­for­ma­tive process. “Readi­ness for change and improve­ments to the per­for­mance of our Com­po­nents unit were, and still are, key ele­ments of our leap into elec­tric mobil­i­ty,” he observes. “Our own pro­duc­tion already cov­ers around 40 per­cent of the value cre­ation for cur­rent e‑models. In the future that will also include bat­tery cells which are the most impor­tant part of an elec­tric car.”

In this new world, new indus­tri­al stan­dards have to be set. “No car man­u­fac­tur­er will be able to afford devel­op­ing vast num­bers of dif­fer­ent drive sys­tems and com­po­nents,” says Schmall. An over­ar­ch­ing plat­form is the promis­ing con­cept here. Its key role becomes vis­i­ble when it comes to the mass pro­duc­tion of elec­tric cars which has only been pos­si­ble in con­nec­tion with the new Mod­u­lar elec­tric drive matrix (MEB). By 2030, the Group wants to be pro­duc­ing around 26 mil­lion e‑cars, most of them based on the MEB. High-vol­ume brands like Volk­swa­gen, Škoda, Seat, and Cupra are mak­ing exten­sive use of the toolk­it. Inci­den­tal­ly, Ford will also be a client of MEB—it wants to use the toolk­it for all-elec­tric mod­els in the future as well.

A platform approach reduces a lot of complexity and streamlines enormous processes.

Thomas SchmallThomas Schmall
Volkswagen AG Board Member responsible for Technology and CEO of Volkswagen Group Components

The next step is to estab­lish a uni­form Group-wide ecosys­tem. As of 2026, the exist­ing e‑car platforms—not only the MEB but also the PPE plat­form for Audi and Porsche’s high-end segment—will be replaced by the Scal­able Sys­tems Plat­form (SSP). The SSP will enable devel­op­ment and pro­duc­tion of all the Group’s brand mod­els, in extreme­ly effi­cient ways, because each brand will be able to make use of ele­ments like elec­tric mod­ules.

Rethinking cars as a whole

There’s no get­ting around the fact that bat­ter­ies are the key com­po­nent of the e‑mobility strat­e­gy, as well as the largest cost fac­tor at around 40 per­cent of man­u­fac­tur­ing out­lay. The mar­ket is still dom­i­nat­ed by Asian providers, but Volk­swa­gen wants to change that. “Our goal is to lead the way in cell tech­nol­o­gy,” states Schmall.

To achieve this ambi­tious goal, the team in Wolfs­burg is tak­ing cell devel­op­ment and pro­duc­tion into its own hands. And it con­cep­tu­al­izes the car mod­els in a com­plete­ly new way. Bat­ter­ies will no longer be devel­oped to fit the cars; instead, and right from the start, the cars will be designed around the bat­ter­ies. The more uni­form the bat­tery for­mat, the more cost-effi­cient the pro­duc­tion. Volk­swa­gen is there­fore work­ing on a uni­fied cell that can be installed in 80 per­cent of its vehi­cles.

Reduced complexity and costs: battery systems with a unified cell format are expected to feature in up to 80 percent of all fully electric vehicles from the Volkswagen Group.Porsche Consulting/Clara Philippzig

The intel­li­gence behind bat­tery design lies in the chem­istry, explains Schmall. Test labs are cur­rent­ly work­ing extra hours as they ana­lyze con­stituents down to the atom­ic level. The Group is expect­ed to start its own uni­fied cell pro­duc­tion in 2025. “Then we’ll be on equal foot­ing with the com­pe­ti­tion. And our uni­fied cell will be state-of-the-art.”

The next step in tech­nol­o­gy will be solid-state bat­ter­ies, which fea­ture lower weights, greater ranges, and short­er charg­ing times. “They rep­re­sent a real quan­tum leap over how we cur­rent­ly con­ceive of bat­ter­ies,” says Schmall. “The first car maker to bring solid-state bat­ter­ies to series pro­duc­tion will enjoy a cru­cial com­pet­i­tive advan­tage. We’re expect­ing our first pilot plants in 2025 or 2026.” Volk­swa­gen is col­lab­o­rat­ing close­ly with the US-based com­pa­ny Quan­tum­Scape.

Wolfs­burg is show­ing a high degree of open­ness to exter­nal exper­tise in gen­er­al. Swe­den-based North­volt AB is anoth­er of its part­ners, as is Gotion, a Chi­nese bat­tery cell expert. Three addi­tion­al strate­gic part­ner­ships were recent­ly launched with Umi­core, 24M Tech­nolo­gies, and Vul­can Ener­gy Resources to advance the indus­tri­al­iza­tion of rel­e­vant tech­nolo­gies and large-scale series pro­duc­tion of sus­tain­able and inno­v­a­tive bat­ter­ies. That was fol­lowed by a col­lab­o­ra­tion agree­ment with Bosch to indus­tri­al­ize bat­tery cell pro­duc­tion process­es. “We’re well advised to bring tech­nol­o­gy part­ners on board and col­lab­o­rate with them in shap­ing the trans­for­ma­tion process,” says Schmall. By 2030, Volk­swa­gen wants to build with its part­ners six new gigafac­to­ries for cell pro­duc­tion in Europe alone, with an annu­al pro­duc­tion capac­i­ty of 240 gigawatt hours. That should be enough to fur­nish bat­ter­ies for up to four mil­lion pas­sen­ger cars.

The right charging solution for every application, whether business or home-based: the Volkswagen Group’s Technology division also develops and produces the hardware for an all-inclusive charging infrastructure.Porsche Consulting/Clara Philippzig

The aim of this vision—although Schmall is too pru­dent for rash pronouncements—is noth­ing less than to over­take Tesla. The US-based man­u­fac­tur­er is still lead­ing the world in e‑car sales and is con­sid­ered a dri­ving force for future auto­mo­tive devel­op­ments. Schmall wants to change that. “We have a clear plan, and we’re fol­low­ing it close­ly. We have the capa­bil­i­ties, the scope, and the exper­tise.”

From purely car maker to "new business factory"

The trans­for­ma­tion to elec­tric mobil­i­ty is also open­ing up com­plete­ly new fields of busi­ness. E‑cars will no longer just carry pas­sen­gers and goods, but also serve as mobile power stor­age units. They will be able to draw power from a solar facil­i­ty, for exam­ple, and feed it back into the local grid after sun­down. This will oper­ate in par­al­lel and with­out any lim­i­ta­tions to mobil­i­ty, because the high-volt­age bat­ter­ies in mod­ern elec­tric cars will be that pow­er­ful. Viewed over the long term, e‑cars could even serve as mobile power banks for the entire grid. Experts see new oppor­tu­ni­ties here too, and sud­den­ly find them­selves nego­ti­at­ing col­lab­o­ra­tive ven­tures with inter­est­ed ener­gy providers.

Volkswagen AG
Fun at a photo session: Thomas Schmall wanted to push Facility Manager Horst Pudeck through the factory on an electric sweeper. But Pudeck, who has been at the company for 40 years, was having none of it.Volkswagen AG

But new worlds can only be mas­tered if every­one in the Group pulls togeth­er. It remains a cul­tur­al chal­lenge to sus­tain­ably anchor the new men­tal­i­ty and a sta­ble cul­ture of “We can do this togeth­er” right across the diverse work­force. As Schmall puts it, “Trans­for­ma­tion will only suc­ceed if we have strong lead­ers and can clear­ly com­mu­ni­cate our aims and how to reach them. We have to set an exam­ple in this process and make sure our teams are on board. That’s what will carry us togeth­er through­out this entire enter­prise.”

Promising prospects

Realigning a leading global car manufacturer like Volkswagen toward a successful future is a complex and large-scale strategic project. The Group is counting on electric mobility, and correspondingly adapting its entire field of business. Management experts from Porsche Consulting are supporting Volkswagen Group Components, one of the corporation's most important entities, on all strategic levels and stages of the project. The aim of the new "battery" business is to become a leader in power storage technology and cost efficiency. A key aim is to develop internal expertise based on effective product, technology, and industrialization strategies. Experts from Porsche Consulting are involved in developing and implementing these strategies. The Group's consolidated "charging and energy" business gained a program management system. Its personnel collaborated with the consultants to develop a new organizational structure, an expanded product portfolio, and a clear road map. In the “Components” transformation at existing plants for vehicle components, the priority was to significantly increase competitiveness while at the same time ensuring bright prospects for each site. This took into account the estimated production volumes and intelligent allocation of future-oriented components for hybrid or electric vehicles. The consultancy project focused on securing jobs and requisite stable revenues at all locations. Volkswagen also makes its platforms and components available to external companies. These activities are consolidated in the "Platform Business" business area. Partners such as Ford use the Modular electric drive matrix (MEB) and thus benefit from the technology and economies of scale of the first large-scale production platform for electric vehicles. In the future, the Scalable Systems Platform (SSP) will be accessible to external partners as well. The Porsche consultants are contributing their expertise in designing the necessary toolkit and mastering the high degree of complexity—always in close collaboration with the individual brands under the Volkswagen roof.
Read the next topicReinventing
the Wheel