Operation
Powerhouse

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).

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.

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.

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.

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.

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.

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 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.”

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.

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.”