Synergies and Alliances
Leveraging synergies increases efficiency
When developing vehicles, we cooperate closely with our brands to leverage synergies. The joint strategy of our development alliance involves, for example, making the Group more competitive and viable in the long term by deploying resources more effectively and efficiently in the research and development of new mobility-related technologies, products and services. In our Group-wide development alliance, the brands therefore not only work with each other, but also for each other on key technologies, forming cross-brand networks of expertise to address topics of importance for the future.
The Volkswagen Group further streamlined its innovation portfolio, gearing it towards multibrand technologies of the future in order to provide effective support for the brands’ capacity for innovation. In the reporting period, we invigorated the new leading roles assigned to the brands in Technical Development in 2020 to increase efficiency and leverage synergies in module variance, components, parts and processes.
We coordinate the use of modules centrally to reduce costs, capital expenditure and complexity. We are seeking to reduce expenditure in the modular toolkits, while at the same time facilitating widespread electrification and a focus on autonomous systems. We wish to achieve this through a considerable reduction in complexity using streamlined platforms that synergize but do not overlap. To this end, the individual Group brands draw on the modular toolkits, thus creating synergies between the various models of a product line, as well as across the product lines. By optimizing the toolkits, we are giving ourselves the financial leeway needed for developments in topics of importance for the future.
Pooling strengths with strategic alliances
The aim of our NEW AUTO strategy is to transform our core business activities and to expand the mobility solutions business area at the same time. It is decisive to the success of this plan that we place our innovative strength on even broader foundations.
Within the Volkswagen Group, we combine our technological innovation activities in the Volkswagen Group Innovation unit. At seven locations worldwide in the USA, Europe and Asia, employees are working on sustainable solutions for urban and interurban mobility systems in line with our motto “Mobility for generations to come”. Technologies and activities that are ready for pre-development are regularly transferred from Volkswagen Group Innovation to our Group brands to ensure that the areas of digitalization, sustainability and e-mobility receive continuous support in innovative projects. In this way, we are creating an agile innovation structure that allows us to initiate new milestone projects with innovative international partners, even at short notice.
Growth in the mobility sector is strongly defined through regional innovation activities. Volkswagen therefore concentrates its strategic venture-capital activities and partnerships in the Group’s international innovation ecosystem. This helps us to identify the regional needs of customers more precisely, to adjust our product range accordingly and to establish competitive cost structures. In doing so, we rely to a greater extent than in the past on partnerships, acquisitions and venture-capital investments and manage investment selection centrally so as to generate maximum value for the Group and its brands. It is against this backdrop that we formed an alliance with Ford Motor Company. At the beginning of June 2020, Ford Motor Company and Volkswagen AG signed additional contracts within their existing global alliance for light commercial vehicles, electrification and autonomous driving. Among other things, the contracts serve as the foundation for a total of three vehicle projects: a mid-sized pickup, a city van and a one-tonne cargo van. In addition, Ford will use the Modular Electric Drive Toolkit (MEB) developed by Volkswagen for two electric volume models that are expected to be offered in Europe from 2023. The aim of the cooperation is to place both Volkswagen and Ford in a position that enables them to improve their competitiveness, tailor their products to better meet the needs of customers worldwide and at the same time to leverage synergies related to cost and investment.
We are transforming ourselves into a mobility provider with a digital ecosystem and a fully connected vehicle fleet. Together with our strategic partner Microsoft, we intend to press ahead with software development for the automobile of tomorrow. The Automated Driving Platform being built with Microsoft is accelerating the agile development of cloud-based driver assistance systems and automated driving and parking functions by our software teams.
To design the framework conditions for the approval and introduction of our own self-driving system, we are actively involved in public projects. The experience we are gathering here benefits the Group brands and thus our customers.
Software subsidiary CARIAD is responsible for developing automated driving functions for our brands’ customers, for which it entered into several major partnerships in 2022. In the Automated Driving Alliance, CARIAD and Bosch are striving to make partially and highly automated driving suitable for mass use, i.e. also in the volume segment. The aim is to provide functions for Group vehicles that allow drivers to take their hands off the steering wheel at times where this is possible in regulatory terms. In the alliance, both companies are jointly developing Level 2 hands-free systems for driving in cities, the countryside and on the highway, and a system in which the vehicle takes over the complete task of driving on the highway.
CARIAD has entered into a local partnership with Horizon Robotics to drive up development expertise in highly automated driving functions in the Chinese market. The companies also plan to develop a high-tech semiconductor, a system on a chip (SoC), as part of a new joint venture to push the integration of numerous functions on a single chip.
Over and above this, CARIAD is committed to open collaboration in the global developer community. CARIAD joined the Eclipse Foundation open source community in 2022, where as a strategic member of the Software Defined Vehicle working group it is involved in developing basic automotive software more efficiently and promoting innovation.