Volkswagen, Quo Vadis? – Where are you going?

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Volkswagen, Quo Vadis? - Where are you going?-going

When I wrote my first article about the German automotive industry almost four years ago, in the spring of 2018, I did not dare to publish him for half a year because my predictions were very bold and with the generally recognized public opinion and industry broke. I ruled the alarm bells and, painted a picture of the wall ‘a black picture of the future of the automotive industry in my home country Germany, but only a few heard.

The aim of the article was to make the executives of the automotive industry aware that Tesla is just the expression of a basic technological change and that their companies are shrinked, bought up or before bankrupt, if they do not quickly change their course. When I published my bold predictions, I was not sure what would happen, and the overwhelming resonance I received from the audience was negative. It took many years until people realized that my predictions were correct and arrived.

German automotive industry further in the downturn

Today, 4 years later, at the end of 2021, I’m shocked and sad that my worst nightmares have come true. The German automotive industry was and is due to all levels in decline, which shows in shrinking sales figures, constant restructuring and company broadcasts. A consolidation of the auto industry has begun that everything we believed to know is changing forever. In this article, on the example of the VW Group as the most important German car manufacturer, I will actually analyze the situation and give forecasts for the future.

The automotive industry and the Volkswagen Group have done almost everything wrong what you can do wrong with a technological change. First, they ignored battery-electric vehicles, then they smiled them, then they have fight them, then they have tried to copy them, and then lost the connection. The problem is not only that the company has recognized the situation in which it was too late, but also that it is not completely understood today. Huge and still rising investments in electric cars have not led to the expected sales figures because the core of the transformation has not yet understood – but only declared as a different drive, digitization or electrification.

The strength of the world’s once largest automobile manufacturer with 11 million vehicles sold, 119 factories, 670.000 employees, hundreds of models and 40.000 suppliers became its greatest weakness within a few years. The scalability of the VW Group has eliminated its agility and thus its innovation speed. The question is no longer whether they can transform at all, but whether they are still fast enough for it. After all, what we have seen in the last 4 years, we have to conclude that they are not. The next opportunity to introduce a really new vehicle innovation is not today or in one year, but in five years, when the new Trinity and Artemis architecture is delivered, which makes everything better, faster and cheaper according to VWS marketing message. Time today is the largest enemy of the VW Group, which has not yet understood this simple fact.

Facts, facts, facts

Facts: The Volkswagen‘s burning paragraph has been declining for two years, from 11 million vehicles delivered to planned 9 million in 2021, and I assume that the decline in sales will accelerate dramatically in the next few years. The loss of 2 million vehicles corresponds approximately to the size of the BMW Group and is a strong decline in a short period of time. It does not matter whether this decline is due to a lack of computer chips, batteries or a falling demand, because the 2 million vehicles that VW has not sold will not simply come back in the future because they belong to the past.

Volkswagen, Quo Vadis? - Where are you going?-goingAlexander Voigt

Everything VW can do is for sale what they are currently producing, IDS, E-trons, Enyaqs and comparable vehicles that are all manufactured on the MEB platform with the same technology. A technology has proven to be competitive in terms of software, battery, infotainment and productivity. Since the burner paragraph is shrinking faster than the electric car sales increase, the company not only loses sales, but also profits, as price increases can not be realized for a non-competitive electric car. The competition is not necessarily only from the market leader Tesla, but also from well-designed and manufactured Asian and Chinese electro cars that come to the market find good customer acceptance and less costs.

Autonomous driving, battery and software in focus – or not ..

Today’s great innovation movements are autonomous driving, batteries and software, three key areas of strategic importance in which Volkswagen has nothing attractive. As the company value for innovation, according to Ark Invest’s analysis, rises annually by 35% to 40% of 14 trillion dollars to 210 trillion dollars, each company will shrink or disappear over the next few years.

“If a car manufacturer is unable to be attractive in these three important innovation platforms that conquer a trillion dollar market, it will not be able to play a significant role on the future vehicle market.”

Even if the VW Group can finally deliver the expected vehicles by a new technology platform in five years by a new technology platform, the market will already be divided at the time, because consumers will decide their purse over the next few years and do not want to wait.

Volkswagen, Quo Vadis? - Where are you going?-volkswagenArk Invest

The massive investment announcements of the great autoconders of, Z. B. GM 35 billion. $, Daimler 60 billion. €, Stellantis 30 MrD. $, Nissan 17bn. $, Toyota 35 MrD. $ or VW GROUP 159 MrD. € are impressive but they come too late and are too big to make a decisive difference. All VW’s investments announced today into battery technology will have an impact in 2-5 years at the earliest. The VW software concerts Cariad, which should become bigger than SAP, is poorly organized and size is the enemy of good software.

What Tesla has achieved with about 300 outstanding software engineers as best vehicle software that can be obtained today for money, is in dramatic contrast to a VW Cariad organization with planned 10.000 employees and a damaged reputation. The recent callback of the Golf 8 because of software problems rejects in a long chain of software problems of the VW Group. You can not win a fast technological transformation by allocating a lot of capital and resources to allocate and then better results expect. What you need is an intelligent investment instead of a great investment, an agile organization instead of a rigid organization that is characterized by fixed predefined processes.

The most important world market does not show interest in VW Stromer

The important Chinese market for the Volkswagen Group, to the 40% of the total sales at the time of the burners, preferably electric cars from Tesla, NIO, BYD, GREAT Wall and other manufacturers who control the interface to the customer through good software and customer data. The US market, once a key market for VW in North America, has already been lost to Tesla, to the 69% of the electric car sales from January to October 2021. The entire combined competition divides the remaining 31% below. We have experienced that in Norway more than 91% of sales in October and November cars are with a battery and only 8-9%% on internal combustion engines are omitted, and even in Germany, electric cars meanwhile make 20.3% of all new registrations in November 2021 out. It is only a question of a few years until this trend will arrive throughout Europe.

Volkswagen, Quo Vadis? - Where are you going?-vadisAlexander Voigt

At the moment VW in Europe still has good electric car sales, especially if you look at the entire group, because the American and Asian manufacturers prefer their home markets at delivery, but that will change from 2022. Tesla opens his factory in Brandenburg, in the course of time only 500.000 and then 2 million vehicles to produce the delivered in Europe. Rivian negotiates a factory in the United Kingdom, and many attractive Chinese electric cars such as Z.B. NIO and Polestar also urge the European market. Each of these sold electric cars displaces the sale of a combustion in which the German automotive industry is dominant.

Since Tesla already a massive productivity advantage of 10 hours production time for the Made in China Model 3 compared to an ID produced in Germany.3 has, the factory in Brandenburg will set a new and even higher standard through new production technology. Productivity is the key to cost, profit and quantity and allows the company to better control demand better than any other with dynamic pricing. Due to the direct sales model without a dealer network, Tesla can immediately implement price changes during Volkswagen, despite agency model to a dealer structure, is a disadvantage in the times of electromobility. Dynamic pricing designs allow demand to create arbitrarily what is crucial for sales and stock.

Volkswagen, Quo Vadis? - Where are you going?-volkswagenAlexander Voigt

If we try to predict the future of the Volkswagen Group’s serious situation of the Volkswagen Group, we have to come to the conclusion that it will be worse, and I’m not sure if it will be noticeably better at all at all. My prediction is that the Volkswagen Group vehicle rate will at best shrink to 5 million units worldwide in 2026/27. This is a devastating decline by more than 50% compared to the highest level of the vehicle sales of the past. The scenario of 30 presented by VW Group Chef Herbert this.000 redundancies alone at the Wolfsburg plant, if the Trinity project does not exit as a great success and turnout, becomes more than 100.000 to 200.000 redundancies in the VW Group.

The number of only 30 determined by the Executive Board.000 potential layoffs has already triggered a heavy crisis and various organizational changes within the VW top management. About 30% of all 670.000 VW jobs are on the game when the new electric car platform Trinity and Artemis does not bring the expected results. Since VW is 20% owned by the state of Lower Saxony and is a system-relevant company for our country, a massive inflow of taxpayers are expected to secure jobs. The capital may help in the short term, but the demand will not improve, so that the inevitable truth of redundancies and factory closures will only be delayed.

VW Group continues to set in combustion – a mistake!

VW will sell as announced to Asia, Africa and South America, but even these markets will change to electric cars in the long term, because the cost of renewable energies are much lower there and the total cost of ownership is more attractive compared to a combustion. In countries that are suitable by Wind and Sun much better than the industrialized countries for decentralized regenerative energy generation, the electromobility is supported by structures to which the central and very expensive supply of fossil fuels in these regions is inferior. The often quoted charging infrastructure plays little to no role, if one realizes that in the industrialized countries CA. 70% of all charging operations take place at home and each electric car is a power store in the future works in both directions and therefore stabilizes the networks.

The Volkswagen Group is not an ordinary vehicle manufacturer, because it belongs to 20% of the state of Lower Saxony, with $ 260 billion, the highest debts of all automakers worldwide and also 50 billion dollars at unsecured pension obligations. So we speak of just under 300 billion euros liabilities with the recently announced investments of 159 billion euros of this debt burden at least partially increase the cash flow of the automaker decreases further significantly by melting combustion sales.

The Group refinances significantly by the European Union, which buys a large amount of VW bonds each month. The Executive Committee can not affect decisions on production facilities, models and quantities without the approval of the union and meeting powerful works council through special laws, and the recent five-year investment in the amount of 159 billion euros was even without the presence of the VW Group Chief, but with works council Daniela Cavallo decided. A special VW law adopted by the German Government and approved by the EU is located in the automobile manufacturer in a worldwide unique political structure. One can assert with FUG and law that the VW Group is not a company owned by shareholders, but a political organization whose main purpose is to maintain the local automotive industry and its jobs in life financed by political goodwill and taxpayers. The VW Group is a systemic risk for the German and European automotive and mechanical engineering industry and is therefore referred to as “Too Big to Fail”.

The unique structure and political influences of the VW Group work perfectly as long as there is a demand for its vehicles, and that’s exactly what is his “Achillesfer”. It does not matter whether the demand of the VW Group sinks due to chip or battery deficiency or whether people are waiting for a convincing VW electric car, important is that the deliveries of VW are declining. What VW in the past, for whatever reason, could not deliver, will not be made up in the future. These revenue and winnings have gone to other automakers or were spaced by other investments. As soon as the deliveries and sales decrease, the structure with which the German and the EU government support the company financially supported to get jobs and the industry in life, such as a card house collapse. The deliveries of VW have been declining since 2019, and according to works council Cavallo, which can speak with the media without the PR and marketing filter from VW, it will become even worse 2022 and even 2023.

Cavallo, “ahead of us is a real thirsty route. The next year’s lack of defects will prevail. And in 2023 it will not be suddenly better. We still have the worst before us.”

In recent months, the vehicle sales of the VW Group on the basis of a weak year 2020 have been decreased 1.7% and at 31.5% in November in November compared to the previous year. If Cavallo’s statements are correct, then at least in the next 2 years, we should first see a sustained decline in vehicle sales and then a soil education in the middle of the decade, assuming the Trinity and Artemis electric car platforms becomes a great success.

Volkswagen, Quo Vadis? - Where are you going?-going

VW has announced that in 2021 they are still expected to sell 94% internal combustion engines, 80% in 2025 and still 50% in 9 years, which of course includes continents such as Africa and South America, which are in the introduction of electric cars in the backlog. Due to the low total cost of ownership of a battery electric vehicle and its superior drive behavior, many predict that only 10% of the combustion sales will be left in 2025 and almost no more in 2030 and in 2030 depending on the market. Many are surprised that the proportion of electric cars in Norway is already over 91%, but history has shown that a technological change is always accelerated.

Worldwide, the electric car is growing in an exponentially rising curve and this trend will probably even accelerate. If Volkswagen plans with an electric car share of only 20% in 4 years and we see the market today at 11.4% worldwide, then VW will inevitably be left behind the market growth in its last remaining growth area. Assuming that the electric car trend is only linear, a global electric car content of 20% is reached within the next 12 months, while VW is approximately planned 8%. Even Germany, a country that is known to adopt new technologies only hesitantly, reached an electric car of 20.3% in November, a number with the VW only in 4 years plans.

Forecast: Paragraph of the VW Group decreases massive ..

My prediction for the Volkswagen Group involves many variables and can of course be completely wrong, but it is a future that I even consider as a conservative scenario. 2025/26 the deliveries of the VW Group are significantly reduced, up to half of the level of 2019, and they could then stabilize and easily recover from this level. Whether the Group will survive such a dramatic decline in sales, but we can assume that the politicians and the German Government of Volkswagen will help to start the paw to keep their voters in mood.

Volkswagen, Quo Vadis? - Where are you going?-vadisAlexander Voigt

But if I’m completely wrong and the Volkswagen Group rebuilt his production faster and better and brings convincing electric cars to the market in bulk, that would not change his future positively? The unpleasant truth is that the future for the old automakers could be even worse than what I described. Imagine what happens when Tesla 2022 or 2023 receives approval for its full-self-driving software for autonomous driving and starting licensing. The recent advances of the FSD-beta autonomous driving system are impressive, and it is realistic to believe that they will be able to solve the latest challenges in no later than two years.

Do not want anyone who buys a car to have a software that allows the car to drive themselves and allowed him to pursue other activities, be it on the internet to play with the children or to prepare for the next meeting? Volkswagen and all other established car manufacturers are far from offering a solution for autonomous driving, which works at low cost in all weather conditions and on all roads, and their approach is not successful because of missing real data and other technical defects in my opinion. Already today FSD-Beta moves people in the US for hours without intervention and successfully under all conditions. Why should not you want to have such a car? “Software Eats The World”, and if Volkswagen is not one, then it is a software company like Tesla.

My prediction will apply to all old automakers to varying degrees, depending on how quickly and successfully you can bring competitive and attractive electric cars to market. Some automakers will not survive the cash flow outflow and shrinking sales volume and merge with others, bought up or just give up the business.

In view of the highest debt in the industry and the pressure on the electric car margins caused by 200% lower productivity compared to Tesla, the profits that are still good at the moment due to price increases will decrease significantly. Even if VW is to build a new Trinity factory in Wolfsburg until 2026, it is unrealistic to increase productivity in 2026 out of 30 hours per electric car produced on the industry-leading standard of 10 hours, the Tesla in Shanghai already has today. If that was so easy to increase such a productivity, VW would have already done it. Tesla will further increase productivity in Grunheide and other locations during it.

Porsche IPO as a salvation or yet dagger?

As a measure to rescue the company and financing the investment plan of 159 billion investment plans for five years, VW must bring Porsche to the stock market and sell the main winner of the Group in the form of shares on the stock exchange or to the families of Porsche and Piech. An IPO of Porsche is welcomed by the VW major shareholder families and the Porsche company itself and is therefore likely in the medium term. However, this step will significantly reduce profit and equity value of the Volkswagen Group, which makes the Group’s refinancing complicated and the resistance of the management explains.

Volkswagen, Quo Vadis? - Where are you going?-vadis

As a large car manufacturer, you can not blame its strategic mistakes of the past, but Volkswagen has the opportunity to survive as a smaller company, the U.a. Countries with internal combustion engines supplied with electric cars behind. If the Volkswagen Group succeeds, a niche in electric cars for a smaller customer segment Z.B. To establish in Europe, which is willing to drive a VW, Audi, Seat or Skoda, to enter into the technology compromises, it could hold its sales at a lower level and would not be threatened in its existence.

The condition for this is an adaptation of the cost structure which leads to massive resistance of trade unions, the works council and the policy. Over time, however, most of the well-known automakers will only be a shadow of what they were once: they license technology from Tesla and Co. and make only small profits.

Volkswagen will no longer be the largest or second-largest automaker in the world, and that is bad for Germany and Europe, but it is currently the expected result.

That the article could polarize is the author conscious and reflects his personal opinion.

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6 thoughts on “Volkswagen, Quo Vadis? – Where are you going?”

  1. Volkswagen has always changed differently since Piech and Lopez when I have kept it possible. Internally worse than the Stasi, Peter Hartz, Brazil, Gedas and her “Special Server”, etc.
    The beetle was still a cult, and therefore because he has made possible the then feasible by minimalist technologies. The Gulf then came upgrade to the normal-earner shift, which has become more funded and allowed the first time a universal use of an affordable universal vehicle.

    If today vehicles are getting bigger and heavier, without providing more widely used and the ratio of max. Total weight to payload increasingly becomes worse, then only a cannibalistic society is satisfied. A few consume as long as the remaining resources of all, until no longer left. Suffering, however, must be the sustainably economical population, because there is no adequate offers soon – at least not by Volkswagen.

    Germany is not an ideal destination for sustainable emotion anyway, because our home ratio is too low and thus the privately possible photovoltaic. But at least for the few homeowners should be possible to develop a practical ECFZ.

    • Small and light
    • High payload / total weight ratio
    • Wechselakkus (at least half of the capacity) compatible with those of the home system
    • Individual wheel rim, easily changeable, thus four-wheel and more space for payload

    The most important thing is probably the return of honesty. Just Vw would have there to make up: -o who builds EKFZ, and not even his all sealed surfaces (hall roofs, parking, etc. has equipped with photovoltaics and storage technologies, is implausible (this also applies to Tesla Brandenburg). And instead of starting a charging pillar society after the next and thus to drive the public networks into the dutten, the (still) powerful carmakers in Europe should support all initiatives for non-resiary photovoltaics that you can find or reasons themselves. There is the key to well-scaled emotion.

    A uniform change battery system, at least, which concerns the dimensions and the basic electrical data, could become a German export loading. The special electrical data can now be conveniently programmed in the charging electronics – assuming it, nobody screams again a shutdown device &# 128539;

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  2. Apart from the fact that an investor should have an essential interest of being able to portray the own portfolio in the best light, whatever overhame for competitors, he has also shown a lot correctly.
    In particular, the management errors of German car assemblies was clearly and absolutely correctly presented. If you look at the appearances of Mr. this, you also have the impression that the most important employee of Tesla sits by VW anyway.
    However, therefore, a decrease scenario for VW or the German automotive industry overall, I hold for exaggerated and then again interest-controlled.
    Surely Tesla is and was a pioneer in the segment to build a car around a highly efficient headquarters, simply awesome. But what you know your buyers for the prices of quality that is three.
    It has a reason to build the factory in Brandenburg and, above all, to access highly qualified employees, especially at Mercedes Ludwigsfelde / Marienfelde. Mr. Musk is probably aware of where the current weaknesses are of his products and he will eliminate them with German know-how. But only as far as it seems necessary.
    Otherwise one hears from Brandenburg employees (and not only those), which are partly former employees, that the biggest problem of Tesla seems to be Mr. Musk. It is his will, his ideas. Put them around and it’s good, do not you manage, you quickly take the career ladder back down. The possible creativity of the employees has little space.
    Something speaks for the German / European car manufacturer. This is simply the urge of us buyers and with our car from the possibly same model of the neighbor. The magic word is called customization, ie equipment options. There is not much with Tesla.
    Although this restriction is good for efficient and rapidly fast production, finally you plan a car 24 hours after ordering to have the customer, but therefore speaks only one customer base already limited by prices anyway.
    But there is not only Tesla. In particular, the potential of American manufacturers, which are occupied in leading positions with high-ranking former Tesla people and therefore knowing the weaknesses of Mr. Musk and his products only too well, should not be underestimated. There are partly extremely financial partners in the background (Amazon or Saudi Arabia), which stand for rapid growth and leading indispensable technologies (Amazon AWS Cloud).
    What comes from China remains to be seen insofar as it fulfills the claims of the German and European customers. Many of the Chinese manufacturers mentioned in the post have identifiable potential and design I already see them as Tesla. Non-underestimate one should also, where a large part of the required raw materials are.

    It was noteworthy in the article but especially a number that seems to have noticed anyone else. 2 million cars from Grunheid! This number is actually no secret anymore. Under expert people, she will have been discussed for a long time and who is looking for the planning for the work and has a thought of modern production, knew before that it was designed for more than 500,000 cars. Unfortunately, the official Brandenburg politics is still doing as if the number is not or she knew nothing. Problem with both quantities – the water at the site is not enough.

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  3. The sticking point of the conversion to the electric car for the widespread mass – whose largest private investment is the purchase of a car – is in the development of better batteries with regard to energy density and the corresponding price, which is in connection with the respective range requirement of customers.
    This is primarily the manufacturers of cars of the golf class and smaller concerned with their customers the price plays a greater role than products of BMW and Dailmler products.

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  4. The article also reflects my opinion again, that goes down to the last detail. You had more and more the impression that the major providers think the market has to be directed after us and not to the customer.
    That the Tesla m3 and my not only me very well is certainly no secret. These sell as cut bread and the beautiful lines will not be entirely innocent in the design. NIO has also recognized this with his ET5. SELBS The ID3 I would still refer to the form as acceptable – but if you open the door there is already going on with less beautiful surprises. Recently, I was on the configurator of the ID3, that’s a confusing procedure – the question arises: “What’s that?”- Do you want to harness the potential customers here. This annoying package policy, if I want a special equipment useful for me, but I have to take three expensive special equipment that is worthless for me. From my point of view, it would be urgently needed that the big manufacturers lay the ear to the crowd and maybe try it with a beautiful limousine or a station wagon – but please well thought out as usual and a feasible price.
    And another hint:
    I am not a Teslafaher, I was a satisfied VW customer since over twenty years, incl. EGOLF! But I miss the further development for everyday BEV’s since ID3.

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  5. A few thoughts about the article and the comments:
    1) Why should a Tesla shareholder warn that a competitor is threatened with VW? If Mr Voigt would be because his Tesla share continues to rise, he would prefer to be silent than to draw attention to the competition.
    2) How Mr Voigt u.a. Write: We Europeans and here the auto community focuses heavily on Tesla and the USA. The danger to the entire European Auto Industry – not only VW – is the innovative strength of China paired with your long-term plan.
    3) Time is the crucial factor. And there it is difficult to raise a substantial in the auto industry with their 7-10-year-old cycles.
    4) Focus is the next crucial factor. While Mr. This is dealing with internal power fighting (must deal with?), put the competitors around their electrical strategy.

    Whether all this leads to misery. “Forecasts are difficult, especially if you relate to the future” (Mark Twain). But a healthy portion of persecution has never hurt to survive. Arrogance and ignorance is safe the flat way.
    Roman on the topic of what you could do – pure fiction: ultimatum e: https: // amzn.to / 375g335

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