Volkswagen sets a five-year goal to surpass Tesla by 2025

Volkswagen held its first Power Day. The entire event revolved around the next-generation electric vehicle strategy and outlined the future electrification development direction of Volkswagen. In particular, the slogan of surpassing Tesla by 2025 caused Volkswagen's stock price to surge by 30% overnight, the largest increase in more than a decade. Whether Volkswagen can achieve this goal has become the focus of attention from all parties.

1. Volkswagen promotes the battery revolution, and scale becomes its biggest weapon

The ID.3, the first model on the MEB platform, has been a success in the European market. It has become a model that can compete with Tesla Model 3 in terms of both cost and product strength. The MEB platform has made great contributions to this.

At Power Day, Volkswagen announced that it will launch the second-generation MEB platform in 2023. In the field of batteries, Volkswagen hopes to replicate the experience of the entire vehicle platform. For this purpose, Volkswagen has developed a standard battery cell (Unified cell), which will also be put into production in 2023 and installed on 80% of Volkswagen's models to dilute the cost of R&D investment. In terms of technical routes, Volkswagen will divide its batteries into three categories in the future, namely lithium iron phosphate for entry-level models, high-manganese ternary lithium batteries for medium-performance models, and high-nickel and solid-state batteries for special high-energy demand models. The costs of the first two can be reduced by 50% and 30% respectively, while the cost of high-performance batteries will increase. However, for high-performance batteries, Volkswagen has formulated very demanding technical standards: energy density +40%, power density +50%, operating temperature +35%, weight -30%, internal resistance -25%, kinetic energy recovery performance +40%, which will be able to greatly alleviate customers' mileage anxiety.

Compared with Tesla, Volkswagen is able to conduct research and development of four technical routes of batteries at the same time, relying more on its huge volume. Through relevant actuarial calculations, the research and development costs of each technical route can be diluted to the greatest extent, so that the cost of Volkswagen's related models can be well controlled, and the characteristics of each battery can be fully utilized, so that consumers can choose the battery that best suits their needs. In line with these four major technical routes, Volkswagen will also build six super battery factories similar to Tesla, with an annual production capacity of 40GWh for each factory to meet Volkswagen's annual battery demand of up to 240GWh in 2030. Currently, the first two of the six factories have been confirmed, located in Skellefteå and Salzgitter, Sweden.

2. Improve infrastructure to help Volkswagen achieve sales targets

According to Volkswagen's plan, its goal this year is to increase the delivery of electric vehicles to 1 million, and to become the leader in the global electric vehicle market by 2025 at the latest. By 2030, Volkswagen's pure electric vehicles will account for 60% of its sales in Europe. In the Chinese market, by 2025, Volkswagen's various brands will have 15 models based on the MEB platform produced domestically, and the total annual delivery of new energy vehicles will reach 1.5 million; by 2030, Volkswagen's pure electric vehicle ownership in China will reach 12 million.

In order to meet this sales target, the improvement of charging infrastructure is essential. By 2025, in the Chinese market, Volkswagen plans to build a total of 17,000 fast charging piles, all starting from 120kW, including 180kW and even 300kW super fast charging piles, which will cover most cities in China; in the European market, Volkswagen will build 18,000 charging piles. In the US market, Volkswagen will complete the layout of 3,500 charging piles this year.

3. Create a new business model and seek new profit growth points

Autonomous driving is also the breakthrough direction of the Volkswagen Group in the future. We still remember that Volkswagen had previously formed an alliance with Ford, and the most important part of it was Volkswagen's investment in Ford's autonomous driving department Argo AI. At the same time, Volkswagen's autonomous driving business department in Europe was also merged into Argo AI, which allowed Volkswagen to make a big step forward in the field of autonomous driving software platforms and become one of the mainstream technical solutions in the world. Although it is still unclear in the short term whether L4-level autonomous driving technology will be fully implemented in the passenger car field, Volkswagen is more feasible technical solutions, whether it is applying Argo AI technology to its commercial vehicle projects, or achieving infinite proximity to L4 through continuous iteration on the passenger car L3 technology.

In addition, in the era of software-defined cars, it is both a challenge and an opportunity for OEMs. The challenge is that traditional OEMs have not deliberately cultivated their own software development capabilities before, because this part of the work is basically done by suppliers. However, in the era of software-defined cars, no OEM dares to hand over the core capabilities of a car to a supplier. This is actually the model that Apple advocates in the field of mobile phones and in the future when Apple itself hopes to build cars. The whole car is just a hardware carrier. In the future, users will subscribe to the Internet of Vehicles, unmanned driving, and even activate seat heating functions to find new sources of income for OEMs.

Previously, Tesla required users to pay 2,400 yuan to activate the driverless function. In fact, Tesla could be more detailed, that is, provide users with seat heating on a daily or monthly basis, or provide customers with a package that automatically turns on the seat heating function according to the ambient temperature, etc. These model innovations, coupled with Volkswagen's annual sales scale of 10 million and a larger number of vehicles in use, are entirely possible for Volkswagen to find a new source of income. In addition to Volkswagen, similar inquiries were also revealed at recent press conferences of BMW and Mercedes-Benz.

Volkswagen Power Day not only sounded the clarion call for Volkswagen to challenge Tesla, but also sounded a wake-up call to other car companies around the world. For OEMs, in the era of the new four modernizations, they can no longer outsource almost all parts to suppliers as before. Whether it is batteries, cells, electronic controls, or autonomous driving-related algorithms or even exclusive autonomous driving chips, OEMs need to invest manpower and material resources to make up for previous shortcomings; and seeking breakthroughs in new business models can lead OEMs to achieve a comprehensive transformation. Perhaps in 5 or 6 years, OEMs will sell cars like Apple sells mobile phones. Hardware sales revenue is certainly a major source of income, but during the entire life cycle of the vehicle, Volkswagen or a large number of other software developers can earn considerable profits for themselves through user subscriptions to their developed application services in the environment provided by Volkswagen.