VW Shifts to Electric Cars, Robo-Taxis in Strategy Overhaul
The VW BUDD-e concept is unveiled at the 2016 Consumer Electronics Show in Las Vegas in January.
- Carmaker to realign components production to boost efficiency
- VW will present detailed financial targets before year-end
Volkswagen AG Chief Executive Officer Matthias Mueller mapped out a sweeping strategy overhaul focused on electric cars, automated driving and services such as ride-hailing in an effort to emerge from the diesel-cheating scandal.
The German carmaker will introduce more than 30 electric vehicles by 2025 to account for up to one-quarter of its deliveries as part of the transformation, the company said Thursday at a press briefing at its Autostadt exhibition center in Wolfsburg. The goal of the shift includes an operating return on sales of 7 percent to 8 percent by 2025, up from 6 percent before special items last year.
Playing a leading role in the automotive industry “will require us -- following the serious setback as a result of the diesel issue -- to learn from mistakes made,” Mueller said in his first major strategy presentation since taking charge after Volkswagen admitted last September to cheating on emissions tests. The new goals will make the company “more focused, efficient, innovative, customer-driven and sustainable.”
The crisis has forced Volkswagen to accelerate efforts to adapt to the industry’s shift toward self-driving electric cars. The emissions scandal has so far cost the company 16.2 billion euros ($18.2 billion) and highlighted the risks of its rigid structure and focus on expansion, which caused it to largely miss the trends that led to the emergence of the likes of Tesla Motors Inc. and ride-sharing service Uber Technologies Inc.
Plan Details
Volkswagen said it will present detailed steps to implement the plan, broken down for its 12 brands and including financial targets, by the end of this year. The transformation is expected to involve investments of more than 10 billion euros.
The shares fell 1 percent to 118.95 euros at 12:47 p.m. in Frankfurt.
Volkswagen plans to establish a mobility solutions business that will develop its own services as well as acquiring businesses in areas such as ride-hailing, robo-taxis and car-sharing. The goal is to generate billions of euros in revenue from the efforts by 2025, the carmaker said. A $300 million investment last month in ride-hailing app Gett was Volkswagen’s first foothold in the burgeoning field.
New hires including strategy chief Thomas Sedran, a long-time AlixPartners and Roland Berger consultant, and digital head Johann Jungwirth, formerly with Apple Inc., are key to the revamp. Herbert Diess, who joined from BMW AG a few months before the cheating became public, is in charge of the critical effort to lift profitability at Volkswagen’s struggling namesake brand, its largest unit.
The company will face shareholders on June 22 without a settlement in the U.S. A federal judge pushed back the deadline for an agreement, originally set for June 21, by a week Wednesday due to the technical nature of the negotiations.