Volkswagen

See also: Volkswagen:Questions | Volkswagen:Position Changes | Deliveries | Volkswagen Financial Services | Volkswagen:Quarterly Results | Volkswagen:Sheet | Company News | Volkswagen: Capital Markets Day 2023 | Volkswagen: Most Important Markets | Volkswagen: Pricing | Volkswagen: Mangement | Automotive Industry: Current State of EV Sales | Volkswagen:Product | Volkswagen: Analysts Opinions | Volkswagen:Strategy | Volkswagen:EU CO₂ Regulation | Volkswagen:Competition From China EVs | Volkswagen: Possibility of making a B-segment EV | Volkswagen: Sources

Bull & Bear

Timeframe	Bull	Weight	Consideration
Shortterm	Higher car prices	3	Used car prices are holding up better than expected
Midterm	Virtual Equity Stories	8	VW looks grossly undervalued on a sum of parts analysis. Porsche rose almost 50% after it's IPO while Volkswagen kept approx. stable.

Timeframe	Bear	Weight	Consideration
Midterm	Worsening financial conditions	7	Potential Risks of fewer cars sold through worsening financial conditions
Midterm	Recession fears	8
Longterm	Self Driving Technology	9	Selfdriving Technology could completely disrupt the car industry

Market Size

On February 23 2023, CFO Arno Antlitz said that Volkswagen plans to invest more in India as US-China tensions rises and China's seeming support for Russia's invasion of Ukraine becomes apparent. He added that India has enormous growth potential as its population exceeded that of China in 2022. Also, majority of its population is under the age of 30. This is particularly true since Skoda India deliveries grew by 127.7% year-over-year in 2022 to 51,900. Antlitz also pointed out that Volkswagen will try to avoid price discounts in the coming months as global economy worsens and demand declines.

Technology and Usage

June 29, 2023: Volkswagen said it's in discussion with Tesla to optimize its North American charging standard for its customers. "Volkswagen Group and its brands are currently evaluating the implementation of the Tesla North American Charging Standard (NACS) for its North American customers," Volkswagen said in an emailed statement. This comes after Ford and General motors recently inked a similar deal with Tesla. Charging stations in U.S use what is called the public domain Combined Charging System (CCS) plug standard, which has been found to be unreliable compared to NACS. By using Tesla's NACS, these automakers will also save on costs meant to improve the charging infrastructure. “We think we can save up to $400 million in the original three-quarters of a billion dollars that we allocated to this, because we’ve been able to do it faster and more effectively,” General Motors CEO, Mary Barra, said in an interview with CNBC.

May 15, 2023. Volkswagen CFO Arno Antlitz said Cariad will bring its next generation 2.0 platform to the market by 2027 or 2028 instead of 2026, confirming last year's Reuters report. The software would enable level 4 autonomous driving. Antlitz said the company wanted to concentrate first on the version of the platform that will be implemented in 2024 on premium models such as e-Macan and Audi Q6 e-tron. "There will be great cars on that platform... that gives us a little flexibility to postpone to 2027, 2028,"he said. Antlitz said Cariad will rely more on outside partners and do less in-house to reduce cash burn.

March 7, 2023. Volkswagen reverses its 2030 EV target from 70% to 80%.

On 20, February 2023, Volkswagen pointed out during the Tech Day exhibition in Barcelona, Spain that it's developing its electric drive system in-house to cut on costs and reduce complexities. The company said that its drive system will offer up to 20% more efficiency. Other than batteries and electric motors, the company is in the process of developing pulse inverters and thermal management systems. Pulse inverters can be used in any vehicle including sports cars with an output of over 500 kW. Pulse inverters is "being developed for series production maturity and can already be used with the next MEB generation." VW said. On the other hand, thermal management systems will be used to improve efficiency.

Market

See also: Automotive Industry

Competitors

Ferrari. Market Cap 48B Example of highly valued premium brand. Revenue around 5B, Net Income 1B. Could Porsche be hyped up as well? 7.7% of the total order volume was placed by retail investors

Competition in China

• Volkswagen still leads in the Chinese market. But it's losing its market share rapidly to BYD.

Period	Brand
	Volkswagen	BYD	Toyota	Honda	Changan
2015	13.07%	2.14%	5.91%	4.14%	4.30%
2016	12.09%	1.71%	4.09%	5.00%	4.88%
2017	13.09%	1.57%	4.20%	5.26%	4.64%
2018	13.51%	2.20%	5.82%	7.16%	3.56%
2019	15.40%	1.73%	6.97%	7.59%	3.84%
2020	13.39%	2.13%	7.47%	8.43%	4.79%
2021	10.53%	4.99%	7.90%	7.62%	4.39%
2022	11.10%	9.53%	8.85%	5.80%	5.14%
June 2023	10.20%	11.16%	8.51%	5.49%	4.68%

Financial Analysis

Revenue and Profitability

June 12, 2023: Volkswagen Supervisory Board is expected to meet tomorrow to discuss cost-saving measures amounting to at least 3 billion euros across Volkswagen, Seat, Skoda and Cupra brands. This comes ahead of the company's Capital Markets day scheduled for June 21.

Stifel analyst Daniel Schwarz emphasized the profit margins for individual brands that is above the expectations. He noted that Audi profit margin of 12-14% is above the previous range of 9-11% while VW core brand planned margin is 6.5%, above the previously mentioned.

March 3, 2023: Volkswagen Group 2022 revenue came in-line with analysts estimates. Revenue was EUR 279.2 billion (+12% year-on-year) versus analysts estimate of EUR 278.37 billion (+11.3% year-on-year). Similarly, operating profit margin came in at 8.1%, as forecasted in the latest guidance. Volkswagen said its order bank remains strong at 1.8 million vehicles. It sees supply bottlenecks easing gradually in 2023. As such, the company gave revenue guidance for 2023 that exceeds Yahoo Finance analysts estimate. Volkswagen expects this year's revenue to grow by 12.5% at the mid-point to reach EUR 319 billion, above analyst's estimate of EUR 281.84 billion(+0.94% y/y). It also expects deliveries to reach 9.5 million vehicles in 2023. That is growth of 15% in deliveries compared to the prior year. Meanwhile operating margin is to come in between 7.5 and 8.5%. In light of the results, the management is proposing a dividend of EUR 8.70( +16% y/y) per ordinary share and EUR 8.76(+15.9% y/y) per preferred share.

Leasing Business

Volkswagen appears to increase the amount of leasing vehicles in the last years substantially .

Assets

On March 1 2023, RBC news agency reported that Russia's Avilon autodealer group will buy Volkswagen's Kaluga plant. It did not disclose the price but said that the deal is expected to be closed in March. The plant has an annual capacity of 225,000 vehicles, employed 4,200 people and was a recipient of €1 billion in investments. Kaluga plant was affected by Russia's war in Ukraine.

Lease Assets

2021

While there have been a "depreciation of and impairment losses on lease assets" of 9,339M EUR in 2021 "Change in lease assets" accounted for 16,205M EUR. That means that Volkswagen increased their lease assets by 6,866M EUR according to it's cashflow statement.

That is roughly in-line with the lease asset increase by 9,013M EUR from 50,686M EUR to 59,699M EUR according to Volkswagen Balance Sheet

That is similar to the 7,623M EUR increase in lease assets of Volkswagen financial services. A part of the lease asset increased seemed to be financed by debt.

The topic needs further studying in order to display increases in lease assets accurately but for now it's save to say that Volkswagen does indeed invests an substantial parts of it's profits into their lease vehicle fleet which decreases it's free cash flow and net cash flow and makes those numbers seem worse than the situation is.

Balance Sheet

The balance sheet esp. the balance sheet of volkswagen financial services seems solid at first glance. Shareholder equity increased by 18,673M EUR in 2021. Main increases incurred in intangible assets (esp. capitalized development costs, Page 275), increase in lease assets, investments and increase in cash. On the liability side there has been an increase in non current liabilities both for Volkswagen and Volkswagen Financial Services.

Cash Flows

April 18, 2023: Volkswagen's electric vehicles procurement and development centre in Hefei, China will cost the company 1 billion euros. The centre named "100%TechCo" will lower development times of new technology and products by around 30%. It will launch in 2024.

March 14, 2023. Volkswagen announced that it will invest $192.6 billion (180 billion euros) between 2023 and 2027. More than a third of this will go to electrification and digitalization. Previously, Volkswagen budgetted to invest 159 billion euros between 2022 and 2026. 56% of this would have gone to future technologies. The new plan would mean that Volkswagen's average annual investment sum will increase from 32 to 36 billion euros. This is above the market expectations of 26 billion euros. VW expects Powerco to generate annual sales of more than 20 billion euros by 2030.

Catalysts

As of 27 Feb 2023 Volkswagens valuation is crazy cheap at a P/E of 4. It's subsidiary Porsche AG has a market cap of 102B EUR while Volkswagens market cap is only 65B EUR although it still controls 75% of Porsche AG and holds a lot of other valuable assets including Audi, Volkswagen, Volkswagen Financial Services.

Volkswagen trades at almost 1/3 of it's shareholder equity which stands at 190B EUR. (150B EUR before Porsche IPO )

Porsches competitor Ferrari has a crazy Market Cap of 48B EUR with revenue of only slightly under 5B EUR and Net Income under 1B EUR.

Porsche on the other side in 2021 had revenue of 33B EUR and net income of 4B. While a P/E over 20 seems very high for any car manufacturer there is still some potential upside to Porsches valuation if it gets hyped up like Ferrari.

During Porsches IPO 7.7% of the total order volume was placed by retail investors, which was highlighted by Porsche.

[Sitenote on the craziness of capital markets: On 16 November 2021 EV Startup Rivian briefly hit a 150B Dollar valuation while having full year revenue of 55Million and a loss of over 4.5B USD ]

Subsidiaries

Audi

July 12, 2023: Audi is in talks with SAIC Motor Corp to buy its EV platform, IM Motors, according to people familiar with the matter. According to the sources, talks are in advance stage. Audi and SAIC declined to confirm the talks. IM Motors is a premium brand that started producing the L7 Sedan in June 2022. The L7 Sedan is touted as the next Chinese competitor to Tesla.

June 29, 2023: Volkswagen replaces Audi CEO, Markus Duesmann, with company insider Gernot Döllner. Duesmann was responsible for the ill-fated software efforts that led to delays in release of new key models. Earlier this month, CEO Oliver Blume singled out Audi as lagging behind its competitors as well as its potential. Döllner has 30 years experience in Volkswagen and is a former Porsche executive. Until his appointment, Döllner was the head of product strategy at Volkswagen AG.

Skoda

May 15, 2023. A Russian government commission has approved the sale of Volkswagen's assets to Avilon dealership. The value of the sale will not exceed 125 milllion euros. Volkswagen's assets in Russia were valued at 1.5 billion euros in 2022.

March 20, 2023. Russian court freezes all Volkswagen's assets in Russia. This is a result of a legal suit by Russian auto manufacturer GAZ, which had been contracted to produce Volkswagen's vehicles. GAZ estimates losses as a result of the breach of contract to be around $207.79 million. The decision will prevent Volkswagen from selling its Kaluga plant estimated to be worth over $1.1 billion in investment.

March 20,2023. If the "Euro 7" emissions scheme is implemented in its current form, it will affect a third of Skoda's deliveries (731,300 in 2022)."If (Euro 7) is approved in this shape, it would mean for Skoda Auto to close one plant, because we would stop producing the smaller models - Fabia, Scala, Kamiq - that means 3,000 jobs (would be) hit at least," Martin Jahn, a board member of Skoda said.

Skoda CEO said that the VW's subsidiary is in the final stages of exiting Russia. "The talks (on the sale) are in the final stages, but I can't give you details until they are agreed by all parties," Chief Executive Klaus Zellmer said. Skoda's deliveries in Russia dropped to 18,300 vehicles in 2022 from 90,400 in 2021. It took an almost 700 million euros ($742 million) hit resulting from Ukraine war.

PowerCo

January 3, 2024: Powercore’s battery cell developed with QuantumScape only witnessed a 5% storage capacity loss after 1,000 charging cycles (equivalent to 500,000 kilometres on the road), exceeding industry targets of 700 charging cycles and a maximum loss of 20% capacity.“These are very encouraging results,” PowerCo head Frank Blome said. “The final result of this development could be a battery cell that enables long ranges, can be charged super-quickly and practically does not age.”

September 19, 2023: CFO Arno Antlitz said Volkswagen could turn one of its major clients into a strategic investor for its PowerCo business. Powercore currently has Ford as its major client. Ford will manufacture battery cells for its US business using Volkswagen's MEB platform. It is also in advanced talks with Mahindra for the use of its MEB platform. PowerCo will start producing cells in 2025. Antlitz reiterated his previous comments that an investor might be found next year and that interest is high. He added that Volkswagen may list other holdings in the market in future to finance acquisitions.

June 5, 2023: Volkswagen is searching the world, from Canada to Indonesia for battery materials supplies to rely less on China. “Today we are 100% dependent on China,” VW board member and technology chief Thomas Schmall. Schmall noted that VW's goal is to reduce the share of Chinese components in their batteries by making it 50% globally on average. China manufacturers control more than 50% of the global market for EV batteries. However, VW will still use China batteries for vehicles manufactured in China.

March 17, 2023: Thomas Schmall, Volkswagen's board member in charge of Technology said that its PowerCo will invest in mines to lower the cost of battery sales, meet half of its demand and also sell to third-party customers. PowerCo's first customer will be Ford, which is building 1.2 million vehicles in Europe based on Volkswagen's electric MEB platform. It plans to generate 20 billion euros ($21.22 billion) in revenue by 2030. This could be a great move given that 40% of EV costs come from the battery.

Scout

March 21, 2023. Scout wins $1.29 billion in state incentives for South Carolina Factory. The factory also stands to receive $180 million in job development tax credits. Scout hopes to produce 200,000 vehicles from the factory annually. But production will likely start at the end of 2026.

Volkswagen Passenger Cars

November 24, 2023: Volkswagen plans to achieve the benefits of its cost savings efforts as early as 2024. “As early as next year, we plan to achieve an impact of more than 10 billion euros for the group through our brands’ performance programs,” CEO Oliver Blume told the “Frankfurter Allgemeine Zeitung”. However, direct impacts on the result are not expected until 2025 but should help offset the burdens next year. “2024 will be a very challenging year economically,” he said. “The goal is to manage the group stably so that we can get started from 2025.” Blume pointed out that the cost-savings program will include staff reduction. “In order to increase our efficiency, it is also about reducing staff,” he said. “We use socially acceptable instruments such as the demographic curve or regulations for partial retirement.” Details on the employee reductions are expected later this year.

November 13, 2023: According to Handelsblatt, Volkswagen could cut a fifth of its administrative personnel jobs as part of its cost-cutting initiative to save 10 billion euros by 2026. Volkswagen Group employs 40,000 administrative personnel. Volkswagen hasn't commented on the Handelsblatt report.

September 18, 2023: Volkswagen is considering ending production at its Gläserne Manufaktur plant in Dresden as part of its efforts to cut on costs, that’s according to people familiar with the matter. The plant employs 300 staff and is used to manufacture ID.3 electric vehicles. The annual operating cost of the plant ranges between €60 million to €70 million and is projected that ending production here will save the company around €20 million a year.

September 5, 2023: Volkswagen will reduce production in its Wolfsburg plant due to lack of engine parts as a result of flooding in Slovenia. “From September 11th, individual shifts in production will be canceled,” a Volkswagen spokesperson said in a statement. However, compared to other locations, production in Wolfsburg, the main plant is less affected. Volkswagen said last week that it will suspend production in its Portugal plant for two months. “The situation is of course annoying because the order situation, especially for the combustion engine models at the main plant, recently looked so good that we were even heading for special shifts,” said a spokesman for the works council. “Unfortunately, the new bottleneck now prevents processing.” The Wolfsburg plant has a production capacity of 750,000-800,000 vehicles a year.

August 30, 2023: Volkswagen expects production losses in Germany due to floods in Slovenia. The company expects the flooding to interrupt its supply chain but said it has taken steps to minimize the impact. “However, in the course of September it is to be expected that not all component and vehicle plants will be able to receive sufficient supplies, so production losses are to be expected," said a Volkswagen spokesperson. The company did not specify which locations will be affected but it's expected that most locations to that produce combustion engine vehicles will be interrupted.

August 29, 2023: Volkswagen will stop production in its Autoeuropa, Portugal for several weeks due to lack of parts. An internal memo send to employees said that flooding in Slovenia affected the supply of engine parts. The plant has around 5,000 employees and produced 231,100 vehicles in 2022.

July 10, 2023: VW-FAW joint venture offers discounts of 8%-27% on its ID-series of electric vehicles. VW-SAIC also offered limited discounts of around $5,100 on its ID.3 hatchback, putting the price below that of Qin EV from BYD.

July 6, 2023: Volkswagen to launch autonomous vehicles for goods delivery services and ride hailing in Austine, Texas by 2026. In 2023, Volkswagen will test 10 ID Buzz electric vehicles that have Mobileye's autonomous driving features with safety drivers onboard in limited areas of Austin. "The big aim is that we bring fully autonomous vehicles to the market as a commercial, scalable product," said Christian Senger, Volkswagen's board member in charge of autonomous driving.

June 27, 2023: Volkswagen cuts EV production amid weakening sales. According to Manfred Wulff, head of the works council for the Emden plant, demand for EVs is up to 30% below originally planned production levels. “We are experiencing strong customer reluctance in the electric vehicle sector,” Wulff told the North West newspaper. The affected models are ID 4 SUV and the new ID 7 saloon, which was scheduled to be produced from July this year. The production of ID 7 saloon has now been pushed to “later this year”, according to Wulff. Wulff pointed out that 300 of the 1,500 factory workers in Emden plant will not have their contracts renewed in August 2023.

June 14, 2023: In order to achieve 6.5% return on sales target, Volkswagen Passenger Cars aims to improve earnings by around 10 billion euros by 2026. The group aims to achieve this by leveraging synergies and improving efficiency. The targeted efficiency is not expected to come from reduced wages or layoffs. One way they plan to improve efficiency is by reducing lower volume models such as Arteon and focusing more on higher-volume models. “We will focus on a small number of – though genuine – Volkswagen core models. This will reduce complexity and deliver higher profits," Thomas Schaffer said. They also plan to reduce the number of variants. "For the ID.7, for example, this means 99 percent fewer configuration options compared to a Golf 7," the press release noted. The press release added that optimizing efficiency will be necessary in order to produce the planned 25,000-euro entry-level electric.

May 17, 2023: Volkswagen plans to restructure its core brand to increase efficiency and returns. The restructuring effort will result in at least 3 billion euros annually in cost savings. -The cost savings are not expected to come from job cuts although the number of employees will likely decline due to non-replacement of retirees. "We can see that our brand – despite all its strengths – is not yet on a sufficiently solid economic footing," VW brand chief Thomas Schaefer wrote in the memo. "We need to create good, competitive returns in times of crisis and in a continually volatile world," he wrote. Volkswagen's core brand targeted a return on sales of 6.5% in Q1 but only managed to achieve 3.5%. The overhaul plans will be showcased during the capital markets day in June 21.

April 17, 2023: Volkswagen unveiled today ID.7 electric sedan that is expected to challenge Tesla's Model 3. The new ID.7 has a range of up to 700km and a charging capacity of about 200 kW. It is expected to be launched in 2023 autumn in China and Europe and in 2024 in North America. “With the ID.7 we are taking the next step in our electric offensive. The limousine offers a high level of comfort and long ranges. Already by 2026, we will offer the widest electric range of all manufacturers in Europe – from the entry-level model for less than 25,000 euros up to the ID.7 as the new top model within the ID. family. Our goal is to achieve an electric car share of 80 per cent in Europe by 2030. As from 2033, Volkswagen will produce only electric vehicles in Europe.”Thomas Schäfer, CEO of Volkswagen Passenger Cars said. “The ID.7 sets new efficiency standards on the basis of the modular electric drive matrix (MEB). We are aiming for a range of up to 700 kilometres in accordance with WLTP. This is made possible by very good aerodynamics and by significantly increased efficiency in the areas of the powertrain and thermal management.” Kai Grünitz, Member of the Brand Board of Management responsible for Development added.

April 12,2023: Volkswagen brand's CEO Thomas Schaefer said that their EV which will arrive in 2025, the ID.2 will be profitable at the €25,000/$27,500 price. He said that they expect not less than 6% profit margin from it. Unlike Tesla which uses round cells, Volkswagen's EVs will use Unified cells, which Volkswagen's CEO believes will become the industry standards. Other than ID.2, Volkswagen plans to produce three more EV's(one from CUPRA, one from Skoda and one more from Volkswagen brand), all produced in its two plants in Spain. The two plants will produce 150,000 units each, but can go up to 300,000 units per year. Volkswagen is also working on an even cheaper EV(costing 20,000 euros), which will arrive in 2026-2027 but will not use MEB platform.

March 16, 2023. Volkswagen will launch an all-electric car priced at less than 25,000 euros. The ID.2all will be based on modular electric platform(MEP). It will be the first model to feature a front-wheel drive. Besides, it will have a range of up to 450 km and will be as spacious as Golf. The model's production will begin in 2025. By announcing the planned launch of this model, Volkswagen outbids Tesla, which announced in 2020 that it will launch a similar version though noting to show off so far.

Volkswagen Financial Services

March 21, 2023. Volkswagen's Financial Services expects a drop in earnings in 2023. "Subject to macroeconomic and political developments, Volkswagen Financial Services expect earnings in 2023 to be significantly below last year's level." Frank Fiedler, chief financial officer of Volkswagen Financial Services, said. "2022 was once again an exceptional financial year strongly affected by special factors. It can be anticipated that a repeat of such a result will not be possible in the short term."

Volkswagen Financial Services Operating profit declined 1.2% to EUR 5.6 billion. Howeverer, this was above the midpoint management guidance of EUR 5.25 billion(-7.4% year-over-year).

The special factors which affected the 2022 results include lower risk costs for credit and residual value risks and the continued high revenues from its used car business.

Apparently, VFS has given a lower guidance compared to what was given by Volkswagen Group during its earnings call. "For the Financial Services Division, we forecast a strong increase in sales revenue compared with the prior year and an operating result in the range of € 3.5 billion." Volkswagen Group said in its report. That would be year-over-year growth of 9.4%. On the other hand, VFS has said that its 2023 operating result will be "much stronger lower than in the previous year", without giving specifics.

SEAT

September 5, 2023: From 2030, there will be no more newly produced SEAT vehicles, that's according to Thomas Schaefer, CEO of Volkswagen Passenger car. Cupra will continue as a fully electric brand from 2030. However, SEAT will continue as a mobility service provider. SEAT was established in mid-1980 but has suffered losses for a long time.

TRATON

June 2, 2023: Volkswagen will start selling its bus in North America from 2024.The bus will be fully electric ID. Buzz and will carry up to seven passengers. It will feature 85 kilowatt hour (kWh) battery.

Volkswagen China

September 20, 2023: Ralf Brandstaetter, Volkswagen China CEO said Volkswagen's electric plant in Hefei, Anhui Province will start production soon. A maximum annual capacity of 350,000 vehicles will be produced in the plant. Hefei plant will not only serve as a production factory but also as a research and development facility. The plant will integrate R&D and procurement functions; hence reducing the time to market for new products by 30%.

a maximum annual capacity of 350,000 vehicles.

Start-ups

Elli Unit

July 12, 2023: Volkswagen wants to dive into electricity trading in an effort to secure new revenue source and improve energy management. “We want to give our customers a clear advantage in terms of electricity prices and at the same time develop new, high-revenue business models,” Volkswagen’s head of charging and energy Giovanni Palazzo said in a statement. Its Elli Unit will start trading electricity on EPEX Spot SE starting from today. This pilot project aims to maximize the use of renewable energy, reduce charging costs and expand second-life battery use. Volkswagen is also weighing options around large-scale stationary battery systems that boost EV battery life and stabilize grids transmitting growing proportion of renewable energy.

Management

December 22, 2023: Volkswagen Supervisory Board agreed to tie the management board’s performance bonuses to the company’s absolute net cash flow from 2024, CFO Arno Antlitz announced in a LinkedIn post. The net cash flow metric will replace the “Operating Profit including China" metric and complement the “Return on Sales” and “Achievement of ESG Goals” metrics. Plans to alter the management remuneration structure were first announced during the company’s capital markets day. Assessment (Aron): I think it’s a good idea to include cash flow as one of the performance metrics, especially since Volkswagen's net cash flow hasn’t performed so well this year. Also, the “operating profit” metric is already accounted for in “Return on Sales.” It’s also good to see Volkswagen implementing the plans announced on its capital markets day.

May 6, 2023: Volkswagen to fire all but one of the management members of its software division Cariad this week, people familiar with the matter said. The move comes after Cariad exceeded its budget and failed to meet its goals. Cariad problems have delayed the releases of new models such as Porsche e-Macan and Audi Q6 e-tron. The officials to be ousted include Cariad's CEO Dirk Hilgenberg, CFO Thomas Sedran, and CTO Lynn Longo.

Management Commentaries

September 19, 2023: Volkswagen's work council has demanded for more information regarding the cost-cut initiatives at the core brand. Daniela Cavallo, head of the works council said in a statement that programme milestones regarding the cost cuts were to be established and shared with employee representatives by October 1, but none so far. VW passenger car brand said in June that it was planning to achieve cost savings and cost cuts of up to 10 billion euros by 2026 in order to achieve a return-on-sales target of 6.5%. Cavallo said the employee representatives were chosen last week; hence limited time to the October deadline. "I call on the board to develop clear targets ... for all locations and all large entities within the brand," she said.

September 4, 2023: Ralf Brandstaetter, head of Volkswagen China business said the discounts offered in China were temporary and only meant for marketing purposes. He added that the cost savings from its MEB platform enabled them to cut prices. "The first results are now materialising. We have passed these benefits directly on to our customers, for example with regard to the ID.3," he told Reuters at the IAA conference. "With these consistent efforts, we have significantly strengthened competitiveness." He reiterated comments from Thomas Schaefer, CEO of Volkswagen Passenger Cars, that Volkswagen will not engage in price wars. "Profitability is our top priority. That is why we will not push electric vehicles onto the market at any price," he said.

September 4, 2023: Wolfgang Porsche, grandson of Porsche founder and head of Porsche SE and Porsche AG supervisory boards said that Volkswagen's declining share price is not a result of its ownership structure. "The major shareholders are certainly not the reason for the poor valuation of the share," he said. He added that Volkswagen has to reduce costs. He went ahead to brush aside complaints about Oliver Blume's dual roles as CEO of Volkswagen and Porsche AG. "Oliver Blume hasn't been there that long, and he runs two DAX companies. And he does it very well," he pointed out. On succession plans, he said that his nephew, Ferdinand Oliver Porsche, will be a natural successor when he steps down since he is experienced enough. "He has been in all the relevant committees for many years," Porsche said.

September 4 2023: CEO of Volkswagen, Oliver Blume, said Chinese EV manufacturers are not a threat in Europe because their models in Europe will be more expensive than in China due to regulatory and set up costs. "On the market, we see that the Chinese are offering their vehicles at twice the price in our country than in China," he pointed out. He added that Chinese manufacturers don't have the combustion engine vehicles to help them finance EVs production. Blume pointed out that they will have to work on costs but he's confident that they can reduce it substantially since with the new standard cell, they can reduce costs by up to 50%. He said that legacy manufacturers have other several advantages over Chinese manufacturers. "We have the vehicle know-how, we have the quality level. And we have a brand heritage. The newcomers don't have that. We therefore see ourselves well positioned," he said.

September 4, 2023: CEO of Volkswagen Passenger Cars, Thomas Schaefer, described the recent decline in EVs popularity, particularly in Germany, as an “intermediate low”. Speaking at the IAA Mobility Conference, Schaefer said, “We assume that the share of electric cars in Europe will increase significantly in the coming years.” "Since May we have seen an upward trend in incoming orders again," he noted. Schaefer reiterated that they don't take part in price wars initiated by Tesla. “We don’t take part in price wars,” he said. "In my experience, buying market share through price is not sustainable." He rejected claims by dealers that said Volkswagen increased prices in September 1st. “The prices of our electric cars were not increased as of September 1st, only those of some selected combustion engine models," he pointed out.

July 14, 2023: CEO of Volkswagen Passenger Cars, Thomas Schaefer, told more than 2,000 managers in an internal meeting that “The roof is on fire" as he laid out series of problems facing Volkswagen as it seeks to become a leading EV manufacturer while continuing to produce combustion vehicles. He noted that the next few weeks and months will be "very tough" for Volkswagen and asked managers to make "small wins." “Our structures and processes are still too complex, slow and inflexible,” he said. He told employees that Volkswagen needed "team spirit more than ever" while pointing out that he will introduce new series of "performance programs" that will save the company up to 10 billion euros in spending in the next three years. The brand's CFO, Patrik Andreas Mayer, added, “Our vehicle business is unwell."

May 31, 2023: Volkswagen brand board member said the company has introduced extra shifts at its Wolfsburg plant in order to meet production targets."Our production network in Germany was hit particularly hard by the consequences of the corona pandemic, the global chip crisis and the Ukraine war," Labbe said. "The situation has eased substantially," he added. Labbe noted that in 2022, Wolfsburg plant produced only 400,000 cars or half its annual capacity but that situation is over now.

May 31, 2023: Chief Operating Officer Ralf Brandstaetter said Volkswagen will not participate in a discount war in China. "Volkswagen is focusing on a sustainable business model. In concrete terms, this means that we will not participate in the discount battle at any price," Brandstaetter said in an interview for the company's intranet. "Our market position is strong enough. For us, the focus is on profitability, not sales volume or market share," he added. "If we achieve sales of more than 4 million vehicles in this environment in 2030, with corresponding profitability, that is a position we could very well live with," he pointed out. He expects the Chinese car market to grow to between 28 to 30 million by 2030 from the current 22 million.

May 17, 2023. CFO Arno Antlitz said the company is still weighing whether to convert its Wolfsburg plant to build a new generation of electric vehicles called Trinity or build a new factory. The new plant will cost the company 2 billion euros but retrofitting the Wolfsburg plant will cost less. Antlitz said Volkswagen is "planning for significant positive margin" on its new ID.2. He added that it will be until 2025 before Volkswagen starts building EVs at the same profit margins as combustion vehicles due to rising battery material costs. "A lot of the margin parity depends on raw materials," Antlitz told the Reuters Automotive Europe conference. He noted that an investor for its battery division Powerco could found in 2024 and a potential listing could come later. "Onlookers shouldn't be surprised if in 2024 there might be a first step taken with a strategic investor," he said "There is a lot of interest," he added "We have to decide how long we want to keep it on our books."

Regulatory Environment

July 6, 2023: Volkswagen said it's monitoring the situation in metal markets after China imposed export restrictions on gallium and germanium, which are used to make automotive products. The company added that it's "ready to take measures together with its partners if necessary." A top Chinese trade advisor has said that the restriction on the two metals were "just a start". Companies such as Taiwan's WIN Semiconductors, TSMC and NXP Semiconductors do not see any immediate impact.

Supply Chain

August 23, 2023: Volkswagen has started purchasing semiconductor materials it believes will be in short supply directly from 10 manufacturers. These manufacturers include NXP Semiconductors, Infineon Technologies and Renesas Electronics. According to Karsten Schnake, head of a Volkswagen-wide taskforce for component supply, the company started striking direct deals with manufacturers last october. The direct supply relationship does not involve TSMC but Volkswagen said that it's meeting with it every few weeks to communicate demand situation. .

Strategy

September 4, 2023: At the Group's press conference at IAA Mobility in Munich, Volkswagen said that its second electric platform, the Premium Platform Electric (PPE) will be launched in 2024, one year earlier than planned. Volkswagen also said that talks are in advance stage with Mahindra to allow it use its key MEB components, including e-drive and unified cells. Ford is already opting for Volkswagen's MEB platform.The company also said that its Volkswagen Financial Services plans to invest in Bike Mobility Services (BMS), a subsidiary of Pon with the aim of becoming "Europe's largest manufacturer-owned two-wheeler financier". It added that after successful pilot project in Vienna, Europcar will now roll out in Germany and Europe.

Irregularities

September 27, 2023: Prosecutors searched four Volkswagen locations including its Wolfsburg headquarters on allegations of excessive renumerations to members of the Works Council. Volkswagen said it will cooperate with the prosecutors.

Social responsibilities

December 12, 2023: MSCI removes red flag warning on Volkswagen following Xinjiang audit.

December 6, 2023: An audit of a jointly owned Xinjiang plant commissioned by Volkswagen and conducted by Loening Human Rights & Responsible Business GmbH found no signs of forced labour. Loening pointed out that the challenges in conducting the audit in China were widely known. In November 2022, MSCI Index gave Volkswagen a “red flag” on social issues. Citi analysts believe that the findings could help Volkswagen stock regain a significant portion of its underperformance. “If this audit conclusion satisfies MSCI, and the ‘red flag’ is removed, many EU investors currently not allowed to own any VW shares given ESG metrics, may now buy back at least some exposure,” Citi said in a note. According to Volkswagen, the audit was conducted in line with SA8000 standard, an international human rights system developed by SAI, but Loaning is not listed on SAI’s website as an accredited body that can provide such certifications.