Recently, at the Volkswagen Group's annual financial report press conference held in Wolfsburg, Germany, Volkswagen Group CEO Herbert Diess said that in 2021, the Volkswagen Group will usher in a favorable turning point in the business in important global markets, successfully promote the electric mobility strategy, strengthen software development capabilities and improve efficiency. Since entering 2022, many multinational car companies such as Volkswagen, Mercedes-Benz, BMW, and Tesla have expressed their positions, saying that they will increase investment in the Chinese market and strengthen localization research and development and operation.
For every new energy vehicle company that aims to accelerate the transformation of electrification, the sharp increase in the cost of raw materials for power batteries is an objective and must be overcome. On March 21, Volkswagen Group China reached a strategic cooperation intention with its partners to lay out the supply chain of battery raw materials. In fact, the pursuit of sustainable, low-carbon and green development goals by multinational car companies will be integrated into China's orderly promotion of "carbon peaking and carbon neutrality" work.
Even under the multiple pressures of the new crown pneumonia epidemic and chip shortage, China's new energy vehicle market has maintained a strong growth trend in the past year. But now, due to the rising price of power battery raw materials and changes in the international situation, car companies that are undergoing difficult transformation, especially multinational car companies, are facing more new tests.
Recently, at the Volkswagen Group's annual financial report conference held in Wolfsburg, Germany, Volkswagen Group CEO Herbert Diess admitted that in 2021, the shortage of chip supply led to the Volkswagen Group's inability to meet the high demand in the Chinese market, and the overall sales were affected, while the sudden war not long ago brought about severe economic and social turmoil.
"The Volkswagen Group has proven itself resilient over the past few years and will work hard to cope with this crisis. We will continue to focus on the implementation of the NEW AUTO strategy towards a future of zero emissions and autonomous driving. Diess said that in 2021, the Volkswagen Group will usher in a favorable turning point in its business in important global markets, successfully promoting the electric mobility strategy, strengthening software development capabilities and improving efficiency.
According to reports, in China, the world's most important growth market, volkswagen group has a market share of 16% in 2021, nearly double that of the second largest competitor. Among them, the Market Share of Volkswagen brands reached 11%, while porsche, Bentley and Lamborghini sales in China all hit new highs in 2021.
According to the reporter's understanding, since entering 2022, many multinational car companies such as Volkswagen, Mercedes-Benz, BMW, tesla and so on have expressed their positions, saying that they will increase investment in the Chinese market and strengthen localization research and development and operation. It is worth noting that many multinational car companies have chosen to put their latest new energy models into the Chinese market. This may mean that multinational car companies pursuing the goal of sustainable, low-carbon and green development will be integrated into China's orderly promotion of "carbon peaking and carbon neutrality" work.
Increase Local R&D in China
For all multinational car companies that are trying to lead the transformation of the global automotive industry, whether they can maintain the profit margin and market position in the Chinese market is almost an important indicator of the success or failure of all the work at hand.
"China's new energy vehicle market is the fastest growing segment, with multiple products on sale and fierce competition. So far, the new energy vehicle market is still a pioneer market. In the view of Feng Sihan, CEO of Volkswagen Passenger Car Brand China, China's new energy vehicle market is different from the traditional automobile market model. On the one hand, the micro entry-level market is performing strongly, and on the other hand, the high-end market is growing, and these two parts account for nearly 60% of the market share.
"Our ID. family models are targeting the production model market, which is expanding as more and more middle-class consumers choose electric vehicles." Feng Sihan admitted to reporters that Chinese consumers' demand for vehicle interconnection has maintained rapid growth, so the development trend of new energy vehicles in China is closely related to smart cars.
However, he still believes that the main challenge facing volkswagen brands in China in 2021 is not insufficient demand, but from the supply chain. "Customer demand is maintained at a high level, but many times, we have to face downtime due to chip shortages and the epidemic. The shortage of supply also has a great impact on the ID. family models, especially at the critical time when we are expanding into the new energy market with new models. ”
"This year, we will provide OTA remote upgrades for users of ID. family models in the Chinese market. This not only fixes software issues in a timely manner, but also provides new features and services to continuously improve the user experience, such as AR-HUDs and navigation systems. Feng Sihan revealed that more L2+ level autonomous driving assist functions will be fully mass-produced in the next two years, "Our long-term goal is to be in the field of automatic driving." ”
There is no doubt that whether it is the layout of the battery value chain for fierce market competition or the forward-looking layout of intelligent technologies such as autonomous driving, the Volkswagen Group must continue to strengthen its localization research and development capabilities in China.
Not long ago, Volkswagen Anhui Comprehensive Experimental Center R & D test site broke ground in Hefei. According to Ge Wandi, CEO of Volkswagen Anhui, this is a one-stop product development site covering vehicle driving and component testing, virtual reality and engineering, software and application development and other test functions, "It is an important part of Volkswagen Group's global R&D network, which will greatly enhance Volkswagen Anhui's R&D capabilities and inject new impetus into the Group's electric mobility strategy." ”
At the same time, CARIAD China, a software company owned by the Volkswagen Group, will also provide strong support for localization software research and development. It is understood that CARIAD has successfully integrated Hella's camera software business and cooperated with Bosch to develop L3-level autonomous driving technology. In 2022, CARIAD will enter the U.S. and Chinese markets, enabling the Volkswagen Group to customize software development according to the different needs of various markets around the world, further accelerating the pace of development.
The relevant person in charge of Volkswagen China told reporters that in the near future, the number of employees in CARIAD China will double. "We are making steady progress, and we will better meet the needs of Chinese users and quickly adapt to new development trends." In the long run, innovation based on the Chinese market will also be promoted to other markets around the world. ”
In addition, Volkswagen has launched a new sales method that combines offline and offline for young consumers in China. "We have opened 120 city showrooms, which will lay the foundation for achieving the full-year goal of more than doubling sales." The relevant person in charge of volkswagen passenger car brand China revealed.
"Cutting down on food and clothing" must also be transformed in a big way
"Last July, we unveiled our NEW AUTO strategy: by 2030 the Group will transform itself into a sustainable provider of software-driven mobility services." Diess recalls that in less than a year, the Volkswagen Group has achieved significant results in all four strategic areas. "We are steadily creating new sources of profit for the future and will do our best to shape the future of mobility."
As the saying goes, "the soldiers and horses have not moved, and the grain and grass have gone first." Sound financial performance and a resilient business model are considered the keys to supporting corporate transformation.
Volkswagen Group's 2021 financial data shows that although overall sales in 2021 fell by 6% year-on-year, sales revenue increased by 12% to 250.2 billion euros. Operating profit, excluding expenditure on special projects, nearly doubled from the previous year to €20 billion. Return on operating sales, excluding special project expenses, increased to 8 percent from 4.8 percent in the previous fiscal year.
"A richer product portfolio and pricing advantages, as well as reduced indirect costs, are key factors for Volkswagen to achieve excellent financial performance in 2021." Some analysts believe that last year, Volkswagen launched an indirect cost management project, which squeezed out a lot of "ammunition" for the group's comprehensive electrification and digital transformation. It is understood that Volkswagen has ahead of schedule to reduce indirect costs (excluding research and development and capital expenditures) by 2023, saving 4 billion euros compared with 2019.
"Despite being severely affected by chip shortages, Volkswagen still achieved strong performance and stable cash flow in 2021." Arno Antlitz, Chief Financial Officer of the Volkswagen Group, said confidently, "Even in difficult times, we are still able to provide strong financial support for the transformation of NEW AUTO. ”
In his view, the Volkswagen Group fully proved the strength of its business model in the 2021 fiscal year, thanks to a sharp decline in indirect costs and the implementation of strict capital expenditure discipline, Volkswagen achieved a lower break-even point.
Alexander Seitz, member of Volkswagen's passenger car brand management board and head of control and accounting, said: "The shortage of car chips will improve in the second half of this year at the latest, and we will produce and sell more cars. We also want to further improve our operating profit and return on operating sales in 2022, with the goal of achieving a 6% return on operating sales by 2023. In 2022, we also want to further optimize working capital in our operating activities and significantly increase our net cash flow. ”
The tide of rising raw material prices "stirs" the power battery supply chain
Where will the funds saved by the Volkswagen Group's "food and clothing" be invested? According to the previously formulated NEW AUTO strategy, the layout around the battery value chain and autonomous driving technology will be the focus of investment.
It is understood that in 2022, Volkswagen will increase investment in the battery field. According to data, in 2021, Volkswagen's investment in this field has exceeded 1.7 billion euros (about 11.85 billion yuan), including a stake in Chinese battery company Guoxuan Hi-Tech.
On March 21, Volkswagen Group China signed two memorandums of understanding on strategic cooperation with Huayou Cobalt and Tsingshan Group to further consolidate its position in the domestic battery value chain and strengthen its competitiveness in the fast-growing field of electric mobility.
Lithium cobalt oxide, lithium manganate, lithium iron phosphate, ternary materials and other cathode materials are the main components of the power battery, which determines the energy density of the battery and also occupies most of the cost of the power battery. The reporter noted that in recent times, due to the sharp rise in the price of LME nickel, the price of battery-grade nickel sulfate has risen. In addition, since entering 2022, the price of lithium carbonate has risen from 300,000 yuan / ton, and even exceeded the 500,000 yuan / ton mark in early March.
Eventually, the price of raw materials for power batteries has risen all the way, and this pressure from the upstream is being transmitted to downstream car companies step by step. According to the reporter's incomplete statistics, since the beginning of this year, Tesla, Xiaopeng Automobile, Nezha Automobile, WM Automobile, SAIC-GM-Wuling, Volkswagen, Ford and other car companies have raised the price of new energy vehicle products, and the price increase ranges from several thousand yuan to tens of thousands of yuan. There are even car companies that have to suspend the receipt of orders for their hot models to cope with the crisis caused by rising costs.
For every multinational car company that aims to accelerate the transformation of electrification, the sharp increase in the cost of raw materials for power batteries is an objective and difficulty that must be overcome.
The relevant person from the Public Relations Communication and Corporate Social Responsibility Department of Volkswagen Group (China) told reporters that Volkswagen signed a memorandum of understanding with Huayou Cobalt and Qingshan Group to establish two joint venture companies, and the business just covers the upstream and downstream of the battery cathode material supply chain.
"This cooperation is not only to achieve cost advantages, ensure the supply of raw materials, and achieve a transparent and sustainable supply chain, but also to strengthen the synergy of technological innovation in the whole industry chain, including precursors and cathode materials." She said that this cooperation will help achieve the long-term goal of reducing the cost of batteries by 30%-50% of the group, and at the same time continuously improve key performances such as energy density of power batteries through technical collaboration.
It has been revealed that Volkswagen Group (China) will form an upstream joint venture with Huayou Cobalt and Tsingshan Group focusing on the production of nickel and cobalt raw materials. At the same time, Volkswagen also plans to establish a downstream joint venture with Huayou Cobalt, specializing in nickel and cobalt sulfate refining, precursor processing and cathode material production, to support Volkswagen's ambitious new energy vehicle growth strategy in the Chinese market.
Some analysts pointed out that in the long run, the global nickel production capacity is gradually released, the supply tension will be alleviated, and the new production capacity is mostly integrated, which can effectively reduce the cost of the lithium battery industry chain.
"At present, the impact of battery price increases has basically landed, and it is expected that the continuous high prosperity of new energy will further alleviate market concerns." Some auto industry analysts believe that the expectations of the new energy vehicle market this year are still worth promising.
China Youth Daily, China Youth Network reporter Xu Yajie Source: China Youth Daily
Source: China Youth Daily Travel Weekly