volkswagen logo wm

In the face of hardship facing the Volkswagen Group, chief executive officer Matthias Mueller outlined a 15-point strategic plan to bring the German automaker back to a more positive outlook.

The VW Group is expected to cut US$9 billion in costs; have up to 25% of its vehicle lineup powered by some level of electrification, be they hybrids or full electric vehicles; further streamline its vehicle architectures; and make its auto parts operations an independent business which involves over 10% of its personnel.

“There is no doubt that we have severe weaknesses, above all when it comes to our structure, culture and efficiency; we want to eradicate them, and the new strategy will make a considerable contribution,” Mueller said during a news conference with strategy chief, Thomas Sedran.

Mueller announced the aim to sell 2-3 million EVs and plug-in hybrid vehicles by 2025. This would make up 20-25% of total group volume, Mueller estimated.

porsche-mission-e-frankfurt-2016-0013

Porsche Mission E Concept

For that to happen, Mueller said the company has been evaluating the feasibility of manufacturing their own battery packs and even battery cells on an industrial scale. At those numbers, Mueller estimates VW will need 150 gigawatt-hours of battery supply; three times that of Tesla’s planned Gigafactory.

If the automaker takes on the manufacture of batteries themselves, the battery plant could be part of the aforementioned separate auto parts division which will take up more than 10% of staff. Measures such as this are meant to manage costs, which consume over 90% of VW’s annual US$240 billion revenue.

For the future, the automaker plans to reduce its research and development budget from 6.4% of automotive revenue to 6%, which will go towards its goal of reducing costs by US$9 billion.