VW Brunswick battery productionVolkswagen is reorganising its global components business into a separate corporate division in an effort, it said, to improve efficiency, become more flexible and prepare for growth in electric vehicles. Group Components will sit under the aegis of Volkswagen AG alongside VW Passenger Cars and VW Commercial Vehicles.

“We are preparing ourselves for the approaching new era of mobility,” said Thomas Schmall, board member for components at the VW brand and head of Group Components. “Investments for the new electric components must be borne by our present core business. We are therefore working at full speed on a group-wide added value strategy based on investment and cost optimisation.”

There are 56 plants in the Group Components network and a global workforce of around 80,000, producing components from engines, transmissions and electric motors to steering systems and lightweight parts.

As the market moves toward more electric drives and electronic components, it is likely that carmakers will be using fewer components overall because electric cars have fewer moving parts. Electric cars do not require multiple gear transmissions, spark ignition technology or cylinders, for instance. However, parts manufacturing is likely to be defined by a greater range of products as new vehicle technology runs alongside the production of parts for the traditional combustion engine. Logistics networks are also likely to become more complex to support the delivery of sophisticated products and information.

Asked how this would affect the component network and workforce, a spokesperson for VW said the entire automotive industry was facing the biggest transformation in its history.

“The conversion to electromobility with accompanying digitisation of the vehicles requires billions in investment,” he said of VW in particular. “These resources need to be earned, and we need appropriate structures in the company, in component development and production. This also means we need to set up our plants more efficiently and become more flexible, in order to keep up with the ever-changing pace of change and achieve our economic goals.”

VW’s component plants in Braunschweig, Kassel and Salzgitter are already producing parts for electric vehicles.

“In Braunschweig, we build battery systems for electric vehicles and in Kassel, electric drive motors,” said the spokesperson. “At the moment, these are comparably small projects, but they will grow strongly.”

He added that the factories would be producing more components and different ones, with Braunschweig already a good example as it is producing steering systems, battery systems and brake discs in parallel.

In Salzgitter, meanwhile, VW is building up component production for electric drive motor parts for the next generation of electric vehicles, called the ID family.

Last year, Volkswagen announced a major €22.8 billion ($26.7 billion) investment programme in its plants around the world to prepare them for modular production of electric vehicles. The greater part of that investment is in Germany, which will account for investments totalling €14 billion. That includes the transformation of the Zwickau plant into a pure e-mobility facility, with an investment of about €1 billion.