And I am Head of Global Group Communications. Yesterday, many of you already joined us for our Power Day. Today, our CEO, Herbert Diess, will tell you how battery and charging fit into the overall picture. Our CFO, Frank Witter, will present last year's annual earnings and our new CFO, Arno Antlitz, will present his CFO agenda for the coming years. Our executives will hold their presentations in English, and our Q and A later on will be in German.
And with that, let me hand over to Herbert Diess.
Thank you, Nicole. Ladies and gentlemen, 2020 was an unprecedented year, a year in which Volkswagen mastered one of the biggest challenges in our history. In the pandemic, we managed supply chains and production worldwide, made sure Our employees are safe and secured liquidity. At the same time, Volkswagen accelerated its transition into a climate neutral software driven mobility group.
I would
like to thank our 670,000 Employees, they have taken us through this crisis. Today, I will be sharing the stage with both our current and our new CFO. Frank Guitter has been CFO since 2015. He will pass on the baton to Arno Antlitz, who joins from Audi in April. Ladies and gentlemen, Volkswagen has proven to be robust and powerful in 2020.
Global passenger car sales fell to 68,000,000 units last year. In total, the Volkswagen Group delivered around 15% fewer cars then in 2019. At the same time, we could increase our global market share slightly to 13%. In China, we have strengthened our partnerships with a focus on electrification. And for the first time, We acquired majority shareholdings in 2 joint ventures, both dedicated to e mobility.
Audi and FAW planned the production of premium e cars in Changchung In Anhui Electric Joint Venture, Volkswagen increased its share to 75%. Audi reached a sales record with a plus of 5.4%. Porsche's deliveries grew by 3%. An important model to strengthen Volkswagen's premium appeal in China is the new Willow Run. It is a comfortable and luxury van with 7 seats, providing 1st class travel.
In South America, our teams are delivering an impressive turnaround story. In 2020, We raised our market share to a new record of over 14%. And for the first time in many years, we expect the region to be profitable in 2021. The Senebos Foxtran for the first time will sell a car in Europe that was developed in Latin America. In North America, we now have the right product lineup and substance tailored to the taste of our customers in the region.
The upcoming Taos is the 5th new SUV in only 4 years' time. Our portfolio will soon consist of attractive SUVs models only, A rebirth of our Volkswagen brand, which will be propelled by our electric push with the ID4 production starting in Chattanooga and the homecoming of the iconic ID bus. In Western Europe, we could grow our share of electrified vehicles from 1.9% in 2019 to 10.5% in 2020. Skolarshad strong momentum. The brand was the main driver of our market share growth in Europe.
For this year, we expect to overcome the COVID crisis with demand picking up in the second half. In 2020, we also set the future course by strengthening the group's management board. The new board is set to unleash value. We will accelerate our transformation journey in 2021 and beyond. Anno Antlets will ensure that we generate the funds to finance the transformation and that we allocate our resources towards future technologies.
Building a strategic supply chain management, this will leverage global synergies across brands and reduce material costs. Murad Axel joined the board. Thomas Schmal joined the board as a member in charge of technology in January. He has taken the lead on battery and charging, which is becoming a core business for the group. 5 years ago, we have initiated Volkswagen Group's transformation towards e mobility.
2020 marked a turning point in customer sentiment, and Volkswagen benefited from that trend. We delivered around 230,000 all electric vehicles, 3 times more than the prior year. We lowered the emissions of new passenger cars in our European fleet significantly and finished the year with a gram of our synogram of our 2020 targets. In 2021, we are confident that we will meet the targets by scaling up production and deliveries. In the course of the year, our BEVs sales will pick up step by step.
ENYAC, Kufia Etron and the Cupra Born will be available in Europe. The ID4 will be ramped up in 2 Chinese plants, and later, the ID6 will come to the Chinese market. In 2020, TRATON implemented its global champion strategy to leverage scale and technology. TRATON announced the acquisition of U. S.
Manufacturer Navistar to strengthen its presence in North America, the most profitable truck market in the world. Scania will establish a fully owned truck production facility in China, and MAN started its restructuring program in Germany to raise competitiveness. Also, Traton will invest more than €1,000,000,000 into electrification. Emissions in freight and local public transport can be reduced much faster than in the passenger car fleet. In Hamburg, MAN's Lion City E Bus is already part of a mobility ecosystem with 0 emissions.
Each electric bus saves up to 80 tonnes of CO2 per year. It is the right time for cities to switch from old diesel buses to electric transportation. MAN and Scania can help with it. In addition, V Share operates around 800 ID3s for private car sharing, and MoYA Enables ride pooling with soon up to 500 also electric shuttles. Volkswagen will support the decarbonization of cities and regions worldwide.
In Europe, we are helping to implement the green deal. In a partnership with the Greek government, we will replace the existing fleet on Astypalia Island with around 1,000 electric vehicles connected via a mobility app. Astypalia serves as a real time experiment to explore what it takes to make people fully switch to sustainable Mobility. In Spain, we just met with the Prime Minister and the Spanish King. Together, we share the vision of transforming Europe's 2nd biggest car industry with the local production of e cars, battery cells and battery modules.
The project is on the starting block. Its execution will hinge upon a clear commitment by the European commission. Ladies and gentlemen, e mobility has won the race, but the transformation Won't happen overnight. It will take 2 life cycles to change from old auto to new auto. New auto includes the switch to electric drives, which is the easier part, and to software, turning the car into a connected and autonomous device.
In 2030, we foresee a 50% bev share In our global deliveries in Europe, we expect around 60%. In 2,035, the majority of vehicles will be Electric and around 40% of cars will drive autonomously. Financing the transition to new auto We'll be based on selling highly efficient combustion engine cars. We will keep selling ICEs in some regions longer than in others. E mobility will come at different levels of speed globally, depending on local policies and the supply of CO2 free primary energy.
Over the whole period, we will optimize the ICE business with fewer models, better price mix, lower fixed costs, leading to higher profitability. As a result, we can shift additional funds towards new auto. Ladies and gentlemen, Volkswagen always has been a platform champion. Millions of customers drive cars based on the production kits, MQB and MLP. Now we are taking the platform approach to a new level and adjusted to our future core competencies, hardware, software, battery and charging as well as mobility services.
By providing strong unified platforms, our passenger car brands can unleash They are full potential and leverage synergies. The same principle applies to our truck and bus business. Our truck brands share software stacks, hardware platforms and services. Our very own MEB platform serves as a proof of concept. The world's 1st volume platform Has taken e mobility into our core business.
In the northern half of Germany, not only our own sites, but also the Ford will be transformed by the MEB. Our component sites account for around 40% of the AIGI family value chain with sites in Braunschweig, Kassel and Salzgitter. Today, MEV production takes place in Zwickau and Dresden, and it will start in Empen and in Hannover in 2022. It will also come to Wurzburg in 2026 with Trinity. We are rolling out the MEB worldwide with a production capacity of 1,000,000 vehicles.
The ID3 and ID4 are produced in Germany, so will be the Q4 Atron and the Cupra 1. In the Czech Republic, we will build the ENYAC. In China, following the launch of the ID. 4 at 2 sites, the ID. 6 We'll begin production this year.
In 2022, the ID. 4 will start production in Chattanooga in the United States. Volkswagen Anhui in China will start producing new MEB based models in 2023. Ladies and gentlemen, over the next decade, software will transform the car fundamentally. The car software work will develop our new software stack.
Volkswagen OS We'll be first implemented in the year 2024 in the Audi project, Artemis. The organization has been growing rapidly. We are getting job applications from all across the world, targeting up to 10,000 employees. It will be the 2nd largest software company in Europe only after SAP. There's only one complex software domain where Europe still has a chance to play a leading role.
The next generation of automotive software. Our car software work To develop the necessary skills, we are currently integrating the software capabilities of 15 companies with more to come. Our goal is to increase the share of in house development from currently 10% to at least 60% by 2025. Already today, most of the software developers are working in the era of automated driving. Similar to Tesla, they are taking an evolutionary approach, automated driving for private cars.
Starting from today's driver assistance systems, Like Volkswagen's Travel Assist, we will develop automated driving functions up to level 4. Together with Argo AI, on the other side, We are pursuing a second way to autonomous driving. The driverless vehicle for mobility services. Here, the core systems are designed for lower speed and more complex environments like in cities, using LIDAR as the base technology. It will allow us to build up our system capabilities for mobility and transport as a service.
We are merging the Argo self driving system, the autonomous ID. Buzz and MoIA to a comprehensive mobility offering. The autonomous ID. Buzz will begin test operations this year, bringing the driverless system into full operation by 2025. Ladies and gentlemen, both elements of the transformation, hardware and software, cannot be separated from Each other.
Until 2022, electric platforms will take over the lead. In 2024, We start to merge our electric hardware platforms and synchronize with the unified software platform. We call it scalable systems platform. Speedboat projects like Artemis, Trinity and Apollo We lead the transformation. By the end of this decade, we will be able to roll out the SSP across all vehicle classes.
As we announced during Power Day, we will reduce complexity and focus on only one Single battery cell. From 2,003 onward, we will be ready for rollout. By 2,030, one cell format will cover 80% of the use cases in the group. New chemistry and manufacturing processes will reduce battery cost by up to 50%. This will make e cars even more affordable and as a result, even more attractive.
Charging will be as easy as refueling. We are raising the number of fast charging points in Europe by 5 times over the next 4 years. Strong partners like Iberdrola, Enel and BP will boost our European network. In At ForexOne, we are building the skills to offer mobility as a service to our customers for every situation in life. Our goal is to have full system capabilities in each sector.
With that, We will be an attractive partner for any mobility service company, whether Ladies and gentlemen, within 2 life cycles, the car industry will radically change. Profit pools will shift from conventional cars into EVs and then radically into software. We are driving the change with our strong brands in premium and in volume, leveraging competitive scales in hardware, software and services. We are confident that following this transition, Volkswagen will be an even stronger company with higher market shares than today. Our profitable ICE business will broadly finance the transition and opened new profit pools for us.
In 2021, we will recover from COVID and speed up the change once again. Thank you. Before handing over, let me thank Frank Witter. Frank, You always have secured our financial stability that was through many crises, But you always have been focusing as well on this strategy. You nevertheless strategy out of sight.
For me personally, you always have been very, very Supportive and committed. So thank you very much for that. And please go
on. Thank you very much, Herbert, for your warm words. Very much appreciated. Yes, ladies and gentlemen, also a warm welcome from my side to our annual press conference. End of February, we provided you already with the key financials for calendar year 2020.
Today, we are publishing the entire annual report. And we would also certainly shed like to more light on this truly unprecedented calendar year 2020. Let's start with the VW Group in total. Certainly, COVID COVID was in this calendar year all over us and certainly our numbers and had a negative impact on our business worldwide. But I think we really truly did a good job on effective crisis management in respective brands and also centrally under the leadership of Gunnar Kirjan.
We had a rapid Recovery in our 2nd home market, China, which clearly helped a lot of our brands. And the premium business again demonstrated to be more robust than volume and also our financial services turned out to be Very, very stable. If we start with sales revenue, we ended the year in total with €222,900,000,000 That is certainly down €30,000,000,000 equivalent to 11.8 percentage. But we have a year, which is clearly a divide between H1, which was down more than 23% versus 2019 And a much, much stronger H2, which was already basically on prior year level with particularly strong momentum in Q4. Key drivers for the development on the revenue side were clearly on the negative side, the volumes, which we were missing And exchange rates were also working against us.
The usual suspects, so to speak, the weak South American currencies, the Russian ruble, Turkish lira, but also the renminbi and the U. S. Dollars Didn't help on the revenue side. Positive, we continue to have a positive mix effect in our numbers, particularly type mix. More than €5,000,000,000 was very strong.
And also, we have been able to price more than €2,000,000,000 positive on the revenue side. If you now focus on the operating profit side, which came in, in total at €10,600,000,000 which is certainly down €8,700,000,000 versus the previous year equivalent to 45%. But if we go back for just a second, how we looked at the world, how uncertain the world looked like to us in April May, And I think when we gave our projections at the time, we can clearly say that those numbers we have been posting at the end of the calendar years are much, much better Then our expectations in April. So we had a very strong recovery, thankfully, in H2 2020 With a very exceptional strong Q4, which added up to €8,200,000,000 for the Volkswagen Group in total, which is a return on sales, which is even for our standards extremely high of more than 12%. But it was also a year where we prepared for the future.
We had restructuring expenses in the Automotive division, In total, €500,000,000 The major impact came from MAN Energy Solutions, almost €360,000,000 But also Volkswagen Passenger Cars, again, in South America had to restructure its operations, which did count for minus 132 €1,000,000 And last but not least, also Bentley, almost €30,000,000 are included as for the others in the operating result, but these are investments into positive effects for the years to come. 2020, ladies and gentlemen, again, was a year with special items. In our P and L, €900,000,000 did hit the P and L. On the positive side, €1,400,000,000 lower than in calendar year 2020, but still a tremendous burden to our P and L. Cash out, not to be mixed up, cash out was for diesel, €2,500,000,000 All special items are diesel related only.
The operating return before special items came in at 4.8%, which is obviously down from the 7.6% in 2019. So Volkswagen Group, ladies and gentlemen, proved its robustness in calendar year 2020, despite the continuing challenges of the COVID-nineteen pandemic. Let's now focus on the top line results For the individual brands, you will certainly get much more details from my colleagues in their respective sessions. Let's start with Volkswagen Passenger Cars. I think when we looked at the numbers at Q3, it wasn't clear that we will post a profit of €500,000,000 for the full calendar year.
So we had a strong recovery in Q4 with a margin Of 6%, the operating return on sales before special item came in at 0.6%. Certainly, also Volkswagen Passenger Cars, as the global leading player, suffered from lower volumes and also the negative Exchange rates I was referring to, but the colleagues in the brand worked hard on the fixed cost and also better pricing did help. In the net results, we had special items recorded of €800,000,000 all for diesel. Let's go to South Sun, Germany with Audi. Operating profit before special items came in at €2,700,000,000 which is 39.3% down, but clearly a recovering in the second half because at half year break, numbers were Much, much smaller.
Decreased volumes and negative exchange rate effects again hit P and L, But also Audi was able to reduce fixed costs. We had a positive one off effect from the deconsolidation of AID, €500,000,000 of the total €800,000,000 effect is in Audi's P and L. And Audi's transformation plan and Audi's ZUKONF program do work and help Audi through this difficult calendar year. The operating return before special items came in at 5 0.5%, certainly not reaching up to the 8.1% for calendar year 2019. Q4 It was exceptionally strong with more than 50% return on sales.
That is a remarkable quarter for the fine brand. Also in Audi, we had special items for diesel €200,000,000 were included. If you now go on with Another volume brand, SKODA, operating profit at €800,000,000 certainly lower than the €1,700,000,000 a year ago. Again, lower volumes, the strong Czech koruna and also emissions related expenses of more than €300,000,000 which were included We're providing strong headwind, but cost optimization partly compensated. In total, a positive 4.4% Operating return on sales.
If we now move on to SEAT, Southern Europe, the operating result, we post a loss of €339,000,000 certainly a huge swing from the €445,000,000 a year ago. Lower volumes, particularly in Europe, deterred and also emissions related expenses of roughly €260,000,000 are included. Operating return on sales, respectively, is minus 3.7%. But we also had important product launches in calendar year 2020, which will help in the years ahead, the new Leon family, But also the Foreman tour, it's a tremendous coupe crossover with 2 plug in hybrid versions, which are available for customer orders. Going again into luxury, Bentley still, even with the difficult market conditions, did post a profit of €20,000,000 We had to absorb higher depreciation charges, one off restructuring expenses of Roughly €28,000,000 which I already referred to and negative exchange rate effects.
Vehicle sales were quite strong, especially China, And we did see, generally speaking, worldwide, a lower impact from corona on premium and luxury segments. Operating return came in at 1%. Now coming to Porsche, a very impressive €4,000,000,000 operating Profit. Yes, we had this lower impact, which I already referred to on premium and luxury segments, which certainly led To lower vehicle sales of minus 4.2 percent, we had some cost increases for digitalization and electrification, very important for the future Going forward and some negative exchange rate effects, but it is a very top performance by our colleagues in Stuttgart and still posting 15.4% in such a year on operating return on sales is remarkable. And just to cite Q4, 24.8 percent operating margin is even for this fine brand, A very tremendous quarter, and that certainly can't be just carry on to be the benchmark.
Volkswagen Commercial Vehicles and operating result Also in negative territory with minus €454,000,000, a huge swing from the €510,000,000 profit just a year ago. 110,000 lower sales couldn't be absorbed. CO2 related expenses also for Volkswagen Passenger Cars, Almost €340,000,000 are included and also negative exchange rates did hurt. But The guys worked hard, product cost optimization and some big effect were able to offset some of that headwind. At the end of the day, if you sum it up, operating return on sales at minus 4.9%.
Now move on to heavy duty truck and buses. Scania, one of the benchmarks in the industry, but even that strong brand couldn't avoid And operating profit decline of 50% to but still in profit land, EUR 0.7 €1,000,000,000 Lower volumes and also negative exchange rate effects deterred, but the new truck is in the market, so we have a positive mix effect And also a very stable service business, which is particularly helpful in a crisis. Operating return Came in, in total for the calendar year at 6.5%, and Q4 was almost 10%. Return on sales was back on track where this fine brand belongs. And then commercial vehicles also Certainly impacted by weak markets.
So we had a loss of minus €633,000,000 lower vehicle sales, But also launch cost for the new truck generation, which is going certainly to help and be an asset in the years to come. Operating return on sales came in at minus 5.8%. The restructuring program you all know about It's not yet included in the figures for the calendar year 2020. This will hit the P and L in the Q1 of this year. But clearly, it is again an investment to improve the performance in the coming years.
Let's look. Take a look at China, our 2nd home market group deliveries came in at 3,800,000 vehicles, Only 9.1% down year on year, this is the best performing region for us in the entire world. But it is also the most important single market for the Volkswagen Group. Roughly 41% of all our deliveries belonging to China, and we appreciate the market share of 19.3%, which clearly states that we are the proud number one in China. We had a very weak Q1 in 2020.
You might remember, China was the very first region, which was Hit the hardest in Q1, but we truly had what the textbook would call a sharp V shape recovery. So the proportionate operating result of our Chinese joint ventures came in at €3,600,000,000 Certainly not reaching up to the €4,400,000,000 in 2019. Just to remind all of us, the operating profit Of the joint venture companies is not included in the operating profit of the Volkswagen Group. Their profits are recognized at Equity in the financial result on a proportionate basis. Volkswagen Financial Services, The entire division ended up with sales revenue going up 1.5 percent to €40,800,000,000 Consequently, the number of contracts also have been increased by 1.8% to more than 24,000,000 contracts.
As we speak, the penetration rate, the share of the business financial services supports has been increased by another percentage point to 35.5 percent, particularly the used vehicle business turned out to be strong. The operating profit ended up to be €3,000,000,000 only 6.2% down. Yes, we had increased risk costs. Again, ladies and gentlemen, you know us quite well. We took a very prudent approach again, And we had no issues with residual values, which we certainly appreciate.
Let's now take a closer look at the financial result For the group, which came in, in total, at €2,000,000,000 up €600,000,000 from calendar year 2019. Let's start with the equity accounted investments, which came in at €2,800,000,000 Obviously, down €600,000,000 versus prior year, just simply due to lower profits from the Chinese joint ventures. The interest result at minus €1,500,000,000 better due to lower interest expenses And the other financial results at €0,700,000,000 1,100,000,000 higher than a year ago. And we are a proud shareholder in QuantumScape, and their listing is the reason why we had a positive noncash effect In the financial result of €1,400,000,000 which drove the improvement in the other financial result. We should keep in mind, share prices are very volatile.
That is also true for QuantumScape. So we don't know yet What the valuation effect in Q1 'twenty one will possibly be? Cash is king, But also, let's take first a look at the total P and L for calendar year 2020. At €10,600,000,000 the operating profit before special items for calendar year 2020 exceeded the expectations We all had in April, May 2020 significantly, and you find here the summary of the key top Financials. If you are interested in more details for the Q4, please refer to our Investor Relations website.
Now cash is king, what I already talked about. The reported net cash flow came in at Strong €6,400,000,000 Although we had lower profit before tax, minus €6,200,000,000 versus the prior year, and we also had €600,000,000 higher cash outflows for the diesel issue, But we did rigorous working capital management, particularly lower inventories and lower receivables That helped us and significantly reduced spending on CapEx minus €2,900,000,000 That's another good proof point how different the calendar years turned out in 2020 to be for us. Net cash flow in H1 was minus €5,000,000,000 and in H2 +11,000,000,000, so a huge swing also on the cash side. You know, we also report clean cash flow, which is basically the adjustment for the cash outflows for the exceptional item, Diesel, which were €2,500,000,000 negative and also we separate the M and A effects, which added up to €1,000,000,000 So the year was closed with a strong €10,000,000,000 clean debt cash flow, and we are very proud of that number. That certainly has a good impact on the net liquidity of our Automotive division, which came in at 26,800,000,000, even up 26% from a good number the previous year.
Beside, obviously, the positive net cash flow Development the other determining factors was the issuance of hybrid bonds. So we increased hybrid capital by €3,000,000,000 and we paid The dividend to our shareholders, it totaled up to minus €2,400,000,000 and we also did the squeeze out at Audi, which will have Positive impact in the long run, but it cost us €200,000,000 on the cash side. So Automotive's net liquidity in total, euros 26 €800,000,000 is extremely solid and is up €5,500,000,000 But That is not all what is important certainly to our shareholders. Let's talk about the dividend. The earnings attributable To Volkswagen AG shareholders are adding up to €8,300,000,000 This is related to the individual shares worth €16.60 €16.60 per ordinary share and €16.66 per preferred share.
Despite corona, ladies and gentlemen, we achieved a solid result in calendar year 2020. The Board of Management and the Supervisory Board, therefore, proposing to our shareholders an unchanged dividend of €4.80 Per ordinary share and €4.86 per preferred share. That leads, if we add it up, to a payout ratio of 29%, quite significantly up from the 18.1% a year ago, and we are clearly approaching our payout target ratio of 30%. Let me come to my closing and the summary. The figures for calendar year 2020 clearly prove, ladies and gentlemen, the Volkswagen Group is robust and performs Even under very difficult market conditions, we are capable to finance our transformation, and we deem that to be of extreme importance.
We have a very strong momentum from H2 of calendar year 2022 2020, sorry, which we will carry over into this calendar year. We have programs for fixed costs And procurement, and they are going to make us even more robust going forward. And we certainly, ladies and gentlemen, We strive for the upper end of the range for the return on sales in calendar year 2020. Ladies and gentlemen, my term as CFO is coming to an end in due course. I'm looking forward to spend more time with my family, with my wife and my kids.
And I'm very, very happy to hand over to Arno Antlitz, Somebody I and you already know for years and Arnaud particularly from his assignments at Volkswagen Passenger Cars and Audi. Thanks to all of you for your support and your feedback during these honestly not so easy last 5.5 years. I'm very grateful for the opportunity, which was given to me. I wish Arno and the new Board of Management a lot of success. Arnaud, it's now your turn to please shed more light on us for what you have in the books
Yes. First of all, Frank, thank you for your kind words And also for all the support and the excellent collaboration throughout all the years we've worked together. I Also very much appreciate the robust financial foundation that you are handing over to me. Ladies and gentlemen, it's an honor for me That the supervisory board has put their trust in me as group CFO. I'm really looking forward to steering the Volkswagen Group through the transformation together with the whole board team.
I'm deeply convinced that Volkswagen has the technological competence, The financial strength, the right people and the values to shape mobility for generations to come. Herbert and Frank have already described what we have achieved in 2020, and now I would like to turn the focus to 2021 and beyond. Our goal is to finance the business transformation of our group. For this, we need robust earnings and cash flows. This is very clear.
Our strategic targets are defined, and we will stick to them. Our target is to achieve a return on sales in the range of 7% to 8% in 2025 at the latest and to generate at least €10,000,000,000 of clean cash flow. Let's now take a closer look To our outlook and to our guidance on 2021. We've guided for a return on sales in the range of 5% to 6.5%. But rest assured, we are striving for the upper end.
For clean cash flow, we are sticking to our strategic target of greater than €10,000,000,000 To get there, we need strong sales momentum, commitment to our PEV ramp up and continued strong cost and investment discipline. Strong working capital management is also key. I've just mentioned strong cost discipline, but be assured, we will make no compromise when it comes to the necessary investment in Future Technologies. For that reason, we've guided for R and D around 7%. This is a reflection of our execution of our BEV strategy and of building up our software competence.
And in relation to CapEx, We will continue our strict disciplined approach and are guiding for around 6%, and it's our goal to stay well below this figure. It's still early days in 2021, and 2021 is not risk free. Our level of achievement depends on how the worldwide COVID pandemic situation develops and the level of pace of recovery. And there's a further risk regarding sufficient supply of semiconductors for the entire automotive industry. We are striving to keep the operating impact of current undersupply of semiconductors as low as possible and to compensate them as far as possible during the remainder of the year.
Ladies and gentlemen, I would like to take the opportunity to lay out my priorities for the years to come. I have 2 very clear strategic goals as CFO. 1st, financially steer the transformation. This includes allocation and shifting of resources and capital towards electrification, digitalization and mobility services. Our second goal is to safeguard and further strengthen our financial foundation.
To achieve these twofold goals, we will focus on 6 major topics: 1st, product transformation for electric 2nd, digitalization and developing further our software stack. Topic number 3, Capturing group wide synergies between brands, I am deeply convinced group wide synergies provide a unique source of competitive advantage for us. Topic number 4, steering group wide cost and efficiency programs to finance the transformation. Number 5, strengthening brand positioning and pricing, and everything we do will be based on our integrity and values. We are fully committed to continuing to transform the company.
On the left side of the chart, You see our investment in terms of R and D and CapEx in each 5 year planning round. You also see the share of allocation of investments in new technologies, BEVs' software services. Each planning round, we increased the share and we will continue to do so. The question is whether this is ambitious enough. We think it's extremely ambitious.
By 2025, we expect our Sales of battery vehicles to amount up to 20% of our total fleet, and we will see an increase each year beyond 25. In the meantime, the ICE business will help to generate the cash flows necessary to fund the transformation. We are ambitious in our transformation. We will offer around 50 BEV models until 20,030. And combined with the shift in resource allocation, we will transform this company to a leading tech player in our industry.
These ambitious plans need to be financed. Therefore, we need to keep overhead costs under tight control. In the past, our fixed costs grew over time. This is not necessarily a problem for a company that is growing, But for various reasons, our overhead costs grew faster than our sales, and we want to reverse this trend. We are convinced that a lower fixed cost base is necessary to improve our competitive position and to finance our future.
Therefore, we want to reduce fixed costs without R and D and CapEx until 2023 by 5% versus a defined base in 2020. This equals a reduction of around €2,000,000,000 In this cost base, we have included general overhead costs in our headquarters, indirect costs in our plants worldwide, All the budgets of our national sales companies, including marketing spend, to name some examples. Taking the year 2019 as a more normalized base, the program target implies a reduction of around 10%. We also communicated that we intend to reduce material costs by 7% by 2023. Later this year, Murad Aksel will give a deep dive to explain his strategic approach and the financial impact of that.
Ladies and gentlemen, Volkswagen is a bundle of some of the most fascinating, powerful and valuable brands in our industry. Without a doubt, strong individual brands will remain a differentiating factor going forward. We will strive to even better position our brands in the future, draw synergies where possible and work hard on cost and efficiency for the good of our customers and stakeholders. At the same time, we need to transform ourselves into a unified This means that we need to shift our focus also towards value drivers like unified software stack, best platforms and autonomous driving to name a few. Our internal decision making and capital allocation will be geared towards this goal.
Step by step, we will complement our current planning and steering of individual brand performance with focus along these value drivers, best platforms, software stack, battery energy and charging And Mobility Platform and Automated Driving. Ladies and gentlemen, we have a clear plan. We will scale our best platforms, we are going to develop a leading automotive software stack, and we will continue to invest in autonomous driving and mobility services. During this transition, our traditional business will help to generate the profit and cash flows to do so. We are convinced But based on these unique opportunities and a solid financial basis, we will be a leader in the transformation of our industry, We will preserve our natural resources, and we will achieve this with integrity and based on our values.
We are looking forward to this task. Thank you very much.
Thank you, Herbert, Frank and Arnaud. We have heard from Herbert that Volkswagen will be counting on strong platforms to tap into future profit pools. We've learned from Frank why Volkswagen was able to manage the COVID year 2020 relatively well. And Arnaud has presented his outlook for this year and given us some insight into his agenda for 2021 and the years beyond. Now it's time for your questions.
We are switching to German because most journalists who've dialed in are from Germany today. Of course, you can also ask your questions in English.
Dear journalists, you can now use the following channels to ask your questions directly via So Richard, You ask your questions. Now we'll come to the question and answer session. We have Christophe Steitz from Reuters to begin with. Mr. Steitz, please ask your question.
That seems to be taking a moment. Then we'll move on to Jens Schwarz from Reuters. He would like to know what financial impact the ship shortage is expected to have this year and how long the bottleneck is expected to persist. I'll be answering the question in German, says Mr. Diess.
The situation is a little bit unclear due to the weather conditions in the United States. And for the entire year, it's not possible to say what the situation will be. We prioritize plug ins, but we have production of around 100,000. We won't be able to make up The backlog, we're going to do everything we can in order to mitigate the impact to the greatest degree possible. But to quantify the estimate, perhaps I'll hand over to Frank for this part.
It's important that in I think we'll be able to catch up a little bit in the second half of the year, but it's a complex situation. You've got Long preparation times with the manufacturing, but we've tried to do whatever we can, and I do believe that there will be an impact. However, I do believe that we'll be able to limit the impact, but the second half of the year will be extremely important. We'll have to try and recover From this part, it's a topic that we'll have to deal with for most of the year, particularly in the first half of the year. I think it's reflected in our guidance.
Now we have another question from Ian Schwartz. A lot has been assessed about the suspension of the administration of the AstraZeneca vaccine And also about a third wave of the coronavirus, what type of impact will these news have on your outlook for 2021? The answer now? Of course, it's far too early to say, But we believe that we'll be able to maintain our guidance. We learned a lot in the year 2020.
We set up teams, task forces. Production was geared very closely towards demand, and this is something that benefited us in the second half of the year. And based on what we know today, we anticipate that we'll be able to maintain our guidance. But of course, it's impossible to say precisely what's going to happen with the pandemic. Thank you very much, Mr.
Antlitz. We also have a question from James Atwood. He is from Haymarket in the United Kingdom, Autocar. Hugh is asking about the SSP platform and also about whether It will replace the existing platforms, and we would like to know what kind of impact this will have on the factories. Now on to the answer.
The SSP platform will replace the existing platforms but over a long period of time, which means that the start up will begin with Artemis, so 2024, 2025. Now it shouldn't be something which could be seen as something brand new. What we're taking is what we have got with the We will have cost improvements. As you will know, standardization of the battery is going to play a significant role. And of course, this goes Hand in hand with a new electronic architecture, which is going to provide much greater computing power and add more software to the vehicles.
Well, the SSP will eventually be the single backbone for the We're speaking about beyond 2,035 here. Thank you very much. We also have a question from Daniel Twik from DIVER. Mr. Twik, you need to be on the line.
I hope that this will work. I hope you can hear me. This is the question now. I have two questions. Firstly, what was the savings effect generated by quota by short time working hours?
Next, with the stock price. Do you plan on spinning off Porsche with an IPO? Now €200 is the share price now, by the way. What do you think of that? An answer to the question now.
Perhaps you, Frank, can speak to begin with this about the business travel that's reduced. Well, I would like well, the thing is we were very, very happy about the share price performance. I'd like to say this to begin with, but we need to Exactly. We made to make clear the potential in the company. Now we're not going to say anything about speculation As we will have seen, if you look at the sum of the parts, Then of course, we did not remain unimpacted because the sum The sum of its parts is probably higher than market capitalization.
Now of course, Furlough and also business travel, things that were reduced, We didn't have much spending. We didn't have any spending because business travel was significantly reduced. I think fixed costs for passenger cars improved by €3,800,000,000 And of course, this includes furlough and the absence of business travel. Positive contributions also came from other areas as well, which is why it was a well concerted action overall. And hope we'll be able to end the furlough But it doesn't necessarily mean that we won't be able to produce what we need to produce.
I think that the new world is probably going to be somewhere between the old world and the I don't think there's going to be as much travel, but I do think that it makes sense that it does have a certain value to meet people face to face because we're present in a number of different countries, which is why we will certainly be traveling more than we did during the pandemic when barely anybody But I don't think it will return to the levels that we had pre pandemic. So this is something where Arnaud could probably Make a few decisions, but that won't be the decisive factor when it comes to fixed costs. Okay. Now we have the next question from Henning Cork from Business Insider. Mr.
Cork? I would like to say hello from Hamburg. Mr. Diess, Gina is and remains the most important single market for the Volkswagen Group. We can see that you've got Audi there in the premium segment.
But you said that with the volume But you've also spoken you were spoken about the different segments. Is there any room for Skoda left here? Because you've covered it quite well with passenger cars like the Jetta, for example. So I'd like to know what your opinion is on SKODO. Is it Or is it a brand that will be more that we're focusing on in other markets?
So I'd just like to know about your geographic positioning of the different brands. Now I have a question for you, Mr. Antlitz. You would have watched the WW Power Day yesterday. Now there were lots of gentlemen who were giving presentations yesterday.
There was a lady. So one lady and the rest of them were gentlemen. So that's a very small number of women, Poorly represented so now look about Audi, for it. Now what about Audi? There were 2 women on the board.
Now you are going to be Chief Financial Officer. Are you going to increase the representation of women here, particularly in areas The future such as e mobility, for example, or software. If this is the case, could you be specific about this? Now my third and final question, How likely is it the IAA passenger cars will take place this September? Thank you very much from Hamburg.
So SKODA in China, to answer your question. Now SKODA is one of our core brands. Now it's positioned differently in China, though, is in Europe. Now in Europe now Skoda, Yves, in recent months, has admittedly not had an easy time because in China, a certain level of consolidation is taking place in smaller brands, Which Arnaud is represented in this huge market. I think maybe has a market share of around 1% and having great difficulties.
That I said Skoda, with its foundation of our factories and also with the modular platform, it has a very good starting point. It is continually working on improving its positioning. When it comes to new models, Skoda is being electrified. Now We do have somebody working on Skoda in China, but they're also looking to improve it there. Now Skoda has a number of other tasks that it isn't facing, Overall responsibility for the Russian market, I think that Skoda certainly has everything that is necessary We're able to be a new approach, and Skoda is revenue globally in the volume segment a huge success.
The volume segments, we've had a huge gains in market share, a great cost base. We heard about the figures 10% in the volume segments. And for this reason, we believe that Skoda Can also be a success in China given its success elsewhere in the world. Now the IAA The Trade Fair, well, we are committed to organizing the event. The VDA is convinced that it will be able to take place.
We will make our contribution to the event, and we do expect That we'll be able to hold the IAA in Munich, and we are preparing for it. So now about female representation, I'll hand over to Mr. Annalits. Yes, you spoke about Audi. You're also Head of the Supervisory Board there.
Yes, we've got a great Board of Management team. I'm looking forward to working with my colleagues here in As well. And I would say that overall, we are aiming to improve female representation throughout the company, particularly in management positions, Especially when it comes to the new areas of technology. Now I think while Mr. Diets mentioned the supervisory board.
Now of course, he said that this is something the supervisory board has to deal with. But we are trying to improve the female headcount throughout the entire company.
Thank you very much. Let's take a question from a question from Bill Boston, Wall Street Journal. He has About the e ramp up in the United States and the plans for Chattanooga and the ID4 and projects after that. Now we've made a strong commitment in the United States, and our team has said this is also Rightly so. Scott Keogh is a powerful team, and we have all the trust in him.
Good recovery of the brand also in the U. S. After diesel because we had a 30% diesel share on the American market. It's now a major loss of the image and trust in customers there, but we've come back It's enjoying a good reputation in the brand, good market shares, good brand portfolio, model portfolio. And we've also made Forward looking commitments in the U.
S. So yes, indeed, we are building the probably largest fast charge network in the United States in that market. And it was also our decision to establish a battery cell production, including suppliers. And our factory in Chattanooga will be Made ready for electric vehicles. The ID.
4 is going to launch there, which is currently built in China and Europe. So it will first be imported to the U. S. And then after 'twenty two, it will be built in the U. S.
So that's a strong commitment. It's So investments of to the tunes of Mill, 1,000,000,000 of euros. So we see that also that the U. S. Administration under Joe Biden is following up on that strategy, focusing on e mobility.
So we believe, yes, this is the right time. This is a good investment, which is consolidates our position. Now brand wise, Scott Keogh is an important brand man in inverted commerce because he's been driving Audi for 10 years and has brought Audi to the reputable situation it's now in. And thanks to electrification, this gives us a major opportunity to Give radiance to that brand. Very important product for the year to come is the RD Buzz.
Now that, I should say, really is an icon On the American market, because this is how the Volkswagen Firstly, Bannegone has been truly an icon, and we're planning to release that vehicle now on the U. S. Market, we'll be building Hanover, though, and I think it's a good product portfolio. And all of our Product portfolio of electric vehicles is available, but it's also true that in the next weeks months, we are going to think about Launching more electric vehicles in the United States. Mr.
Andes, am I right? Yes. All right. And there's a follow-up question by Bill Boston here. And he asked about the transformation and the group's assets.
Regency mentions Lamborghini, Bugatti Ducati, but also Porsche and How they are positioning themselves and what future outlook those brands have, he would like to know. The answer is that I think we have seen a good allocation of brands within our group because our decision was to take Bugatti to Porsche and then into a minority shareholding together with an e car Producer, a very competent one, mind you. And we believe that Bugatti, the Bugatti brand, will Get an environment that is actually stronger than being here in Wolfsburg in the volume segment. We have more synergies over there, Carbon fiber bodies, high performance batteries, so it's in better hands over there. And it's also our decision to pool our premium portfolio at Audi, together with Hedega Voortmann and Markus Dussmann, we have a lot of premium experience in that brand And great passion and commitment.
Markus Dussmann is a passionate motorbike driver and also a sports car driver. So all that means that Audi really is a competence center now for our premium and knee segment, Lamborghini, Bentley, which is very important and Ducati in that as well. Audi is just reorganizing itself to ensure lean management of those brands, leveraging all the synergies for our group, which is Banking on platforms going forward, as you have heard in our earlier statements, we believe this is a good Allocation of responsibilities, I think the brands we have are very valuable. Lamborghini has developed really well over the past years. We're talking about double digit Profitability rates, younger customers than Ferrari has and a better product portfolio, we believe, than Ferrari is developing really well.
In terms of Bentley, the company, the brand has recovered financially. And thanks to the synergies with Audi and Bentley and the new platforms Artemis and SSP will allow us to pool synergies in such a way that Bentley will be bouncing back to double figures of profitability. And that's very important for Bentley in the premium segment, but we are upbeat about it. We believe this is the right structure for our group. Thank you.
Our next question is Christian Hetzner from Automotive News Europe. Mr. Hetzner, you have the floor. Good morning. Thank you very much.
I have two questions. Number 1, on semiconductors And the bottlenecks we're having there. Now Could you say that such critical components like semiconductors Probably coming from parts of the world That are not really consolidating the supply chain, wouldn't you rethink your strategies there, possibly have Critical components like semiconductors build elsewhere in the world, namely in Europe. And then also, a question on vertical integration with the integration of Northwell 2 and we have partners that also you operate your battery factories with. And something you did not mention is How do you secure supplies of battery materials, raw materials like lithium?
Do you have supply arrangements, agreements already with commodity suppliers with your new battery factories? Or Tesla, as we've heard, is going to source lithium from Nevada in the U. S. So what do you what's your take on that? Answer?
Absolutely valid point to make. I mean, we must say that commodity hedging for us has always been a major priority. We never Ordered exclusively with our 1st tier suppliers, especially when we talk about Aurora's materials, palladium, platinum. So we have always had direct delivery contracts, also brought individual deliveries forward in order to compensate for cyclical changes in the market. But you're right when you say that we need to do more there on the semiconductor side.
Hitherto, we had left it to Bosch and Continental and our first layer suppliers. So in the future, the critical semiconductors And the relevant volumes will be sourced directly in the future with our 2nd tier and 3rd tier suppliers, at least this is what we want to negotiate with them. And then going forward, we hope that also in critical situations, we can secure suppliers. And yes, you're right. For new commodities that we need for battery production in the past years, we've looked into those.
Talk about lithium here and nickel, We want to consolidate our sourcing position. We have long term contracts also with raw materials companies. But it's Certainly true with the rollout of more e mobility that will be more relevant than ever. Our colleague Murat Axel is currently in the process of establishing the right setup of competencies and skills. And just a follow-up, you also talked about The sighting factories in Europe, I don't think that's an easy thing to do, especially semiconductor production.
Production is a global industry, Great. Different technologies used in other parts of the world. Now we have bottlenecks now with a 54 nanometer Semiconductors that are usually also used in consumer electronics. So establishing and building up a new and exclusive automotive supply chain for Europe It's probably not going to happen. It's not going to work.
It's not going to be efficient either. So I think we need to make sure that there's plenty of redundancy in the system And semiconductor supplies will continue to be a global market in the future as well. Thank you. Now we have Christoph Raubal from Bloomberg. Mr.
Raubal, the floor is yours. Good morning. Can I begin here, Matt? I'm calling from Frankfurt. I'm in the English call getting the English translation here.
Because I was talking about the translation earlier. Have you confirmed that you're planning to transfer Bugatti to Rimac? Mr. Laubert, you will have to repeat your last questions. We couldn't quite hear you.
We had some technology glitches here over here. Can you repeat? Can you confirm what we said before? I didn't quite get the translation earlier. The question is, are you transferring Bugatti to Remark?
That was the question. Well, I'll start with the last one. Transferring to Remark is not true. Porsche is currently preparing a partnership that is currently under discussion with Remark, And Porsche will be taking care of that. But the whole The thing is not yet finalized.
What we want to do is that to transition responsibility of Bugatti to Porsche. And Porsche, In all probability, we'll establish a joint venture with Rimac with a minority share of Porsche. The platform question, Mr. Albert. I do not share your view there because I think that Volkswagen's platforms are important, An important building block of the Volkswagen success story.
Also the earlier platforms designed under Mr. Piers, the PQ platforms rolled out globally, that led To today's strength of Volkswagen, not only financial strength, mind you, but also the product substance. If you look at the Gulf today And the related products like this, go to Octavia, the SEAT Leon and the Audi A3, all of these are based on the MQB platform, 2nd generation. And they still are clearly superior as products in the market. Don't just look at the cost effect really, But also at the technical competence of those platforms, for Volkswagen and for the group brands, the platforms have made sure that we roll out Technologically superior concepts at a competitive price tag.
And we believe that It's going to be the case again for the new MQB, for the PPE and then finally, the SSP platform. But something that was always something we needed to discuss about is how many platforms does a single group need. We believe that the differentiation of different drive Transverse Industries reached to be 80% of the ultimate of the same car. It's no longer that relevant because all the new platforms have battery skateboard with either
There were 2 components to it. We have global targets for all of the different brands and units. Now the brands are We're responsible for the implementation of the program, but we also want to utilize synergies within the group. So with the fixed cost potential, we've got fixed cost potential within the brands. But What's going to happen is that the brands will look for fixed cost reduction potential.
So there might be one brand which Looks more closely at the planning for other brands, and this is a plan which started in parallel across the different brands. And Volkswagen has made a big step here as a brand. We also have Cosai Fokau from Nikkei, who is on the line for us.
Hello, can you hear me?
Yes, we can hear you. Yes, we can hear you.
Thank you. My name is Cortes. Yes, thank you for taking my question. I have two questions. And 15% of global sales mean that you will produce around 6,000,000 battery electric vehicles by 2030.
So the current capacity is 1,000,000 units. So how do you plan to increase this? And on the other hand, you have to reduce the surplus so called surplus employment in So truly responsible matters. Could you give us the outlook of this? And second question is
A
bit basic questions, but Mr. Dix, Volkswagen is making a big commitment to battery electric vehicles. So what do you think would happen if you don't commit to battery electric vehicle or if you Let's stay open to all technology, including hybrid vehicle and
We said a 50% electric vehicles by 2,030. I think this is a well founded estimate. If you look at the fleet targets that are being discussed as part of the Korean deal, This will mean that we will probably have more than 50%, maybe 55% or 60%. This is probably what we'll need, but there are other technologies that could play a role This will depend on the funding environment. Now in Europe, we do have plug in hybrids.
Our plug in hybrids only work Where they are subsidized in the U. S, they don't play a role. And in some other European markets, they don't really play a role as well, Which is why we do anticipate the key approach for reducing CO2 emissions Will the electric vehicles? We do not believe that there are any real alternatives to this. And we also believe that where you have a charging infrastructure, where customers can enjoy the benefits of electric vehicles, This is where we have a lot of potential.
So mobility, We need to have a cheaper individual mobility than more expensive mobility in the future. We believe this is possible, and there are several reasons For this, we believe that by 2,030, we'll have a significant increase in electromobility. We expect a share of 50%. Of course, this will depend on several different factors. So example, what the subsidy situation, if there is subsidies, how the government deals with the prospect of electric vehicles funding, etcetera.
Now the drivetrain concepts will be hybridization. So there will also be a brake energy recuperation. These technologies that we've already rolled out, there were 48 volt systems and also some high voltage systems. It's not going to be the key means of reducing CO2 emissions, which means that when it comes to electric vehicles, the second question, What was it about here? About the headcount.
Now this is something which has been talked up a little bit and probably exaggerated. Now we spoke to the Fraunhofer Institute, who said that in the vehicle factories, the impact will be quite small. We'll be able to offset this with Of course, electric vehicles require a lower headcount in the vehicle factories, but this is something that we can deal with. So now the major change will take place with the powertrains. But one thing that's important to know is that the powertrain, when it comes to jobs in the automotive industry, is not That's significant because you've got a high level of automation here.
And if you think about engines, the individual engine parts, Large cast parts, and there's a high level of automation involved, which means that the headcount isn't particularly high in this area. So maybe 10%, 15% of the headcount is involved here. Nothing else will change. If you look at the other areas, if you look at the steering system, axles, Electronics, seats, the interior, all of this will remain the same. So I think that the impact on jobs is often Exaggerated.
I think that because I think there were actually probably more likely to be positive effects, which is why I assume that when the MEP is rolled out, particularly In Northern Germany, we also have a higher share of self produced parts when it comes to the electrical components. We also get things Cologne as well. We believe that it will actually lead to job security and perhaps even an increase Let me just add something here. As Mr. Diess said, now you have I do believe that the impact is negligible But this is something that's been looked at in our programs.
All of the different brands have set up programs. Audi has, for example, Audi Zukunft, Audi Future is the name of it. Volkswagen also has a future packs, which it introduced at a very early stage with a road map for the transformation, which means that the headcount effect that is anticipated, It is it has been taken into account into the brand's programs. Thank you very much. We have Marco Ingemann from DPA.
Mr. Ingemann, please. So I would like to go back to a topic you mentioned earlier. You said that in the next few years, you want to finance your electric initiative. Mr.
Mikhail Yoss is leaving the company. And He spoke about the year 2026. He said maybe by the 2,040, it will be the end of the combustion engine. But what's your view on this? Another question.
With CO2 emissions, you are above The level that you said in January, you said, are there any more provisions going to be made for this? Is it possible? No provisions will be required for this. We are We will meet us the CO2 targets. It's even possible that we might be lower.
Now about the end of the combustion engine, I think Audi said that It's 2020 from 2023 that I want to develop any more combustion engine vehicles. What we like to say is that we Operate globally. And you have to be frank here, in several regions throughout the world, electric vehicles are probably not going to be the solution for producing CO2 emissions, this might apply to India, where they only have coal powered energy. Now maybe applies to Latin America as well, which seems to be looking at biofuels with ethanol It is a means of reducing CO2 emissions. And here, power generation is mainly coal based, which is why It's important to bear in mind that the combustion engine will have a different lifespan depending on the different regions.
And Electrification is not going to generate the desired CO2 emission reductions in all different regions equally. And for this reason, We need to keep our options open. There are model platforms that are ongoing in these countries, and It's anticipated that they will continue to run beyond 2,035. And it will make sense From an economic and also from an environmental perspective, which is why we have not set a specific target for ceasing production of combustion engines.
Okay. Thank you. Then we go to the chat portal. We have Jack Gearing from New York Times, Who asked about QuantumScape and also the technology in how far QuantumScape is scalable as a technology? The answer, yes.
We are committed with a stake in Quantum State, And we're supporting developments as closely as we can, and we continue to believe that Quantum Gabe is the most promising engagement because This will help the solid state batteries to prevail and also the capital markets support that optimism. And that obviously is important because it will improve battery And in France, we also collaborate with QuantumScape. But still, having said that, it's not true But we can say now at what time point in time solid state batteries can be rolled out because we don't have production applications. I mean, in lab Testing, they work really well. The membranes work well.
But we're lacking a concept and an industrialized solution for solid state. Obviously, we are collaborating, we're helping, But in exactly defined time of when they will roll out, we cannot give you, but we still and continue to believe that Solid state batteries should be the main research focus to make batteries safer and more powerful. So we support continue to support our commitment in QuantumScape. That's rock solid. Then we have Jan Schreiber from AFP, Piyi, and he's asking about software development because you said that 60% will be in house software development going forward.
Which elements of the software you want to do in house and which one would you like to develop with partners? Answer, this is a good question. Why are we doing it ourselves in the first place? If we need to update and continue to develop software Because vehicles of the future will need to see software deployed in the car. A car needs to be regularly update Yes, while the car is operating on the road.
And this is why we cannot develop software or configure software Across different stages, test it and then install it, hardwire it into the car. Instead, and this goes back to your earlier question, Everything that's critical for the functionality of the car and the software, which is needs to be critically tested, Should be the core competence of Volkswagen, including the operating system, things where mistakes may Where errors can be made, we have to be sure that our device, if it is in the customer's hand, always has the right software on board. But there's also a second area to that, and I think you will have understood it in our earlier presentations because we believe that autonomous driving will evolve. And therefore, this is going to be a major USB, a major differentiator. Hence, we are committed in our software organization.
About half of What we do in the car software org goes into automated driving, and we're going to build up more expertise there as well. Now this is about the big loop process. What that means is how do we analyze camera images and then on that basis, Establish a neural network that is self learning. We believe this is a core competence. This we should have in our on our page.
And we also need definition competence for hardware. What that means, the computer kernels That will be a hallmark of future vehicles. We should do that and this needs to be done here. 60% is a good Target there, not every single app needs to be developed ourselves. Now when we go towards system integration for We don't necessarily need to do that on our own, but the core of the software must be our in house competence.
Thank you. We now have a question from Spain by Denny Cordero. Interesting question. He says, our plans for electrification in Spain, decarbonization and also supporting the EU Green Deal Hinge on the decision by the European Union to provide support as well. What does that mean in actual terms?
Do we assume That Spain is going to see more subsidies than we would get in other plants and other Development facilities for batteries held production. So do you expect more or different approaches in Spain than in the rest of Europe? The question here refers to the European funding rules that are depending on the regions. So in Highly developed regions, that development funding is rather low with small percentages. Now if we cite A production for battery cell production also vehicle production in Eastern Europe, we could claim up to 30% or 35% of public support, public grants.
Now Tesla has received I mean, that's in the public domain, has received an amount of 1,000,000,000 of euros for the battery facility near Berlin. But our decision for Spain is a positive one. We already have 2 production plans for vehicles in Spain. We have components production in Spain as well. And also, we believe that smaller vehicles like the A0 Like the A0 class, the Polo or the T Cross could be really well industrialized in that country.
Having said that, we need the same conditions that our competitors enjoy. So I'm saying that this is a responsibility that the Spanish government has taken on board and that we're happy to support. But now we also need the commitment on the part of the European Union to make sure that we can also use the money, the funds from the EU Recovery Fund to convert our Martyr oil plant, where we expect EUR 2.4 €1,000,000,000 to be the price tag. So these are open questions as we speak, but I'm very confident and also the Spanish government is very committed and Europe, in fact, is very interested in Spain overcoming this crisis. And we do anything we can and we're going to Provide assistance to make sure that we continue to commit ourselves to our Spanish plans.
We have another question by Bill Bost and follow-up question on lithium mining. Because Tesla has made an announcement that they're going to invest into lithium mining. Do you have similar plans is the question? Answer. We are talking to different lithium suppliers globally, including Spain.
There are lithium deposits in Spain that are to be mined. So rest assured, we have a good understanding of Where lithium mines are in this world, and we do anything we can to hedge lithium supplies there. A number of MOUs have been signed with lithium manufacturers, producers In order to minimize the risk and also we have delivery guarantees there in order to manage risks related to commodities. Thank you. We have Christoph Stelz again from Reuters coming into the portal.
Mr. Thijs, is the sheer size of Volkswagen An advantage or rather a disadvantage in your transition plans or do you see drawbacks in the size Because it will hamper the speed of your transformation. This is a valid point because SAI certainly is not an advantage for Quick transformation. We've realized and understood now that it's actually a strenuous process to Establish the software in the company and to have the right backbones in the company, it takes a lot of talking and discussion. But at the end of the day, It turns out to be an advantage.
Why? Because all of the new technologies that are forward focused are scalable. Software is a case in point. Software is important. It's scalable.
Hardware platforms are scalable, and they're Crucially important for our future vehicle projects and also operating a global manufacturing network has clear advantages over what Startup would be able to do. So it's both pros and cons. We must make sure that the pros dominate. And with our current size And reach, I think we've done a good business. We have had seen a good start, good The depth of getting our software flying and the speed with which we proceed needs to We increased in some places, I would admit that, but there's no reason whatsoever for us to say that our plan is not going to work.
And then In the long term, we have a major advantage because a software stack is a software stack is a software stack, no matter whether you run 1,000,000 or 10,000,000 or 15,000,000 cars on that software stack. So the world leader or the big Global leaders always see significant economies of scale in this new industrial world. It's like what I like to do is to compare ourselves to the smartphone industry. There's not 10 or 20 different drivetrain technologies or software versions. We will be one of the consolidators.
We will be offering the platforms going forward to make sure that We can play a role in that consolidated industry and at the same time, maintain our size and also increase it. Now I have Sebastian Schmidt from Berzent Zeitung, who has asked about the launch problems Of a number of EVs, now launch, ramp up problems and delay of SOPs. Why was that? He asked. Is that production related?
Is it software related? Or was it semiconductor related? Answer? What we have and this is one of the reasons is we have adopted a radical approach to our EVs with a minimized or reduced computer architecture. In the MEB, there are only 3 computer systems, Corporate, if you will, from the group.
And this was a major challenge for our workforce to develop a new vehicle that is Updated as it goes along. We have done a good job. I mean, yes, there have been a few delays here and there, but we managed to get the vehicle started. We almost Met our emission targets. The situation is getting better and better as we speak.
The ID vehicles will be updated over the year this year. So people driving those vehicles will actually see that they get better and better. So I think It's been worthwhile. It was a tour de force, no doubt about it. Our teams have been fighting hard.
Thomas Ulbrich, mind you, as well, Sometimes, I spent nights days and nights and putting energy into that. Yes, it Has been a forceful effort, but I think we can truly say that we're doing better this year than we have been in the last couple of years. Every new ramp up and launch project will be better and better. I mean, the same way it has been harder for Tesla to scale up factories, For us, it has been just as difficult to get and perform on the level of good software management and software development, but I think we're getting better. But there's one more thing.
And if I may, I'd like to add a notion here. Normally, software is developed From premium products, so Audi would be someone who does that. And it's actually that reason why Audi is now in the lead of the car software organization, because software is always a differentiator in the premium segments and then usually trickles down into the volume segments. Well, we couldn't do that for a number of reasons, the diesel issue and other Audi problems. And now Audi is back in the game and is contributing under that new leadership.
So we believe we'll see a major boost of that. There are software groups from Audi and Volkswagen that have already been merged. So therefore, I'm quite upbeat That we're getting better and better. And then finally, this is, in fact, true also for many start ups in the industry Who obviously position themselves really well, but they shouldn't forget, this is not an easy way forward. Car making And automotive software is a very complex issue.
And now I have a short follow-up by Mr. Menzel. Software is a case in point. Will or would Volkswagen also develop chips and chipsets for vehicles? I mean, not produced, but probably developed.
That was his question. Answer? Yes. Especially in terms of autonomous driving, the design Of computers and computer elements is very important. And we are not the only ones to realize that because we've always had, say, In the future generation of Mobileye or NVIDIA image recognition chips.
But maybe you're right. We have to bring our definition competence Back into the company and consolidated because our competitors are doing more like Tesla. They're doing it really well, I should say.
Now we have one more question. And this relates to the unified cell. Jerstig Meyer from the Automotive Sport. If the unified cell is only unified for the housing, where do the savings come from Because of the value added in the chemistry, is it not? Now the answer.
Yes,
this is
a very justified question. Now the main savings are, in fact, In the chemistry, so the raw materials account for a large share of the cost, but there are also Certain processes. But if you have a look at the look at what we said on Battery Day. It's a new manufacturing method that we're thinking about, about the production of cathodes. As you can see this in the material as well, As a result, it won't only be material savings, but also process improvements, which will require lower investment And will thus mean that batteries can be produced and sold at a lower price.
One thing that shouldn't be forgotten, however, is that if you take different types of chemistry and different cell formats, They all need to be tested. They all need to be approved. They need to be checked in the vehicle, and this can lead to increased costs. So a unified cell constitutes good significant progress. And as we said yesterday, It will lead to much more competitive pricing, which is why we are delighted I think by 2025, it's clear what we want to do.
But now for 2025 to 2,030, I think we have clearly described what We want to do standardization, etcetera, and this is what we want to achieve. Now I just got one more question Lutz Heizer from S and W. Well, I think we actually answered this question already, but he is asking About Porsche and a potential partial or full spin off IPO spin off of Porsche That was reported on a Manager Magazine in January. I can only repeat what I've already said. Of course, for us, Porsche It's a jewel in the crown.
And due to its earnings, it's a strong earnings, Porsche is increasing in value. But another thing we can see is that Porsche is doing very well in the new world of electric vehicles. Look Saikan, for example, Porsche has pursued a very ambitious aggressive electrification strategy. We shouldn't forget, however, that the reason it does Achieved these big margins is that we utilize the group backburns. So partially with Audi and there were some These Porsche vehicles are often produced in Volkswagen plants, so we are very closely connected with Porsche.
Porsche also makes a significant contribution to the group, not just cash flows, but other things as well. So it would be something that would have to be very, very carefully thought through. And another objective, and this is something that we're optimistic about, Yes. The transformation that lies ahead can be financed using the cash flows that we generate from our business, Which is why we don't see any cause for action on that front. And now I have one Question from Zavan Balak from Controlling.
You said that car software that Kjar Software will become one of the biggest software companies in Europe. Why are you confident that we will how are you confident that we are to get the best programmers in the world for Volkswagen? Well, now the answer we hope that will apply to us. I've often spoken to Mr. Kirillen Berg, who is Head of Software for us.
We have more than 500 The software specialists who have been appointed, a number of them have come from Silicon Valley. A lot of them just find the project very exciting. Now it's the only software project in Europe which could Have the ambition of setting global standards. It's the only domain. Well, what I'm trying to say is that in Europe, we've got the premium industry, which is globally networked.
We've got these competent suppliers, Bosch, Continental, Heller, The other companies as well, which have a lot of expertise in other areas. Now if we can succeed in combining this effectively and being fast enough, then It will be possible to do a great service to Europe because then this would be a software domain, Which needs to be competitive globally and which can also attest to Europe being Strong in the field of software, but it's not the people who were the constraints. There were lots of people who are educated here at universities and who go to Silicon Valley. But the question is, can we be fast Enough. In getting everything together that we need, getting the resources that we require.
And as you've seen, there are 15 different companies that are being integrated at the moment. It's important the integration proceeds quickly. Now it will be an interesting challenge, but it constitutes a huge opportunity for Volkswagen. Yes. We've got programmers who are working here very passionate about their work.
It's good for Germany, good for Europe, good for industry. Thank you very much. Now I have one more question from Jan Schreiber from the AFP. And he is asking on planning in the electric entry model segment. And he wants to know what is planned for the ID vehicle.
He wants to know what is planned below the ID vehicle in the entry level segment. Yes, I believe this is something that we announced in 2025. We would like to launch an entry level platform for electric vehicles, which is derived from the MEB. The intention is, if everything goes well, it will begin in Spain and various Group vehicles will be introduced. We believe that this will come at exactly the right point in time because we're electrifying from the top down, so premium, then the volume segment and then the entry level segment Because it's the most cost sensitive segment, but by this point in time when it comes to cell technology, we would have made significantly more progress And thus, we'll be able to offer very attractive vehicles similar to the ID.
3, but in the segment below it, up to around 4 meters Our 4 meters 20. I think ID3 is around golf. And then beneath this, we've got the polo. So it will be Polo. We will be in the Polo segment.
We've had a lot of experience with MEB on expertise will be integrated into the development of the new entry level model. Now of course, the price segments is very low, But we are optimistic that we will succeed here, again, with scales And also with the technology that Volkswagen has. Okay. Now I have one more question from Carsten Stevens from the Bosund Seitelman, he would like to ask about charges from the diesel crisis. So 2020 will warm.
Do we believe that it will continue to be an issue, that diesel costs will continue to be an issue in 2021? Frank, this would like to answer the question. Now special items of more than 32,000,000 Euros have come about over the since the diesel crisis, which is a huge sum. You can have a look at our And you will report here, I have clearly underlined that we've cleared up a lot of this. We've but there are still some Litigation risks which are not yet concluded.
This could take a few years to conclude with these litigations. We have valued all diesel related potential charges and Set aside provisions for them, but these are estimates that we based on the knowledge that we have now. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] But when it comes to settlement, so the payments, as we call them, not necessarily special items As reported, Bill, we expect around €2,500,000,000 in 2020, which It's expected. So we need to distinguish between what goes through the GNV and what the Payments will be over the entire period of time. But yes, we believe that we probably got the worst of it behind us, But we it has not come to an end.
Okay. Thank you very much. There are no more questions. I would just like to Ask if there are any more questions. Otherwise, we will conclude the event.
Let me just ask again, are there any further questions? Mr. Rauber from Bloomberg. So Mr. Rauber, please, from Bloomberg.
So I have a couple of audio problems. One thing at the end. When do you plan to achieve the margin target of 6% for Volkswagen? By 2023, that's the plan. Yes, there's no reason to believe that we won't achieve it.
Thank you very much. In that case, I would like to say thank you to Mr. Dietz, Mr. Adlitz and Mr. Witter.
Thank you very much for answering the questions in the Q and A session. We will be available to you for answering your questions throughout the course of the day. And on that note, hope you enjoy the rest of your day. And most importantly, stay healthy. Thank you very much.
Thank you. Thank you.