The Volkswagen Group is the automotive powerhouse. We have always been one step ahead, constantly reinventing ourselves. Volkswagen, adopting state-of-the-art technology for everyone. Audi, elevating the brand with the pioneering quattro, or Porsche's fusion of excellence and efficiency, creating the modern luxury segment. Today, Volkswagen faces new challenges and opportunities: decarbonization, digitalization, increasingly regionalized customer preferences, new competitors, and an uncertain economic outlook. But we are exploring, adapting, and moving fast forward with an unleashed global portfolio of unrivaled brands, leading technologies at scale, innovative ideas to capture future profits, and an entrepreneurial new leadership team. The Volkswagen Group is ready to master the next transformation and successfully reinvent itself once again at an unprecedented pace.
Thank you, a warm welcome here at Hockenheimring. By preparing the event, I have been told that this is the first in-person Capital Markets Day since 2015. It's really great to have you all here. When I look into some of your faces, I can see a lot of excitement, and some pale faces as well. Looks to me that the driving event has really been a full success, and also the design presentations you have seen today. My name is Rolf, and I'm heading the Treasury and Investor Relations department at Volkswagen. Before we start with the presentation, let me do some housekeeping items. First of all, we have a hybrid format.
We are about 200 people here at Hockenheim, and I would guess about 300 via the webcast, which are participating. It's quite warm in here, Patrick. The presentation you will see is structured in 6 chapters, and we will have two very qualified people here today to present it to you. That will be Arno Antlitz, our CFO, and of course, Oliver Blume, our CEO. Thank you. These are the two very good-looking gentlemen here. After the presentation, there will be, of course, the opportunity that we answer your questions. In order to make this in a very efficient way, we thought that it's best that you can ask your questions directly during the presentation. For this purpose, you will see here now on screen a QR code showing up.
You have to take your smartphone, scan this QR code, then you will land on a Menti page. Take your time. Very good. Tim? Sorry, that's the bad thing about sitting really in front of the audience. Once you have it, you can put your question just in this chat. If you want your name to be called during the question, then please put your name either at the front of the question or at the very back of the question. We will name actually who is putting the question into the chat. The webcast is being recorded and will be put on our website once the presentation is finished. Give us a little bit of time.
Highly likely, it takes a few days until the full presentation will be available, but will be available afterwards. The disclaimer. I have to read the disclaimer to you, yeah, as part of the housekeeping items, I can't see it. Here we have it. Exactly. As a reminder of the safe harbor language and other cautionary statement that will govern today's presentation, I would like to encourage you to read the disclaimer carefully, since all forward-looking statements are qualified by this language.
I, however, do not want to read it out in order to maximize the time we have for this presentation, think with that, the housekeeping is done. Let's move over to the reason why you are here, the presentation of today's Capital Markets Day. I'm very pleased to welcome the whole Volkswagen Board today, which is with us.
It's not only the Volkswagen Executive Board, but it's also the dual roles, which are up here today. You will have the opportunity at the dinner, yeah, to mingle and to chat with them, and please use this opportunity in order to get the messages really from the first hand. With that, I think this was enough of an intro, and I would like to welcome Oli. Oli, the stage is yours.
Thank you, Rolf, for your introduction. From my side, a warm welcome to all of you. It's a great pleasure to have you here. Thank you for joining us today here in person or via webcast. Shaping mobility for generations to come, for the present and the future. That is our mission, our drive, and our passion. I'm very excited to welcome you to our Volkswagen Capital Markets Day 2023. Your high level of interest in our Capital Markets Day is both an incentive and an obligation. Thank you for your numerous participation. Today, we will present you an honest, transparent, ambitious, and convincing picture of Volkswagen Group's future strategy and how we expect this to translate into earnings, cash flows, and tangible value creation for Volkswagen Group shareholders. It is fair to say times are exciting, yet challenging.
The automotive industry is exposed to various influence factors. Taken together, it's close to a perfect storm. The current geopolitical and macroeconomic outlook is highly uncertain. Our industry is transforming at an enormous pace, with BEV and digitalization dominating the agenda of the future. We are facing new entrants, which are aggressively pushing into the international automotive market, and that's why we also need to change at massive speed to remain competitive in the long term. Responsible leadership means having an honest view on both strengths and challenges.
Volkswagen today is a strong company. We are globally positioned with leading scale and reach into each country on this planet. We have a portfolio of truly exciting brands that complement each other. Our team is ready to execute on our strategy and to fully unleash the Volkswagen Group potential. However, we need to overcome challenges.
First, we need to transform our portfolio towards BEV, while at the same time manage the transition from ICE. Second, in the past, our decisions used to take too much time. Third, while we are profitable and have a strong financial position, our history and organic growth have resulted in a large fixed cost base, and this is not capital efficient. To become successful in a new environment, we need to become even more agile, lean, and effective. Our promise to you is built on six key pillars. We have a new team. It runs the company with entrepreneurial spirit and a clear commitment to sustainability and performance. We have a leading technology at unique scale, with unmatched performance and the organizational agility to cope with the speed of innovation in our industry. Our brand portfolio is second to none.
We have set up an organizational framework that unleashes the brands and provides them with entrepreneurial freedom to excel in today's market. With our setup, we strive to win globally. We are aiming to be successful in Europe, North America, and China by tailored strategies that cater to the local market needs. This new approach to a competitive Volkswagen is enabled by our new steering model to foster entrepreneurship, accountability, and faster decision-making. All of this is aimed towards achieving a financial successful Volkswagen Group with a focus on profitability, cash flow, and capital efficiency. With this, we want to deliver attractive shareholder value and dividends. These six points are not only our promise to you and all our shareholders, they are also the structure for the today's presentation.
In the following two hours, Arno and I will guide you through our vision and idea how to make this company an even better one. One of my key principles in leading a company is execution excellence. We will walk the talk. We will make our promise a reality. By 2027, we aim to achieve the following: having an unrivaled brand portfolio consisting of exciting products with leading technology, having a regionally more balanced footprint with tailored investments to capture the attractive profit pools, while at the same time increase capital efficiency and mastering the cultural shift towards a capital market-oriented organization. We will pair entrepreneurial spirit with a focus on profitability and cash flow in the entire organization. We are just at the beginning, We are convinced that we can do it.
Our success depends on our team and on its capability to show the fullest of everyone's potential and performance. Our engines are filled by passion. We have a transparent direction for the future. Today we are ready to deliver step by step, with a pace never seen before. I am fully committed to bringing the change to the Volkswagen Group. Teamwork is at the core of it. We are a new management team with new leadership principles and a new steering framework committed to transform this company. We believe we have put the group on the right path. We have already executed many important steps successfully, with many more to come.
We are part of a great executive team, a team that is fully committed to mastering the transformation, a team that bears extraordinary potential and motivation, a team that has the right combination of industry experience and fresh perspectives. On average, our board members have been in office for just about two years. We combine diverse perspectives and experience from leading automotive industry, leadership measures that are required to be successful.
Moreover, this team is ready to deliver and to execute day by day. We cannot master the challenges that the Group is facing all on our own. We are supported by a new team in key positions, embracing the dual role concept with a lead function on Board and Group level. This enables the Brand Groups to represent core competencies on Group level. In addition, we foster strong integration between the Group and the Brands.
In their dual role, our top executives are close to the daily business in the brands. In this way, we have created a new, powerful team that will enable us to implement projects more quickly in production and procurement, sales and quality, development and design, and communications. It allows us to achieve a cultural change at group and brand level at the same time. This team brings a new leadership philosophy inspired by teamwork, fairness, and passion. This new leadership approach is working extremely well, and it's having an impact already. The new management model is not only efficient, but also very effective. Our leadership team is ready to spearhead our global Volkswagen Group team in the future. This group combines the power of more than 600,000 professionals worldwide.
We trust on our highly skilled expert across functions and regions, all of which are unified by their passion for mobility. Our goal is to empower our team. We want to unleash a spirit that truly can move mountains. A great team is a key driver of success and a unique resource for our company. Over the years, I have defined my core leadership principles to empower each part of the organizations. These are entrepreneurship, accountability, execution, focus.
New leadership principles as basis for our systematic problem-solving approach: honest assessment, defined target picture, priorities of action fields, clear implementation, and continued measurement. Following this consistently, we are able to manage the group professionally and systematically, with a clear strategy and a strong focus on execution. Another important method is to empower entrepreneurship with strategic goals, performance programs, and virtual equity stories.
The Volkswagen Group operating model is based on three simple, yet extremely powerful concepts. First, our unique brands are the biggest asset for the group. They know what is the best for the customers and will take the best business decisions. Second, group scale. Volkswagen is more than the sum of its parts. It has scale benefits that are unique in this industry. This is the true value of our size. Third, speed, agility, and performance to deliver what our customers want as fast as possible. Managed properly, this harmony of polarities of brand identity and group scale will become the framework for the success of Volkswagen Group, while putting the customer at the center of everything we do. We take full focus on our customers, our brands, and our products. This is the only way to create sustainable value.
Our new steering framework for group management is a fundamental enabler for this. It is structured along four brand groups that we renamed according to the mission and profiles within the Volkswagen Group, the brand group's Core, Progressive, Sport Luxury, and Trucks. They are supported by four technology platforms: architecture, software, battery charging and energy, and Volkswagen Group Mobility, and focused on three pillars: profitability, cash flow, and capital efficiency, direct profit and loss accountability, and third, aligned and consistent management incentivation. As Volkswagen Group, we are facing major tasks, as does the entire industry. In my role as CEO, I benefit from my decades-long experience in this group, and in my first year, we started with profound programs from second zero. We left no stone unturned. We scrutinized everything from the ground up.
Based on this broad analysis, we condensed a 75-point list, and this list ultimately resulted in the 10-point plan for the Group. Our 10-point program sets the strategic marks for our journey. For me, it's all about priorities. To do the right things right, that's my personal mindset and management experience, as you know it, for example, from the Porsche case. It follows a clear and transparent logic. It is built operationally and strategic with concrete milestones, sustainably measurable.
We have been focused on executing our top 10 program. Our products, for example, are one important action field. We restructured our product strategy and kicked off design and quality programs in all brands. We have also assessed our key technology areas and recalibrated and reset the strategies accordingly. For central regions like China and North America, our global footprint plays an important role. Here we have initiated clear action plans.
Importantly, we have put sustainability into the center of our attention as a key for long-term value creation, and we started establishing the capital market orientation of the group, therefore, we are here. Sustainability is at the heart of our attention. It is a core business driver, not a tick-the-box item. We have set ourselves ambitious ESG targets. We are systematically breaking those targets down and executing them accordingly, with a particular focus on decarbonization. We see sustainability as a holistic approach covering all business areas. Looking ahead, we have implemented a renewable energy strategy as part of measures to achieve our ambitious targets. It ensures that we will be able to create sustainable value in the long term. Our systematic approach and consequent implementation of measures have already been reflected by improving ESG ratings and successful performance against key milestones.
We have improved our ISS rating to our 2025 prime status target level of 7+, are on track to improve the MSCI and Sustainalytics rating as well. Our electrification roadmap supports our sustainability goals with a BEV target of 10% of deliveries in 2023. This also underlines that we have integrated sustainability holistically in our company, doing what is good for all stakeholders and the environment, while at the same time capturing new growth opportunities. We are also on track to reach our decarbonization target of 30% reduction by 2030. Human rights are in the center of our activities. We have planned an independent audit of the factory in Chenyang, which is operated by a subsidiary of our joint venture, SAIC Volkswagen Automotive.
We take the claims about forced labor very serious and aim to provide full transparency as soon as possible. We believe we are on track to embrace sustainability. We will continue to challenge our targets and try to systematically identify areas to improve. At the end of this first chapter, as we will do it for all the other chapters as well, a short conclusion of the key takeaways. Let us be aware, we are just at the beginning of an exciting journey. Our new team is transforming the Volkswagen Group at a pace never seen before. We bring a new team spirit, we are fostering entrepreneurship and accountability, and we have a clear execution focus. We want to create the best customer experience possible by combining unique brand identities with our group scales.
Throughout our new approach, we can act much, much quicker, and we have a first track record. We already addressed a lot of critical topics. We have fully embraced sustainability as a core principle guiding our actions. Our new strategy implementation is at full swing. As said, a great team is key driver of success and a unique resource for our company, and this is only the beginning. Our team is ready to cope with technological changes, with speed, agility and performance. To put it very simple, automotive has become a technology game, and these are good news for our group. Our scale opportunities are unchallenged.... In today's environment, they're even bigger than in old classic ICE-only world. Let me show you how we will unleash this potential. Firstly, I will explain you the fundamental change to the way we steer technology across the group.
Afterwards, we discuss the implications on finding the optimum of speed, agility, and performance. We then focus on scale for cost competitiveness. Finally, I will guide you through our strategy and highlights of each of our four key technology areas: architectures, battery, software, and mobility solutions. You will see that all of these mechanisms are built around the core of our customers' needs. As Volkswagen Group, we must identify the optimum between speed and performance on the one hand side and scale on the other side. This holds true for every single decision. As our industry has been changing, so have the way we need to steer technologies across our group. Therefore, we have executed a fundamental change and defined a clear set of steering principles across all technology areas to ensure fast, efficient, and competitive technology.
Historically, most of the development work was done centrally, standardized across all regions, and executed with a high make share. This will change. Now we shift to a best owner approach, putting leadership in the brands and regions. Thereby, we provide much more focus on speed and in-time execution. We will enable high tailoring to the regional markets. To still secure scale in that new approach, we will entitle the brands and the regions with the highest skin in the game to lead a global and cross-brand effort wherever possible.
We will focus more on selected and smart partnerships, working closely together with leading companies across all areas. As in every strategic approach, focus and speed are main enablers for the efficient implementation. You will see different examples through the section. Those are all happened in the last weeks and are just a selection out of many.
In practice, our principles will enable us to regain speed by leveraging the scale like no other OEM. We aim to launch leading technology before our competition. Their own model for leading and early-to-market technology is a Porsche Taycan. While bringing new technologies to serial cars, we are already working on the next level for upcoming models. The Mission R shows in detail what impressive features we will bring to life with our next generation of electric cars, which will come soon to the market.
It has leading track and road technology. It is not just leading with the highest recuperation rate, it delivers real advantages in everyday life. It makes the powertrain even more efficient, and the fast charging reduces the charging breaks to a minimum. Most of you will have seen the Mission X as another great example of cutting-edge technology, our SSP architecture will benefit from.
There is the potential to leverage full scale, resulting in strong cost competitiveness for the group. Let us have a look on the ID.2, which will come on the MEB+. Our plan how to achieve cost competitiveness versus ID.3 speaks for itself. We intend to improve all major cost drivers significantly, and at the same time, also, it is spacious, like the Volkswagen Golf, but only as long as the Polo. Hence, you will easily find a parking space in the city without compromising the comfort. The best, we can offer it at a price of EUR 25,000 and still achieve attractive margins. The Volkswagen brand is the best owner to drive the BEV portfolio extension. Still, all group brands can leverage the technology for their target customer groups.
To enable a leading experience for our customers, we are focusing on four technology areas: architecture, battery, software, and once again, mobility solutions. On the following slides, I will provide you with an overview for all of them in terms of strategy, structure, and technology. One reason enabling us to price the ID.2 at such a competitive level is our platform architecture approach. Architectures have always been key to Volkswagen's DNA. Architectures cover up to 75% of all material costs for BEV, up to 10% compared to ICE, and this makes them even more important in the BEV age. Architecture are a key driver for profitability. In the future, we have the clear target to move to SSP as one single future backbone with an integrated electric and electronic architecture.
Nevertheless, despite the focus on BEV, our ICE architectures will be an important cash contributor over the next years during the ICE ramp down. Which is each step, we see further improvements in engine power, charging time, ADAS capabilities, while SSP is our single future backbone. PPE and MEB+ will already be introduced in 2024 and 2025 as competitive architecture lineup for the next steps of BEV transition. PPE will have leading capabilities required for the premium and luxury segments, to name just a few. PPE will use an 800-volt architecture and enable even large SUVs, such as the Q6 e-tron or the Macan, in achieving leading performance figures. The charging power is up to 270 kW, is an enabler for competitive charging time across battery sizes.
The MEB+ will also be a significant upgrade of the current MEB architecture for volume. We can use LFP and NMC chemistry in our Unified Cell concept, which will enhance cost competitiveness significantly. Only 20 minutes charging time from 10%-80%, the MEB+ will reduce charging time by about 40% compared to MEB. Finally, SSP will cover the full range of segments from entry A to upper D segment. It will enable a unique combination of scale and standardization with differentiation and speed. From a margin perspective, MEB+ and PPE will be the next steps towards margin parity between ICE and BEV vehicles. SSP will then allow us to achieve margin parity for most BEV models across all segments. Over the past months, we have conducted an honest assessment.
Today, we have a clear understanding of current challenges in our combined BEV and ICE architectural lineup: high complexity, limited synergies, and varying competitiveness. Therefore, we have defined a clear strategy to ensure the success of the SSP. The key to success is our best owner approach. We will allocate responsibility based on best expertise and highest accountability. Each owner is responsible for tailoring the features to requirements within each segment, and for leveraging maximum synergies potential of platform sharing with each segment. We nevertheless achieve maximum scale effects as multiple brands access the platform for each segment. Segments A zero, led by Volkswagen Brand and used by CUPRA, Škoda, and Audi. Segment B and C, developed by Audi and used by Volkswagen, Porsche, and Škoda. Finally, segment D, led by Porsche and used by Audi, Bentley, and Lamborghini.
When tailoring our SSP architecture to each segment, we have adopted a highly systematic approach in defining the respective technology profiles. Subsequently, we forecast the expected competitor performance along each dimension. That allows us to build competitive products. This systematic approach is consequently used across all our segments for each product. The SSP architecture will balance the need for scale and standardization with differentiation and speed. Across segments, SSP will enable significant module sharing across over 40 million units. It continues to allow for the tailoring of parts specific to each segment, price point, and customer preferences. Let me give you 2 examples. We will reduce cell format complexity from 6 cell formats in MEB+ and PPE to 1, only 1. We are planning to achieve a +100% performance spread at 20% variance in e-drivetrain.
Let me show you the advantages using the specific example of our D segment. We combine 4 brands, Porsche, Audi, Lamborghini, and Bentley, with 14 models, aiming for about 1.4 million combined vehicles until 2038. This is planned to result in a potential of more than EUR 150 billion sales revenue, with highly attractive profit margins, in part of more than 20% return on sales. We strive for highly competitive features, such as charging time as low as about 12 minutes. We will achieve full brand differentiation while ensuring high commonality. High-performance attributes in the Urus to luxury comfort of our Bentley models make vehicles truly unique. We can achieve over 95% shared platforms and modules for selected models. All of this has important financial implications.
Here, we can combine the positive profitability developments with a planned reduction of CapEx and development cost by 30% compared to MEB. Let's focus on our battery strategy. The battery market will be one of the key areas for success in the future of the BEV-driven automotive industry. For Volkswagen Group, the battery strategy is of outstanding relevance, as batteries often account for more than one-third of total cost of a vehicle. Even more important, the battery performance is one of the most critical purchase criteria for our customers. The demand is driven by our increasing BEV share. In 2030, we target a BEV share of more than 50% worldwide. We are confident our scale allows for competitive battery production, leading to a stronger competitive positioning in terms of supply and economics.
Once again, our scale proves to be an unrivaled competitive advantage. Our battery strategy is designed to provide a highly competitive battery for our cars. We aim for high optionality. For example, we secure raw material and pursue flexible make or buy approaches to optimize margins and capital efficiency. Our strategy builds on five complementary pillars. We will dive into them now. The Unified Cell is one key pillar of an efficient battery future. In 2030, this will be a main component in more than 80% of all our BEVs across all segments and architectures. The Unified Cell will have significant and rich competitive advantages. We are planning to achieve a significant reduction in cell costs of up to 50%, through leading process innovations.
Most importantly, a new Dry Coating process for both electrodes can reduce energy costs by 30% and space requirements by 15%. We have recently successfully reached a key milestone in this development. We are currently working on 30 further process innovations, which together can have a similar effect as the Dry Coating and enable a total cost reduction of 50%. The usage of the Unified Cell across 80% of our portfolio leads to a significant volume within the group. This boosts competitiveness. It allows significant scale effects on both OpEx and CapEx, and high efficiency in the production process. The Unified Cell is a future-proof. Its chemistry can be adapted to almost all existing and new chemical combinations. We can even manufacture solid-state batteries with a Unified Cell.
Finally, the unified cell has significant flexibility in specs, allowing to select chemistry that fits best to each segment. Like the SSP, the unified cell variances are tailored to the needs of the various customer segments. This enables us to develop specific solutions for each brand group regarding costs and performance, and it allows to tailor battery systems to requirements of each segment, while still ensuring maximum scale. In almost every business field, we see a high need for regionalized solutions. This holds true also for batteries. Therefore, we pursue a local-for-local strategy to reflect regional customer preferences and regulations. This ultimately optimizes our cost structure. The unified cell will be sourced from both PowerCo, as our competitive supplier, and third-party partners with a regional tailored sourcing approach to reflect local market environments and regulations.
Our new plant in Ontario, Canada, is expected to cover the majority of the demand for the Northern American market. It enables us to be fully IRA compliant and have secured significant subsidies of up to 13 billion CAD. In Europe, we follow a tailored approach for maximum flexibility with PowerCo, complemented by third-party suppliers. In China, we are focusing on 100% third-party sourcing from our local partners that can offer at a highly competitive price point in the crowded Chinese battery market. We have set up PowerCo as a competitive battery supplier to leverage our scale and our secure supply. PowerCo is planning to achieve 30% lower CapEx compared to other state-of-the-art factories. The CapEx advantage is driven by a standard plant design, enabled by the unified cell concept, which accelerates ramp-up, lean line design, as well as flexible production footprint.
The ramp-up of PowerCo is well underway, with three gigafactories under construction in Salzgitter Advanced, Valencia, groundbreaking, and Ontario soon to come for a total of 200 gigawatt hours. PowerCo has the optionality to build further factories via staged gated ramp-up. Of course, we will consider current steps only if we see sufficient demand in the market, and if a sufficient return on investment can be achieved by that. All of our plans are powered by clean energy to support our commitment to sustainability. Driven by its independent setup, we are willing to open the capital structure to external investors to fund additional growth at PowerCo, once the time and the circumstances are right. Our approach will be closely tied to key milestones and achievements, such as very successful starts of production in our under-construction gigafactories.
We will ensure that we have clear proof points as part of a compelling equity story, underlining the potential and the competitive advantage of PowerCo for any external investor. Yes, an IPO can be tangible option. However, we will have full flexibility in our approach, and we will evaluate all potential options for external funding closely. Nevertheless, we face critical challenges in the supply of raw materials. The availability of raw materials, such as lithium, nickel, or cobalt, especially from sustainable sources, is a massively challenging constraint. The Volkswagen Group secured future supply at a competitive price point from sustainable sources already today. We hereby focus on lithium, cobalt, nickel, and anode material as key materials, and have already secured up to 30% of our total demand from today until 2030 for Volkswagen Group. As a group, our strategic focus lies on execution.
We are already delivering across all key elements of our battery strategy. First of all, we are executing with the highest possible speed. The best proof point is our gigafactory in Canada, for which we significantly accelerated the decision-making process in light of new developments. Most impressive for me was the personal involvement and commitment from the Canadian Prime Minister, Justin Trudeau, who made a very compelling case to invest in Canada and is open for further fields of cooperation, like raw materials and energy.
Moreover, our Unified Cell will not only be cost competitive through leading technology, we are also aiming to make it highly sustainable, for example, through emphasis on recycling of raw materials to ensure all benefits of the circular economy. Finally, we have successfully built a highly experienced team with some of the best talents in the industry. Let's talk now about batteries beyond.
Offering customers a holistic BEV ecosystem, especially access to a broad charging network, is essential for the transition into the electric era. The Volkswagen Group is at the forefront of the development of charging offerings around the world. Here, we leverage our unparalleled access to customers and technologies. In North America, by 2026, Electrify America is aiming for around 8,000 chargers in the U.S. and Canada, supported by local subsidies. In Europe, Elli is a key driver for our European charging and energy services, supported by the fast-charging network, IONITY, where Volkswagen and Porsche are invested. In China, our joint venture with our local partners, such as FAW Group, is one of the leading high-power charging players in the market. All activities will lead to around 45,000 charging points, driven by Volkswagen, by the middle of this decade.
Charging is one important element of the future BEV ecosystem. BEVs will become a central pillar of our energy system. Starting with our proprietary energy stack, today, we plan to offer local fleet load management services to business customers from 2024 onwards. Through bidirectional charging, BEVs can serve as a mobile power bank. From 2026 and beyond, energy management and smart energy services are expected to be a crucial future profit pool. Let me assure you, the Volkswagen Group is in the prime position to drive this innovation and capture a significant market share. Let's talk about software. The software game has changed our industry completely. Just 2 or 3 years ago, scale advantages in automotive came from manufacturing. There will be an additional crucial source for scale advantages.
Given the high fixed cost for development and long-term maintenance, software is a clear scale play. A play which high initial investment, but very low incremental costs per unit. Software will be key for offering attractive and competitive cars to our customers. They do not only demand leading battery electric vehicles, but also software-defined vehicles. We face challenges, it is also clear where we have 2 strengths. With our size, we are in a unique position to capture the scale advantages software offers. We are also able to attract strong partners. For example, in the field of automotive driving, we have a strong alliance with Bosch. We also have tailored local partnerships, such as Horizon Robotics, for China. To unlock the potential of our software capabilities, we have to honestly name the obstacles.
By now, we did not deliver an attractive set of features for our customers, especially with regards to regions' specific preferences. In addition, we have not reached the speed required by the fast pace of the transition to software-defined vehicles. To successfully solve these challenges, we have implemented a five-point plan for CARIAD. It is comprehensive, transparent, and once again, focused on execution. First, we will restructure CARIAD into a lean internal software supplier with strong ties to our brands, especially Volkswagen and Audi. Second, we will significantly increase the speed in developing our Premium Platform 1.2 to bring the fully electric Macan and Q6 e-tron as first cars with this platform to the market next year. Third, at the same time, we will implement a new setup for our 2.0 platform to develop the next generation of software-defined vehicles.
Fourth, we gain more speed and reduce cost. We will continue and even accelerate to leverage partnerships with world-leading tech companies. Still, we will maintain control over key strategic control points and our platforms. However, we will consequently stop development efforts which do not contribute to our strategic position. Fifth, the execution of this realignment is driven by a new leadership team. It bears a new model of collaboration, trust, and effectiveness to CARIAD and the entire Volkswagen Group. I asked Peter Bosch to drive this transformation. He holds the trust from all our leaders across all brands. The board is complemented by Thomas Günther and Rainer Zugehör. We are still in the process of finding our final board member that will be in charge to drive the software-defined vehicle development, and we are already in promising talks with top experts worldwide.
To make the restructuring process of CARIAD effective and focused, it is structured along our 1.1, which is mainly known from ID. models and serves Audi, SEAT, CUPRA, and Škoda, will receive significant improvements with Over-the-Air updates over its life cycle. The 1.2 will be the basis for our Progressive and Sport Luxury vehicles in the upcoming years. Its realization and continuous development will be accelerated. We will build a dedicated implementation organization with CARIAD, with full focus on this architecture. We will jointly review, stabilize the launch task force and further integrate CARIAD and brand capacities. Our next generation platform, 2.0, will be developed in a completely new setup.
When it comes to E³ 1.1 and 1.2, Volkswagen will collaborate much more closely in the development process for our volume platform, and so do Audi and Porsche for our progressive and luxury platform with E³ 1.2. We have already managed to ramp up 1.1 into a stable and reliant platform after the initial problems with the ID.3, and will continue to significantly enhance the attractiveness of our features for 1.1 via OTA. 1.2 currently is in the middle of the launch preparations. We do everything to ensure the launch of these vehicles and the following SOPs, and we will offer a comprehensive set of highly attractive features, such as our digital assistants.
With 2.0, we will holistically define the hardware and software concept and architecture for the next generation software-defined vehicles in a software-defined vehicle hub. To ensure that we achieve the leapfrog that we require from 2.0, our new approach starts with efficient and right software-defined vehicle setup. A small team will start with implementing everything we need for effective and fast software development. The refinement of this current 2.0 planning is already ongoing. It is supported by a leading expert from the Silicon Valley. This will not only be a technical assessment, we also will optimize the entire setup, including suppliers and partners. We want to become as fast as possible and bring the 2 software-defined vehicles to the market.
Overall, the development, where we proceeded in very close collaboration with Audi and Volkswagen, the new speed that we want to operate by, will be required, carried to change, and it will also require adjustments to how the brands develop vehicles. We plan and pilot this approach in our new setup. Once we are stable in the dedicated and software-defined vehicle environment, we will roll out the learnings across the entire Volkswagen Group. Speed has become an imperative to stay competitive. The unique size of Volkswagen Group results in a clear competitive advantage, stem from our own software development. We clearly understand we need to focus, and we know there are many great technology companies with great products and leading capabilities. Therefore, partnering with leading technology players will enable us to speed up our time to market.
It will provide us with access to technologies that are not part of our core strengths, and it will help us to reduce development costs and complexity. For example, with Mobileye, we plan to offer top-notch ADAS and AD functions in our 1.2 vehicles quickly, while we have time to build our own solutions in this field together with Bosch. That brings us to mobility solutions. I hope most of you had the opportunity to experience our ID. Buzz ADAS at the pre-event today. The Mobileye approach was very convincing to me from the first test drive on. They picked me up at Stuttgart Airport and let me drive 40 kilometers distance to the Porsche Engineering Center. The system drove fully autonomously, a profile of highway, country roads, and towns, including complex situations, without 1 single intervention. For me, very exciting.
We see significant demand for robotaxis as a means of individual but also shared mobility. We are gaining valuable experience with mobility as a service offerings through MOIA. On the product side, we redefined our strategy through a smart partnering approach with Mobileye. We follow a clear, capital-efficient, and stable product roadmap. Volkswagen Group plans to introduce robotaxis in more than 70 North American and European cities. robotaxis are a fantastic element of the mobility of our future, but it is not the only one. Volkswagen Financial Services is leading the way to an integrated, seamless mobility platform, a platform with a single user interface, combining all core products across the group. With our mobility platform, the established offers, such as leasing and financing, are supplemented by new and expanding offers, including subscription services, rental, car sharing, and scooter sharing.
Already today, we are doing digital sales of cars and services in up to 30 markets. Until 2022, more than 1 million contracts were completed digitally already, focused on finance and service contracts. Thus, the mobility platform ensures that customers have a seamless experience without any breaks in the customer journey. For the front end, our strong brands will remain as faces to our customers. This ensures we continue to leverage and build brand recognition, as well, loyalty. At the same time, an integrated platform will provide significant synergies as a single backend across all brands. Today, the Europcar Mobility Group has more than 5 million customers and a fleet of 250,000 vehicles.
Following a strong year of robust growth in 2022, with an EBITDA increase of more than 50% compared to 2019, we plan to see a further revenue and EBITDA increase by 50% until 2027. This is an exciting opportunity for us as Volkswagen Group to shape the mobility of the future. Stay tuned for our new offering and get prepared to finally delete all the different apps you are using today. Those were the exciting technology areas. It is important to understand that we are doing things differently when it comes to technology. We are recognizing the changes in our industry. They require higher speed and agility. We have adjusted our technology steering accordingly, giving ownership for each topic to the brand with the best expertise and capabilities, and we want to bring in more strong partners to complement our abilities.
You can already see this applied to each of our 4 key technology areas. We have a clear path for BEV competitiveness. With MEB+ and PPE, we will move to SSP as a single future backbone for our group. This will allow a unique combination of scale and standardization with speed and differentiation. Our battery strategy will provide us with maximum flexibility throughout our highly competitive Unified Cells, our balanced regional sourcing approach, complementing PowerCo with third-party suppliers. We are in a process of realigning CARIAD. This is part of significant changes to our software strategy. We focus on increasing our development speed and on competitiveness of our offerings. Finally, we are developing a capital-efficient approach to develop an integrated mobility platform across the Volkswagen Group.
Overall, bringing these four dimensions together, this will enable us to be in a leading position for the BEV and software-defined vehicle transition. Competitive technology and strong entrepreneurial brands will be the core backbone of our future success. Yet our unique brands and their identities are the true value of Volkswagen Group. We want to manage our portfolio efficiently and effectively. This is challenging. Hence, we aim to significantly reduce complexity by our new approach to brand management. Historically, the group has aimed to steer each of the 10 brands centrally. This reduced speed, accountability, and the entrepreneurial drive of our brands. Today, our four brand groups are set up to perform. Instead of managing each brand directly, the group steers efficient brand groups. We give and expect from them full accountability for their brand's development and drive with the entrepreneurial mindset.
We will ensure that each brand has a distinct and differentiated market position, underpinned by a co-current design language. We are confident that each brand will use the increased entrepreneurial freedom to deliver on the momentum of exciting product launches. The new setup will speed up the time to the market. It will allow for better alignment with customer preferences. Let me introduce you to our four brand groups and the added value within the group. The portfolio of the Volkswagen Group is broad and it is diversified, yet we managed to be market leaders in the areas that are most important to each of our brands. Our luxury brands are the most prestigious and desirable ones in the market. Craftsmanship, heritage, and compromised excellence makes them truly unique. Porsche is a story for its own.
For 75 years, Porsche has been manufacturing the world's best sports cars. As provider of a modern luxury philosophy, Porsche has an unrivaled brand heritage. Audi is perceived as a brand with Vorsprung durch Technik and highest customer experience quality with their peer group. Volkswagen Commercial Vehicles, Škoda, SEAT, and CUPRA offer the best functionality as a reasonable price. With robust cars and an appealing design language, they were reliable and perform as the core of the group. Last, we are proud to offer the most cost-efficient trucks and buses in the industry.
We know how to properly address our customers' needs. We integrated their highly individual demands. The market share does reflect this. The brands of the Volkswagen Group are amongst the leading players worldwide. Volkswagen won't be Volkswagen if we rested on those successes. We have a clear ambition for the future.
We want to be the unrivaled number one in each segment of relevance to us. The Volkswagen Group is home to exciting brands with fantastic cars, brands with an iconic heritage. The heritage of our brands is one key differentiator in the industry. Together, we combine more than 800 years of automotive history. This value is an obligation for the future. We want to continuously develop, deliver fantastic experience for our customers, and we will. Today, we have more than 100 million of them, and many more fans who are enthusiastic about our brands. This is what we are proud of. Each of our brands has a unique story, a unique identity, and a unique mission. The group is much more than just a random collection of brands. What unites all our single stories?
It is the ability to reinvent ourselves over and over again, to challenge the status quo. Constantly deliver the desired. To unleash the full potential of each brand, we need to manage our portfolio mindfully. This has always been on top of our agenda, but the complexity of our brand and model range may lead to a certain degree of overlap and internal competition. Hence, we have carefully analyzed each brand and their value-maximizing position, and meanwhile, we want to minimize overlaps. Here you can see our unrivaled portfolio, a portfolio of brands that is differentiated, synergetic, and that allows the Volkswagen Group to cover socioeconomic areas and therefore, almost all relevant and attractive profit pools. The design of our models is one of the most crucial factors that decide upon the success of the group.
I am very passionate about the design process, and I believe that design is at the core of each brand. It is an expression of our unique selves. You had a chance to experience our design team at our pre-event, and I hope you gained a lot of insight on how we aim to further shape Volkswagen Group's brand identities. Together with Michael Mauer and the entire team of Volkswagen Group Design leaders, we have set up a structured, group-wide design process. We strive for differentiated brands, design identities that make you recognize a brand, irrespective of the specific model you are looking at. Not only our brands are unique, but all of our cars are, too. We derive the product design identity from the brand identity. This brings the soul of each brand into a car. We will combine design and functionality.
We will create a tailor-made user experience. We will deliver design with purpose. We are confident we have initiated the right steps. The new design process will already bear fruit with our upcoming product launches. Our product pipeline is highly exciting. We will launch BEV and ICE products across all brands, with the goal of shaping the BEV footprint while mastering the ICE ramp down profitably. Our goal is to launch 80 new BEV models until 2030, almost 80% on the SSP. Together with attractive ICE products, we aim to increase the competitiveness of our products. Our new launches will be the right steps into the right direction. Once we migrate towards SSP, the complexity of our still sizable product portfolio will reduce significantly, and our opportunity space will be increased massively.
Let me now introduce you to our Brand Group that is mostly referred to when thinking about the Volkswagen Group, the Brand Group Core. The Brand Group Core consists of four brands with their own identity and an effective design differentiation towards customers. They build on shared tech backbone within the Beyond Brand Group Core. It is Volkswagen, Škoda, CUPRA, and Volkswagen Commercial Vehicles. We are in a leading market position in two of three largest global markets, China and Europe. We are making good progress to capture the opportunity in North America. Our strong brands have a broad and loyal customer base. This is a very solid ground for a successful transition into the BEV era. Our well-positioned legacy in the ICE business supports this BEV transition. Additionally, we have a clear factory transition plan in place.
We are addressing our relatively high fixed cost base in Europe and increase our flexibility and speed. We want to continuously be able to offer attractive and competitive products. A radical simplification of our BEV, but also the MQB product offering, will support this process. It will reduce development and product costs significantly. We do not only reduce the complexity of our product offering, we also work on our portfolio.
The number of heads in Europe for the Brand Group Core is planned to be reduced by more than one-third over the next 10 years. The Brand Group Core is full of potential, and we are willing to consequently lift its brand group-wide synergies. The Brand Group Core is not just as a collection of brands, it is a model to steer exciting product offerings effectively and efficiently, both from a technological and a financial viewpoint.
The Brand Group Core CEO coordinates joint strategy across all brands. We assigned distinct responsibilities within the brand group to maximize synergy potentials. The brand group CEO is part of Volkswagen Group Management Board and brand supervisory boards. We foster an increased cooperation between the brand CEOs. We strengthen brand leadership for functions and projects within the brand group.
We value joint targets and accountability set up with joint incentive structures. Let us be clear, the synergies from increased coordination and a shared tech backbone will not be sufficient to fully catch up to industry benchmarks and new entrants. The Volkswagen brand is the heart of the Brand Group Core, and it is the root of the brand group, and it is the most loved car brand on this planet. Let us enjoy a quick visual and emotional introduction to our Volkswagen brand. Enjoy it!
This is a car full of the latest innovation, ready to go out in the world. It's not a Volkswagen yet. This car is about to become a Volkswagen. It's not a Volkswagen until there's sand under the mats, until you spill ice cream on the brand-new seats. It's not a Volkswagen until it has a name like Matilda, Lily, or Bug. It's not a Volkswagen until you break up in it, and make up. It's not a Volkswagen until it takes you to the worst, best day of your life, till you realize that children grow up so fast, until you realize your parents grow old so fast.
It's not a Volkswagen until it's accessible to all, and until the technology inside makes you smile. It's not a Volkswagen until it helps build a world your grandchildren drive in. You see, we make cars, but no matter how advanced the technology inside, it's not a Volkswagen until there are people in it.
Wonderful, and also personal memories of my side. This heritage has been the backbone for success stories that lasted for centuries. Our products defined the cultural understanding of generations. I am a member of the Generation Golf, the pure fact that an entire age group is called like one of our cars, shows the importance and popularity of this brand. Our management, therefore, bears massive responsibility. It has a responsibility to take this brand into the era of electric and software-defined mobility successfully. Our MEB-based ID family lays the foundation for this development. The MEB+ will further enhance the product offering, and we will see this with the ID. 2all. We strive for all democratized approach to automated driving and full software-defined vehicle functionality at affordable prices. This brand will truly stay a Volkswagen.
Our SSP-based next generation will set a benchmark in the VW segment. Throughout the transition, Volkswagen will be managed towards improving its margin and cash flow generation to remain competitive. We do have the future of this icon in our hands. A long-term economic success, as well as the securing of jobs, will only be possible if we sustainably increase our competitiveness in the medium to long term. To be able to deliver on our promises, we need a more flexible and leaner structure. We want to realize our target returns in a transitioning world with intensifying competition. We aim for a 6.5% return on sales for the Volkswagen brand by 2026. To secure this path, we have identified fields of action in an honest, critical, and transparent process.
Our identified financial levers include a shift of focus from volume to value, better brand positioning, cross-functional optimizations within the brand to improve the main business drivers, but also address our plant utilization across Europe. We will be making use of the flexibility within our operating model. To avoid any doubt, we remain fully committed to our agreements with the unions. Volkswagen is and will remain a strong and resilient employer, and I am crystal clear about that. Meanwhile, our demographic curve supports natural reduction, allowing us to take advantage of the more efficient BEV factories. They operate at reduced complexity and higher automization. We will reflect this in our employing strategy. Additionally, this development will be further enhanced through an efficient bundling of scales as well as extensive and cost initiatives in engineering, material production, sales, and fixed costs.
With our program, we have the ambition to achieve EUR 10 billion of sustainable earnings improvements. The details of this program will be developed together with employee representatives over the next months and are expected to be up and running by October 2023. The Brand Group Core, we can successfully position brands and leverage scale benefit at the very same time. CUPRA and Škoda demonstrate this very well. For example, Škoda is the bold companion to exploit the world. It lives by modern and solid design. We are positioning it as a functional with the best value for money brand, its cost efficiency championship, its legendary benefiting from Group scale benefits, and it is delivering an attractive and industry-leading 10% return on sales. CUPRA is equally embedded into the Group architecture, yet a contemporary brand for the next generation.
We are proud CUPRA is the fastest-growing European brand. The team in Barcelona enhanced its innovations in a speedboat manner with unparalleled time to market. CUPRA has set itself an ambitious target, too. The brand wants to achieve a 10% return on sales. The Brand Group Core has already benefited from various structural and enhancements since 2016. We repositioned the portfolio, we enhanced the SUV offering, we exited the unprofitable A zero segment, and we reduced overlaps. The brand group will prove to be one of the biggest levers that we have within the entire Volkswagen Group. Every percentage point in margin increases will result in more than EUR 1 billion, and more important, EUR 600 million net cash flow. We are confident to enhance performance by positive price mix effects. We pursue concrete and strict overhead cost initiatives.
Purchasing and plant performance programs are backbone of further cost reductions. Finally, we work on a better break-even point. Global headwinds, be it COVID, the Ukraine war, semiconductor shortages, and unprecedented raw material price increases, have however weighed in on some of the structural improvements. These developments have shown we need to further improve the flexibility and the structural positioning, and have implemented structural initiatives for managing the BEV transition while harvesting ICE cash flows. A stringent cost focus on fixed and material cost is paramount. We want to benefit from economies of scale with a more efficient production and lower material input costs. Moving from our iconic Brand Group Core into Progressive territory. The Brand Group Progressive consists of four progressive and luxury brands: Audi, Bentley, Lamborghini, and Ducati.
Each of these brands is strong and iconic by itself, yet with the brand group as frame, they are able to achieve more than the sum of its parts. Let us enjoy a quick visual and emotional introduction to our Brand Group Progressive. The Brand Group Progressive has a strong financial track record. It is one key contributor to Volkswagen Group's financial profile by delivering growth, margin, and cash flow. This brand group built a portfolio of exciting and progressive brands. With the brand group as enabler, we aim at the scaling of progressive luxury mobility from two to four wheels. This means there's massive potential. However, Audi has not been able to extract this in the recent years. We see this amongst several facts. We did not defend the progressive leadership and position against key competitors. We faced severe software problems.
They delayed the launch plan of exciting electric products. The result, Audi's current portfolio is lagging competition and, maybe even more severe, its own possibilities. On the other side, Audi has huge opportunities with the upcoming product fireworks starting in 2024. The product, the footprint of the Brand Group Progressive is currently highly dependent on China, and especially the BEV lineup is not competitive compared to the market. Furthermore, the U.S. market position is not material enough for the possibility of the group. Finally, while the current ICE offering is profitable and competitive, the BEV transformation is a key challenge for the financial profile of the Brand Group Progressive. We will overcome these challenges. We have established a clearly defined plan of necessary actions, by this, we will navigate in a successful future, step by step, day by day.
Our entire product portfolio has luxury elements that can cater the growing luxury demands. We will carefully leverage our brands to capture this potential. Let me give some examples. Audi represents progressive technology. The growing RS franchise is a highly attractive business, both from a customer's as well as from a financial viewpoint. The Bentley Mulliner is a perfect represent of luxury customization. With Lamborghini, we deliver a unique portfolio of rare masterpieces. North America and China are identified as key regions for the Brand Group Progressive. We will address those markets with tailored strategies for each brand. Finally, we defined a very clear BEV roadmap for each brand. Doing so, we implement brand-specific strategies and take the brand distinct positions into account.
Sizable investments are already undertaken, each brand will benefit from those investments, highlighting the strengths of our combined portfolio, unlike standalone niche luxury competitors who cannot benefit from such scale effects. Audi is an exciting brand. Technological progress is a core philosophy that drives this unique company. Audi is at the core of the Brand Group Progressive. It gains access to scale. At the same time, it contributes to the key technologies for the benefit of the group. Today, Audi has embraced the challenge to redefine a clear brand identity and strategy for the BEV world. At Audi, we want to deliver competitive BEV products. Its near-term focus lies on electrifying BC segments, the heart of the Audi brand.
With Audi, we want to focus on its core differentiators, staying true to a clearly differentiation design language and a very high quality standard, while providing the best-in-class individualized customer experience. In addition, Audi has strong financial ambitions. Those will be reached by portfolio and mix effects. With this brand, we will prove that sustainability, emotions, and financial performance are not mutually exclusive. Moreover, Audi will enhance its core competencies in the CD segments, and Audi will strengthen its R and RS offering. Therefore, we are already planning with a high-performance BEV lineup. For the key regions, China and North America, we defined a dedicated strategy. The local for local approach and tailor-made offerings are key drivers. We are very confident Audi is a brand with unique strengths. It combines technology with design. With this, Audi is on track for a bright and profitable future.
We know how to successfully manage strong brands, as demonstrated with Lamborghini and Bentley. Lamborghini once started its journey in the brand group as an unprofitable niche player. In 2022, it proved to be the luxury powerhouse of the group. A 26% margin in 2022 and a 36% margin in quarter one 2023 speak for themselves. For the future, the common platform approach, together with Porsche, it will be a massive advantage comparing with other competitors in this luxury niche segment. With Bentley, we are repeating this success story. As you can see, we are already way ahead of first steps. The numbers show a clear path into the desirable direction. With the Bentley turnaround, we have shown in a few years that the Porsche method has paid off. The Brand Group Progressive, connecting perfectly, supports this.
A lean governance model and a high level of entrepreneurship enables our brands to grow with the benefits of an R&D powerhouse. The full potential is yet to unfold through the BEV transformation. While Bentley and Lamborghini themselves have the scale of niche luxury players, the Brand Group will enable transformation scales benefits that no other competitor has. This enables a leading luxury financial profile. The unique setup of our Brand Group Progressive also translate into attractive financial results. An impressive track record of margin improvements to around 10.5% in 2022, excluding one-off effects, showcases this development. We are aiming to increase this level sustainably over the midterm period throughout the electrification of our portfolio to 12%. For the long term, we aim at more than 14% across the entire Brand Group Progressive.
We aim to remain this cash-generative business. We are managing with a clear cash flow, maximizing perspective. Growth and margin improvements will translate into a more robust operating cash flow profile. Once our foundational investments materialize, the platform potential will unfold. In parallel, our capital efficiency will grow in the long term. Today, I'm not speaking in my role as CEO of Porsche. Let me tell you from my perspective, the group of Volkswagen Group. Porsche is an integral part and success factor in the group. On the one hand side, driving the business autonomously after the IPO, on the other side, furthermore, benefiting from a close collaboration with Volkswagen Group, especially in terms of scale effects, taking advantages in both directions. Porsche has been a success story for decades, in many ways. It is a blueprint for what we want to achieve with the entire Volkswagen Group.
I personally know how it works, having the proof point from the Porsche and Bentley cases already. For 75 years, Porsche has been about making dreams come true. We are proud of this history, this heritage, the unique Porsche story. Let us enjoy a quick visual and emotional introduction to our brand group, Sport Luxury.
Every one of us dreams. Some of us chase them. For 75 years, we've been driven by dreams. We dreamt in full color. It's what made us race towards brave ideas. We saw Salzburg red for 24 hours. We made a pink pig fly. Went to green hell and back for victory after victory. Our dreams come in half a million shades and counting. Mint green, guards red, speed yellow. We've always been for the bold, the bright, and the brave. Even this guy. Our universe is one where dream is a verb, an invitation, a place where artists, racers, and innovators come together. The product of one man's dream. We've been undoing what's always been done. Together, our dream will color the next 75 years. Open your eyes, take the keys. Join us here.
The Porsche story is shaped by dreams and to drive to make them come true. It is built of pioneering spirit and passion. Porsche truly lives the combination of traditional innovation. Our customers don't simply buy a product, they buy into the Porsche family, a community for those who follow their dreams. 75 years ago, Ferry Porsche lived his dream of a sports car, the 356. He brought it to life and thus launched the Porsche brand. 60 years ago, the first 911 came onto the market. It still is our icon today and currently more popular than ever before. Porsche combines fascinating products with very personal experience and with a brand that takes responsibility for the world we live in. A brand that combines exclusivity, performance, and sustainability.
Porsche has established itself as the definition of modern luxury, a brand like no other in the automotive industry. The attractiveness of the brand gets tangible in our impressive market position. Porsche is exclusive, Porsche is modern luxury, Porsche is in a high demand. However, we are not a niche manufacturer. We benefit from economies of scale with higher volumes compared to niche manufacturers of luxury sports cars. We know positioning ourselves in this sweet spot makes us unique, and it opens up new customer potential for us. We will continue to develop our strong product portfolio even further. After the very successful market launch of the first all-electric model, our Taycan, we are now focusing on the development of the all-electric Macan. First deliveries to customers are planned for the next year. After the Macan, the 718 will follow.
In the middle of the decade, we plan to also have a fully electric version parallel to its ICE version. The full electric Cayenne will follow after that soon. It will be ready to extend the 20-year-long success history of the Cayenne. We also plan to expand our product portfolio upwards with a new all-electric SUV in the segment above the Cayenne. The model is designed to further underscore and strengthen our luxury positioning. We expect strong demand, especially in the strategic regions of China and the U.S.. We will increasingly offer new models and limited editions and expand our so-called Sonderwunsch program. This way, we want to meet the needs and the lifestyle of our customers even more and exceed their expectations again and again. Sustainability is a central pillar of our Porsche strategy.
It is, and has always been, a matter close to my heart and that of my entire team. Porsche seeks to take responsibility for the environment and society. We are willing to take our part to build a sustainable future for society and have set ourselves ambitious targets in doing so. We have embraced the electrification opportunity and aim to reach a BEV share of 80% in 2030. Above all, we are working towards a net carbon-neutral value chain for our vehicles in 2030. Our unique position also translates into strong financial performance. In 2022, Porsche has posted record results and EUR 6.8 billion of Porsche operating profit, up by 62% compared to 2020. This corresponds to a margin of 18% at the upper end of our guidance for 2022.
In addition, Porsche has demonstrated a strong cash flow generation potential. Our automotive net cash flow convinces tremendously, with an increase of 76% since 2020. The base of this strong financial development is a performance program we implemented 5 years ago. This method, we will roll over now to the whole group. Arno Antlitz will explain later to you our targets and the overall common approach. In 2022, Porsche and Volkswagen have made one of our greatest dreams come true. Porsche AG is back to stock exchange. Since the IPO, Porsche is developing extremely well on the capital market. We have outperformed our peers since September 2020, climbing to a record market capitalization of more than EUR 100 billion today. The brand today is the largest and most valuable luxury automotive car manufacturer worldwide.
In terms of market cap, number three in the global automotive sector, and we made the leap into the top league of the capital market by entering the DAX directly. Porsche can be proud that the capital markets have demonstrated their trust in this development. We are thankful for your strong commitment. We are fully embracing this responsibility to remain as successful as we have always been, and to take on new challenges and new growth potentials. All in all, of course, we are sticking to our medium and long-term targets, group operating return on sales of 70%-19% for 2023, and in the long term, more than 20%. Meanwhile, our strategic target in terms of BEV penetration, and by that electrification of our portfolio, remains as one of the most ambitious targets in the automotive industry.
Last but not least, we leave the passenger cars and move to trucks and buses with TRATON as a separately listed entity. TRATON is built around four strong brands, Scania, MAN, Navistar, and Volkswagen Truck and Bus. Each of these four brands has a strong value proposition, a clear regional focus, a long heritage, and long-standing customer relationships, forming the basis to leverage global scale to develop TRATON into more than its individual brands. Let us enjoy a quick visual and emotional introduction to our brand group, Trucks. With its portfolio of strong brands and strong ties to a large global customer base, improved production levels and strong product positioning and technology. Despite some headwinds, TRATON delivered a solid performance in 2022, and accomplished a very successful start in 2023.
In the first three months, adjusted RRS advanced to 8.4%, mainly driven by Scania, with more than 13% RRS, and MAN, which increased its RRS to almost 6%, a level not seen for a long time, and a proof point for a successful ongoing realignment. On the back of this strong development, TRATON has raised its profitability target for 2023 from 6%-7% to 7%-8% adjusted RRS. With the acquisition of Navistar in 2021, TRATON is strongly positioned with access to all key profit pools of the global truck market and leading positions in each region. The challenges TRATON is facing are clear. There's much additional potential from the full collaboration of the brands in all technical areas and knowledge synergies across the group.
The transition to zero-emission transport is happening fast and requires the team to master it in a profitable way and ahead of competition. Discipline and focus are required to increase resilience, and additionally, develop the organization into a strong cash generator, driving down financial debt level while enabling investments into the group's future. To successfully navigate the industry transition to master the challenges, TRATON has a clear roadmap with a clear focus on execution.
The TRATON Modular System, creating standardized interfaces, offering identically solutions across the brands, while at the same time allowing for differentiation, enabling faster time to market and lower product, especially integration costs. TRATON is leading to shift towards sustainability transport, with an emphasis on battery electric vehicles due to the system efficiency. All TRATON brands will offer competitive BEVs across the major application weight classes with a continuously expanding portfolio.
As charging is an important enabler for the BEV ramp-up, TRATON will continue to support the buildup of charging infrastructure. We successfully launched the Milence joint venture to roll out a high-performance charging network in Europe with more than 1,700 public charging points. Third, TRATON will tap into new profit pools from a solution ecosystem around our customers, including charging and charging management offerings and global finance services for all brands.
Simultaneously, TRATON continues to focus on enhancing its performance and a clear capital allocation framework with targeted, future-oriented R&D and CapEx, and a commitment to further leverage TRATON's balance sheet. Execution of the strategic priorities is well underway, and the effects are already visible. CBE is being introduced brand after brand, with Scania making the start in 2022. In China, construction of a new plant has begun, with production start in 2025.
Scania's 40-ton regional haulage truck has a range of up to 350 kilometers, and MAN's eTruck for long distance will travel up to 800 kilometers from 2024 onwards. The clear roadmap of TRATON is reflected in ambitious strategic margin targets for each of the TRATON brands. 12% for RRS at Scania, 8% at MAN, 9% at Navistar, and 8% at Volkswagen Truck & Bus. Overall, TRATON aims for a strategic return on sales of 9% by 2024. At the forecasted 7%-8% for this year, TRATON is not only delivering a substantial step-up compared to prior years, it is also coming closer to its strategic target this year, just looking at the strong Q1. Last but not least, strong profitability should translate into strong cash flow.
You see, the Volkswagen Group lives from its strong brands, and we are fully committed to unlock the potential of these unique companies. We are focused on mastering the most important areas for group performance. We want to achieve 6.5% RRS for the Volkswagen brand in 2025, along the continued strong performance of Cupra and Škoda. We want to realize the full potential of Audi by launching a competitive pipeline. We will continue the success stories of our luxury brands, Lamborghini, Bentley, and Porsche, and we will deliver on the TRATON Way Forward program. The Volkswagen Group is unifying fantastic and strong brands, inspiring and highly qualified people, and an international community of amazing customers for exciting products. Remain competitive with this setup in our key regions, is one top strategic pillar for the group.
The global automotive market is rapidly evolving at an unprecedented pace. Tailored strategies for each market will be necessary to maintain our regional leadership positions. We will shift our approach for the future locally, with tailored strategies. Our focus is to shift from global to regionalization. Ecosystems need to be maximized and to preserve scale effects. The Volkswagen Group was and is number one of all international OEMs in China. We want and will keep this position. In Europe, our home market, we want to strengthen our leading market position.
In North America, the group missed opportunities for many years. However, since 2021, we are operating profitably in this region. We know, now is the right time to double down our efforts to exploit the most attractive profit pools in this market. Volkswagen is a truly global leader. The internationality of this group remained unreached.
We have presences in every major market worldwide. In 2022, we have delivered around 0.8 million cars in North America, 3.2 million in Europe, and 3.2 million cars in China, to name just a few examples. While most revenues are still generated in Europe, the growth engines of the future will be China and North America. Also, in other world regions, in like South America, India, or Southeast Asia, we are well positioned. Across all other overseas regions, we have a high 1-digit market share, and we see in most of that, a tremendous upside potential. Each region had its challenges and opportunities. We have systematically analyzed each region, and we have defined the most promising path forward for each of them. China is, next to Europe, our second mainstay. We have a long history in China.
In 1985, we entered into this market with the foundation of our first joint venture together with SAIC Volkswagen Automotive. In 1991, we founded our second joint venture, this time together with FAW. The combination of our strong brands and our strong partners has led to a unique success story, and China is a market full of special challenges. Today, and no other regions of the world, has the transformation of the automotive industry been as evident as in China. This has led to a high share of electrified cars. Moreover, we see a tremendous speed in the digitalization and the innovation development. Just a couple of weeks ago, our top management team visited the Shanghai Motor Show. The pace, the competition, and the set of potential for our group were very impressive. We have recognized the challenges.
Led by Ralf Brandstätter and our Chinese team, we developed, during the last months, a clear plan for our target picture 2030, for how we will continue our success in the intelligent, connected vehicle world of China. We want to be, and maintain, number 1 position of international OEMs and amongst the top 3 in Chinese market. We know what we have to do in order to keep this promise. We have to localize and control our value chain in China. We have to increase the regional independence for a faster decision-making process, and we have to speed up the development time for our cars. We summarize this strategy in just a few words: in China, for China. Together with our committed long-term partners, we will be able to transform Volkswagen Group China successfully.
We target a proportionate at equity operating profit of above EUR 2.5 billion in the midterm. China is not only an important market for our joint venture-based brands, it is also a major profit driver for our export-led luxury brands. The luxury market segment in China is the largest worldwide, it is one of the fastest growing with rapidly evolving young customer groups. They are not only focused on experiences, but also on sustainability. Strong brands with a clear brand proposition are paramount. With Porsche, Lamborghini, and Bentley, we are at an outstanding market position. We are the clear market leader in the luxury segment, with unparalleled brand reputation. We are especially attracting the young generation with an age of below 35. We are frontrunner in electrified luxury. The Taycan was a first benchmark in this field.
We will continue to electrify our luxury offering with tailored strategies over the next years. This will also serve the Chinese demand for electrified luxury. We offer best-in-class luxury experiences. This holds true for the beyond car services as well. Here, we want to intensify tailored offerings for China only in an extensive manner. Each of our luxury brands is aware of their respective luxury market potential, and each brand will capture it in their own distinct way. We know this is market potential that is not reflected fully in our performance, but we have a clear, transparent plan how to get there. In China, for China, this is our strategy, our strategic key in this ambition. The Volkswagen Group is systematically expanding its local development expertise.
By consistently bundling development and procurement capacities and integrating local suppliers at an early stage, we will significantly accelerate our development pace and tailor our offering even better to our Chinese customers. This will also strengthen the efficiency of corporations between our local joint ventures, which we try to lever even more and increase our profitability. The aim is to gear the Group's vehicles even more quickly to the wishes of Chinese customers and achieve shorter time to market. The establishment of our 100% TechCo in early 2024 will be an important step. We aim to reduce the development times for new products and technologies gradually by around 30%. This is a massive step. Moreover, we focus on a China-specific BEV ramp-up, built on the strong base of our revitalized brands.
Our fully-fledged localized R&D hub will allow us to maintain our position number one international OEM, and ensure stable profit and cash flows from China. Let us now have a view into our home market, Europe. The Volkswagen Group is, without doubt, a European automotive powerhouse. Europe is our home turf. We have a strong and loyal customer base, and we understand the market like no other OEM. We clearly want to keep this pace and stay ahead of our competition. However, we know that our competitiveness is currently challenged by a limited competitive cost base and high fixed cost, a BEV offering, which has its competitive weaknesses, and a complex portfolio with high overlap and complex dealer network setups. To sustain our position as European market leader, we therefore must address those challenges with focus and, most importantly, with speed.
We will manage our ICE portfolio carefully by embracing the BEV transition, offer attractive BEVs, which have the potential to position against the international competition. We will align our investments to profit pools to increase capital efficiency. We optimize our production capacities. Next, we will work intensively on and with our dealer network. We can leverage our unparalleled reach and yet increase our efficiency at the same time via digitalization and next-generation offerings. At this time, thank you very much, and please welcome Arno Antlitz on stage. Arno, it's up to you.
Yeah, ladies and gentlemen, a warm welcome to our today's capital market from my side as well. Good to see you in person again. Coming to America, coming to North America, the North American market, and U.S. market in particular, offers the greatest strategic upside potential for Volkswagen in terms of growth, in terms of market share, in terms of value creation and impact on the current industry transition to zero-emission vehicles. Volkswagen had a mixed track record in the U.S. to date. Times of strong growth were followed by period of stagnation. We saw years with clearly negative operating results for brand Volkswagen in the U.S. Success starts with the right product, and that started with the launch of our strategy to focus on SUVs. Volkswagen brand has made significant progress, both in market share and operating margin since then.
In 2021, the Volkswagen brand reached break even on a consolidated basis. In 2022, our U.S. business earned almost more than half a billion in profits for Volkswagen brand alone, turning it to one of the best success stories within Volkswagen. Our local footprint in the U.S., with a market share of around 4% at group level, is currently insufficient to exploit the full market potential. This is clear. So far, we are not represented in the most profitable segments, such as C pickup. Now all of the sudden, this market is turning electric, and we have all the ingredients we need to be a significant driver of that change.
We have the technology, the financial resources, and the clear will to take a leading role in the electrification of America. With the iconic Scout brand, by 2026, we will now also have an offering in the most attractive profit pools, the SUV and C pickup segment.
... If America was going to take another shot, what would it look like? It would be a shot to contribute something enduring. It would no doubt take our 250 years of hands-on, hard-won experience and apply it fresh to something meaningful. It seems obvious that it would involve steel as well as the work of human hands. It's clear America's next shot would come from a factory, but this time things would be different. The workers in that factory would have skin in the game, stakeholders. The operation itself would respect both people and planet. This operation would produce something strong and smart, chock-full of American ingenuity. This shot would be a miss unless it resulted in something every single American could appreciate, and more than that, use. This something would be helpful, and it better damn well be fun.
It would be at home equally on a Tuesday morning or a Sunday afternoon. If America was going to take another shot, well, you know, it sure might look like a truck. One hell of a truck. One that is absolutely beloved, but hasn't been around in 40 years. One from a brand that helped feed, build, and defend America. One that would excite our possibilities again. One that would make certain that the values of yesterday would lead the charge into tomorrow. Starting today, America is taking that shot with that truck. It's called the Scout. To right wrongs, to carry forward our past, invigorate communities, lead with respect, and help realize the promise of a nation. It is America's next shot, and we do not intend to miss.
Ladies and gentlemen, what an opportunity! Scout will give us the opportunity to address two of the most promising segments in the U.S., both in terms of size and in terms of profitability. Local product offering is clearly the most important pillar on that journey. The current supportive regulatory framework for local investment makes investment in the North American region very attractive. In addition to localizing products, the Volkswagen Group will invest decisively to create a local presence with new regional governance for more independence and faster decision-making, a local technology hub, specifically for software, the already announced battery gigafactory on Ontario, Canada, and further investments in our charging network, Electrify America. I must say, as chairman of the board of Volkswagen Group of America, I'm really proud to be part of that journey. Beyond our core region, there are significant opportunities for us as well.
Overseas markets are significantly large in size and provide attractive market growth. South America is one of such examples. In the recent past, we have successfully implemented restructuring measures and achieved financial turnaround in 2021. With local production presence and an increased local for local approach for each regions, we are ready to capture South America's potential through, for example, a portfolio shift towards zero SUVs and CUVs. India, for Volkswagen, is both a success story and a continued growth opportunity. The Indian market is heavily localized, and success in India would not be possible without intimate market knowledge. Since 2018, Volkswagen committed EUR 1 billion for India 2.0 and launched four competitive products in the volume segments, contributing to 90% sales growth that India observed with Volkswagen and Škoda alone in 2022.
The success of operations has been rooted in a localization strategy that achieved nearly 95% localization rate for our India offering. Based on that past success, India can become a potential source for low-cost BEV vehicle and based on repeating MQB-like localization and adoption strategy for MEB architecture. It is a proof point for our cost competitiveness in the BEV world. We want to approach India asset light with smart and local partnerships. This tailored strategy will ensure success in India and give you confidence that we have equally well thought through tailored strategies for each international market. To sum it up, we will leverage our scale and global reach to tap the most attractive regional profit pools worldwide. China is a key priority.
We are number one, number one international OEM, and our ambition is to remain the number one international OEM and top three OEM in China by an even more localized approach and a competitive BEV offering. Europe is our home market. We want to sustain the number one position, yet at the same time, improve efficiency and reduce asset intensity. North America is untapped growth potential, local for local, and with our iconic brand, Scout, to capture key growth segments. For overseas markets, such as India, we will consider what our best approach is based on a low investment strategy and act accordingly. Coming now to chapter five: our new steering model. The steering model forms the bedrock of our growth, our successful transformation towards electric, our power to innovate, our margin resilience, and this is based on our values.
It provides us with a clear direction and purpose. We are committed to creating a financially robust company that is well prepared for the challenges and opportunities of the next cycles. To achieve this, our new steering model of Volkswagen Group will prioritize sustainable value creation over a focus on volume growth. In the past, our company has focused on outgrowing fixed costs to increase profitability. While this strategy has brought us success in the past, we believe it's not suited for the future of Volkswagen during the transformation of our industry. Against this backdrop, we have developed a new steering model that places value above volume and focuses on sustainable value creation. This model is based on five fundamental principles that will guide our actions. Firstly, we will have a clear focus on profitability, reducing fixed costs, and generating cash flow.
Secondly, in order to safeguard our cash flows and to reduce our asset intensity, we have to focus even more on disciplined investment spending. Thirdly, we have introduced a focused equity investment approach to unlock value of the entire Volkswagen Group and our shareholders. We plan to align our management incentivation accordingly. Lastly, everything we do is, of course, based on integrity and our values. Ladies and gentlemen, Volkswagen is a bundle of one of the most fascinating, powerful, and valuable brands in the industry. There's no doubt that strong individual brands will continue to be a differentiator in the future.
At the same time, we need to transform ourselves into a unified technology and mobility service group by building some of the most powerful platforms in the industry, such as our PPE hardware architecture, SSP, with unparalleled performance and scalability, our unified software stack, our Unified Cell, which is highly competitive in terms of performance and chemistry flexibility, and our mobility platform for all mobility needs and autonomous driving functions. The main objective of our financial steering is to effectively unfold the power of this setup, which is unique in the entire industry. Our primary goal is to maximize the entrepreneurial spirit on our brand and technology groups, while efficiently leveraging the synergies of being part of the Volkswagen Group through industry-leading platforms.
The technology platforms must develop superior technology at competitive costs and make sure that we create the synergies for a significant part over the automotive value chain. The brands are building a superior product offering based on their own expertise and on the technology provided by the technology platforms. By working together, we can leverage our strengths, drive innovation, and deliver superior products that meet the evolving needs of our customers and effectively manage the transformation of the group. To make our new steering principles actionable and to ensure that they deliver the desired financial results, we have defined a set of Key Performance Indicators, KPIs, that are critical to achieving our goals. These KPIs form the core of our steering framework and guide each brand and technology group within the Volkswagen Group. You will notice that these metrics do not include a volume target.
Instead, our focus is on cash flow and profitability, and our financial framework combines absolute operating profit and cash flow targets with targets for operating margin and cash conversion rate. We also emphasize capital efficiency and measures to support investment discipline. In order to set the right margin targets, we conducted a comprehensive benchmarking analysis for each brand group against industry peers, focusing on metrics such as return on sales, capital expenditure ratio, and cash conversion rate. Our strategic ambition is to become the segment leader in each of these KPIs. At present, only Porsche can claim to be the benchmark in its segment, while the other brand groups still have some way to go to reach the level of their peers.
While we are convinced that we can achieve those levels, we are aware that this will become a challenge, specifically for the Brand Group Core, a topic I will address later on. As each brand group is accountable for its own results, we encourage transparency and individual responsibility, rather than allowing anyone to rely solely on group outcomes. In order to achieve our profitability targets, we are committed to continuously seeking ways to improve our efficiency. Having successfully overcome challenges such as the COVID pandemic, semiconductor shortage, and geopolitical conflicts, we've demonstrated our ability to respond innovatively and effectively to the unexpected situation and to deliver on margin targets, also in difficult times. Each brand within the group is in the process of creating its own customized roadmap to achieve these goals.
The key role in this roadmap is played by improvement programs at the level of individual brands and on the Brand Group level. These programs will be carefully managed and monitored at Brand Group level to ensure accountability and execution on a quarterly basis, allowing us to make any necessary adjustments and maintain our focus. The recently announced EUR 10 billion program for the Volkswagen brand to achieve a sustainable margin of 6.5% at brand level and 8% margin at Brand Group Core level, is an example of the commitment of the individual brands to make the business more resilient and profitable. To underpin our cost performance programs, the Brand Groups have identified various measures focused on revenue quality, fixed cost, and cash flow improvements. It is the responsibility of each Brand Group to implement the required actions.
Currently, the brand groups have assessed the potential for improvement and defined specific actions. Let me underline again, we are committed to executing on these actions. Implementation and delivery on these targets is key. A core element of the group's cost strategy is to gain resilience by lowering break-even. An important element to that target is reducing group overhead costs. This is an area includes all indirect costs at Volkswagen plants, marketing costs or indirect costs at the brands and regional headquarters, and total to EUR 41 billion in 2019. Compared to 2019, we were able to reduce these overhead costs in absolute terms, despite the first time consolidation of Navistar and significant upfront investments in our battery, software, and mobility business. We believe there's still room for improvement. As Volkswagen progresses, we are committed to prudent cost management and continued overhead cost discipline.
We aim to further reduce the overhead cost ratio, we have initiated an assessment to identify further improvement potential in our operational costs as part of the aforementioned improvement initiatives and cost performance programs of the brands. Once these programs are detailed out, we will share an update target on this bucket. It is clear we will continue to invest in Europe, both in terms of products and in terms of convincing converting our plants to electric to keep our leading positions in Europe. The value over volume approach also requires a reassessment of our production capacity, specifically in Europe. Some examples to realign plant utilization with a new value-oriented steering model and the growth expectation of the market. The group has adapted production capacities or will adapt production capacities in its Ingolstadt and Neckarsulm plants by 25% within the Audi.Zukunft program.
In Wolfsburg, electric lines have been moved from three to two shifts. Overall, Volkswagen Group will take natural attrition of workforce level into account when planning plant utilization. In the midterm, it will allow for a net capacity reduction of 10% in Europe in order to increase plant utilization. While we strive to give our brand groups the necessary entrepreneurial freedom, capital allocation remains a key process managed at group level. This is particularly important as we steer the transformation of our group towards electrification and digitalization, and engage with global profit pools even more consistently than in the past. In that topic, we take a highly strategic and analytical approach to capital allocation, how we derive and manage the EUR 180 billion investment of the current planning round over the 5-year period.
Based on a rigorous benchmarking approach, 9% of our automotive division's revenues is allocated to R&D CapEx combined for the core business of our brands. Once this capital has been allocated, it's up to the respective brand group to determine how to use the allocated funds most efficiently and effectively for their products and segments. To support our transformation and the key pillars of our strategy, we have allocated an additional temporary budget of totaling 3% of planned automotive revenues over the next 5 years. 1% is to be used specifically for initiatives related to enhance our platform architectures and to increase the competitiveness of CARIAD. These investments are essential to drive our transformation and to assure we remain at the forefront of the industry.
Another 1% is, or about EUR 15 billion, is specifically earmarked for the ramp-up of our battery business and PowerCo. The remaining EUR 15 billion are earmarked for group strategic projects aimed to strengthening our global presence, specifically in North America and China, in addition to our current business in these regions today. A prominent example of this investment is our Scout project. The growth investments in North America and the investments in competitiveness in China will increase the strategic robustness of our group through a much more balanced global presence. By balancing entrepreneurial freedom with group-level oversight, we can reap the benefits of both approaches. This collaborative approach to capital allocation ensures that resources are deployed strategically, maximizing value and supporting our overall transformation goals.
Already today, Volkswagen's investment plan places a strong emphasis on electrification and digitalization, and digitalization initiatives, with about 70% of our investments directed towards these areas. We must effectively manage the transition from internal combustion engines, ICEs, to battery electric vehicles. Currently, we find ourselves in a situation where we invest both in ICE and BEV technologies simultaneously, partly doubling our investment requirements. In line with our strategy, when the ICE investments gradually come to an end around mid-2025, we can of course, reduce our investment volume. This transition not only liberates CapEx and R&D expenditures, but also unlocks the full potential of our group synergies, as Oliver showed. In the long run, we will focus solely on the future drivetrain technology, significantly reducing our investment needs.
To successfully navigate the transition ahead, we have a unique advantage that sets us apart from the rest of the industry. We can capitalize on our fully invested MQB architecture, which positions us to enter the golden age of this MQB. The investments in the MQB have been made and mostly depreciated, but the product substance is still excellent, allowing for another platform cycle. You can witness this effect already today when looking at our CapEx ratio, which stood at 5.5% of automotive revenues last year. There are additional positive levers when it comes to margin and cash flows of these combustion engine cars. The challenges posed by stricter emission regulations, CO₂ taxation, and declining demand will be offset by the significant reduction in complexity and the efficiencies gained from our multi-brand MQB factories in the rundown of combustion engine technology.
Both the flexibility and the product substance of our MQB architecture will be a strategic advantage in the phaseout of internal combustion engine vehicles. At the same time, we are ramping up our MEB+ and PPE architectures, paving the way for our future BEV architecture, the SSP. Through product positioning, significant battery cost savings, leveraging R&D expenditures, economies of scale, and productivity gains, we expect to gradually improve margin parity. Bearing significant fluctuations in raw material prices, we aim to close the margin gap for selected models by 2026. Ladies and gentlemen, as we move forward, I would like to emphasize the importance of equity investment management with focus on non-controlled shareholdings in unlocking additional value for the Volkswagen Group. At present, we have around 250 investments at group level that are not fully consolidated.
To ensure that we maximize the value of these assets, we have initiated a comprehensive review process. This review will involve categorizing the portfolio assets into two main clusters: strategic and financial investments. Strategic investments, which are in line with our long-term objectives and offer clear strategic and technological benefits for the Volkswagen Group, will be reorganized under the control of the best owner within our organization. We will take an opportunistic approach to financial investments that do not offer clear strategic or technological advantages. We will carefully consider the value-maximizing path forward for these assets, which may include disinvestment or other appropriate actions. While it is too early to comment on specific assets at this stage, I would like to assure you that we are committed to making decisions in the best interests of the Volkswagen Group there.
In addition, Volkswagen has taken first steps of finding the optimal solution for fully consolidated assets within our portfolio, as shown on this slide. Let me emphasize, portfolio management does not necessarily imply selling assets. Yeah, we approach each asset with an open mind, leveraging our diverse toolkit to determine the best course of action. Let's consider Bugatti as an example. It is an exceptional brand, renowned for its ultra-luxury cars, and by partnering with Rimac, we have found the right collaborator to navigate the luxury transition, benefiting both brands. Through our participation in Rimac, Volkswagen stands to gain from any value creation achieved by the combined company. The willingness to open our capital structure to external investors to fund additional growth at PowerCo, when the time is right, clearly falls into this category of opportunity....
The best owner principle will guide our decisions, allowing us to find unique solutions tailored to each asset. However, we are currently not intending to conduct any IPO of our group car brands. Ladies and gentlemen, we firmly believe that leaders should have a skin in the game. In line with our new steering principles, it is of paramount importance to align the interests of brand groups and tech platforms' managements with the goals set by the Volkswagen Group. While top management compensation is ultimately determined by the supervisory board of Volkswagen, we are committed to implementing a compensation structure that fully aligns the interests of the Volkswagen Executive Board and leaders of each brand and technology group. This structure will be built on the following principles, ensuring that we have a stake in the success of the company.
First, long-term incentives will be centered around shareholder value creation, measured against the overall performance of the group, as we have it already in place. Second, the short-term incentives will continue to focus on margin targets, measured against the specific target of each brand and brand group, and it is planned to complement the margin target with a cash flow component in the future. This ensures that leaders are incentivized to drive profitability and financial performance at their respective levels. Furthermore, we recognize the growing importance of environmental, social, and governance, ESG, factors. Therefore, ESG considerations are already fully embedded into the criteria for compensation, encouraging responsible and sustainable business practices. This overall approach reflects our new steering principles and reinforce a culture of accountability and performance throughout the organization, as well as aligning the interests of shareholders with the actions of the management.
To sum it up, our new leadership principles provide a strong foundation. We have put them into action through our new financial management framework. Each brand in our group has been given responsibility to identifying the key levers to achieve benchmark profitability and a robust cash flow, with direct accountability at the brand level. We are shifting our capital allocation to a focused approach, targeting attractive profit pools and based on rigorous benchmarking. Through active equity investment management, we aim to capture opportunistic upside by finding the best owners for each asset within the Volkswagen Group. Aligning incentives across all brands and technology areas with our new goals will bring all facets of our strategy together in a coherent way. Let me now bring together what we have heard so far and give an outlook on how our new strategy will impact our future financial targets.
We are confident that we have laid a very solid foundation for sustainable shareholder value creation at Volkswagen. Our transformation journey is initiated from a position of strength. We are a company with a history of remarkable success, currently achieving record results, a very solid balance sheet, and possessing an ambition level that matches the immense potential Volkswagen and the opportunities within the industry have. We are committed to creating a financially robust Volkswagen that is well prepared for the challenges and opportunities ahead of the next cycles. Mastering the transformation process, leveraging our strengths and resources to navigate the evolving automotive landscape, continuously rewarding our shareholders for the trust they have placed in us by providing consistent and comprehensive dividends. Volkswagen is undeniably a financial powerhouse, demonstrating remarkable resilience and success through multiple cycles and challenges.
From the impact of COVID to supply chain bottlenecks, raw material price fluctuations, and most recently, the challenges posed by the terrible war in the Ukraine, we have consistently delivered growth and expanded margins. In recent years, we have achieved solid level of profitability, driven by an increased focus on cost profit and effective execution. Our ability to navigate and excel through various crises is a testament of our strengths and adaptability. We've learned from these experiences and are now ready to take our performance to new heights. The resilient operating performance of our business has enabled us to steadily increase our automotive net liquidity, giving us the ability to manage the transformation ahead. In recent years, we have consistently exceeded our long-term target of 10% automotive net liquidity as a percentage of group sales.
As of the Q1, 2023, our automotive net liquidity stands at an impressive EUR 38 billion, allowing us to drive the transformation ahead from a position of strength. Our stable credit ratings from S&P and Moody's enable us to secure attractive financial terms. While our financial metrics are in line with those of industry-leading OEMs. With significant liquidity, we have the flexibility to act quickly and decisively when needed. Looking around the room, I see many familiar faces from our recent quarterly earnings calls and result calls. I know the numbers I just present won't come as a surprise to you. The positive pricing momentum continued in Q1, leading to robust operating results, and we are pleased to see exceptional margins from Lamborghini, Bentley, and Porsche. In addition, Brand Group Core showed improvement with an operating margin of 5%.
The Q1 was a strong start for us in an environment that continues to be challenging. Although the supply of semiconductors is gradually improving, the pent-up demand for vehicles is only slowly moving through the process chain. Currently, the bottlenecks has reached the entire logistics chain to ship finished vehicles through the chain. We are facing a shortage of capacity for trucks, trains, ships, and labor in ports. The first impression from the Q2 shows us that we continue to do well in the automotive business and remain safely within our margin corridor of 7.5%-8.5% for the full year. However, despite this encouraging performance and good operating results, the development of our cash flow requires our utmost attention.
The main reason for that is the funds tied up in working capital, specifically in inventories of finished goods, as a result of the logistics chain bottlenecks described above. Against this backdrop, we are implementing measures to secure our cash flow targets for 2023 of net cash flow between EUR 6 billion and EUR 8 billion. The topic of cash flow enjoys the highest level of attention throughout the board of management. Every Brand Group and every technology platform is aware of the situation, and they are determined to sustainably improve the net cash flow. After this brief review of 2022 and a commentary of the current year, we look ahead into the future. How does our technology and Brand Group strategy, presented so far, translate into medium-term and strategic targets for the group?
Starting for the midpoint of 2022 guidance, we want to grow our sales by an average 5%-7% per year until 2027, and plan to grow in line with industry trends thereafter. We strive to increase our operating return on sales to between 8% and 10% in the midterm, and improve by another percentage point until 2030, through return on sales of then 9%-11%. The investment ratio should fall below 11% by 2027, and around 9% by 2030. Investment ratio here comprises CapEx and R&D combined. We are planning not less than doubling our cash conversion rate from 2022 to 2027. A huge effort against what I have told you before, but we have everything at our hands to action those targets.
The most significant step up in comparison to our current performance is the planned step up in cash conversion rate. Taking together the measures we have implemented should result in a significant cash flow generation. Our focus is improving the operative performance, increasing capital efficiency, and reducing capital expenditure over the medium term, provide a formula for increasing our cash conversion rate. In addition, tight working capital management will play another key role to reach our ambitious targets. We firmly believe that we are at the inflection point. As our investments come to fruition, we will see the full realization of their benefits, further strengthening our cash position. These measures, together with an increase in margins, should result to a cash conversion rate of 60% by 2027. Our strategic target of cash conversion rate is greater than 60%.
I'm convinced that by embedding these goals as part of the compensation, will be an additional lever to realize these targets. It goes without saying that these targets are based on and broken down into brand group targets, as Oliver already shown in his part, and should help in modeling our financial ambitions. Important to say that the current guidance for Porsche and TRATON are unchanged in place. The values shown here is just a translation of their guidance, running year and midterm, in the Volkswagen framework. It is quite obvious that the technology areas need different targets than the brand groups. Volkswagen will pay close attention to efficient use of capital. However, we firmly believe that having both the battery technology and the software in our own hands gives us a real competitive advantage for the future.
However, the business models of both PowerCo and CARIAD reflect significant upfront investments with solid margin and cash flows to follow at a later stage. We established PowerCo as a competitive battery supplier to leverage our scale and secure supply. With PowerCo, we are expanding both our battery capacity and the vertical integration of raw materials for about 50% of our battery needs in 2030. PowerCo's ramp-up is in full swing. 3 gigafactories are under construction in Salzgitter. Ground has been broken in Valencia, and a total of 200 gigawatt will soon be produced in Ontario. Once these upfront investments are done, we expect a significant sales revenue and operating margin in 2030 and beyond, with most of the revenues being still internal, but EBIT being incremental to the brand's margins.
As Oliver said, the software game has changed our industry completely. In future, there will be an additional crucial source of scale advantages from software. Given the high fixed costs for development and long-term maintenance, software is a clear scale play. A play with high initial investment, yes, but very low incremental cost per unit. The business model of CARIAD is designed accordingly. CARIAD initially accrues for the upfront investments in our three software platforms, E³ 1.1, E³ 1.2, and E³ 2.0, and is paid by the brands on a car-by-car license fee once these cars are delivered to the customers. In line with the ramp-up and execution of the respective software platforms, CARIAD expect on entity level and EBIT breakeven in 2027, and a cash flow breakeven in 2028, with double-digit margins beyond.
Our financial services business is a further key pillar of our success, complementing our automotive business. It provides comprehensive financial solutions for customers and enables future mobility services, unlocking additional profit opportunities. We remain committed to leveraging these strengths and are targeting an operating profit of around EUR 4 billion over the medium term, and our strategic goal to achieve even higher profits, particularly as our mobility services offer at scales are unchanged. Volkswagen's success story goes beyond our clear and ambitious financial target.
It's also a testament to the satisfaction of our valued shareholders. We have a track record of consistent dividend payments, even during challenging times of the COVID crisis, and we have remained committed to ensuring that our shareholders have a share in our success. In recent years, we have made remarkable progress by steadily increasing our payout ratio to levels unparalleled within the Volkswagen Group.
Over the past 13 months, we have returned almost EUR 18 billion to our shareholders through 2 regular dividends and 1 special dividend. This is commitment to returning value to our shareholders and underlines our dedication to their interests. Going forward, our ambition is not only to maintain this level of shareholder return, but to increase it substantially in the future. We are targeting a payout ratio of at least 30%, subject to prevailing market conditions. Ladies and gentlemen, we continue to invest in our BEV transformation in a relevant automotive software stack and in future-proof mobility services. At the same time, we intend to further strengthen Volkswagen financial basis with a clear commitment to our strategic targets. We believe that our solid financial position is a key differentiator during the transformation of our industry.
We strive to maintain this position in order to support our strategic initiatives and offer stability in a dynamic market. By carefully evaluating investment opportunities and focusing on value creation, we aim to generate sustainable returns for Volkswagen. With increased dividend payouts, we demonstrate our commitment to rewarding our shareholders. In doing so, we aim to make a positive impact and build a stronger future for Volkswagen, for our shareholders, and contribute to a planet worth living on. Thank you very much for your attention, and now back to Oliver.
Yeah, now we are close to the end, I can promise you. What a journey! Thank you very much, Arno. This has been an exciting day for us and hopefully for you as well. After all you have experienced and heard today, I want to summarize the key takeaways from today's capital markets of our several sections. We are now at the beginning of an exciting journey with our team, bringing new team spirit, fostering entrepreneurial spirit and clear accountability, while focusing on best-in-class execution. When it comes to technology, we have adjusted our steering by giving ownership of each topic to the brand, which best its expertise and capabilities.
We will be ready by focusing on SSP as our long-term single future backbone, and by having a flexible battery strategy through our high competitive, Unified Cell and PowerCo. Our group has initiated strong measures to realign our software strategy with CARIAD to execute on increased development, speed, and international competitiveness. Our new Brand Group Core, Progressive, Sport Luxury, and trucks, each have significant strengths to complement each other. While each brand group also has unique challenges, these provide upsides to the whole Volkswagen Group by executing on our brand-specific strategies. On a regional level, we will leverage our scale and global reach to tap the most attractive regional profit pools. Our ambition is to remain the number 1 international OEM, and amongst the top 3 in the Chinese market, through a localized approach and a competitive BEV offering.
In Europe, our home market, we want to remain number one, yet at the same time, improve efficiency and reduce asset intensity. North America is an untapped growth potential with a local-for-local approach and iconic Scout brand to capture key growth segments. Overseas markets provide excellent market growth opportunities, with the Volkswagen Group well-positioned to capitalize on a local per region approach. All these ambitions and strategies are strengthened and steered through a new steering model. New leadership principles in connection with a financial management framework provide the foundation for more responsibility on a brand group level to achieve benchmark profitability and cash flows. On a group level, we shift towards a focused capital allocation approach, targeting attractive profit pools and towards an active equity investment management approach to capture opportunistic upside potential. Financially, we maintain a balanced capital allocation approach.
We focus on disciplines and value and expanding to invest in all critical areas for the Volkswagen Group's future development. We have a clear commitment towards achieving our financial targets, aim to maintain a strong balance sheet, and thereby rewarding our shareholders with a sustainable dividend target. Let me finish this presentation with some final considerations. As you have seen, our new management team is a strong supporter of honest and transparent assessments. We analyzed the reasons that recently avoided, harmed the investment attractiveness of our company. In the past, the markets identified clear fields of uncertainty and improvement potentials.
Those were our competitiveness in the software business, our performance and pace in the Chinese market, the mechanism of steering a complex group, no ESG investment grade, and honest worries upon human rights situation in the factory in Shenyang, operated by SAIC Volkswagen Automotive, and scoring low on metrics like margin, cash flow for central brands of our groups, and capital efficiency when compared to the competition. Let me tell you the good news. It's not only the capital market who identified those fields of actions, but so did our new management team as well. This team would not be this team if we didn't define a clear, transparent commitment plan to work on these fields. In the past months, we implemented decisions with focus and with speed. We provided a clear restoration plan for CARIAD.
It is fostered by a new management team and a five-point action plan. We localized our operations and key functions for China with a clear target picture and action plan for 2030. We brought a new steering model into life. By this, we guarantee for fast decisions and entrepreneurial responsibility. We already improved ESG rating results, and we are planning a further profound milestone to analyze the situation in Shenyang. In 2023, we plan to commission an independent audit. This assessment will be based on an independent view and shall provide 100% transparency to our management team. Finally, we provided ambitious performance programs to make our brands fit again and work on improved cash flows and profitability performance. We are convinced that the Volkswagen Group has a compelling equity story.
We provide a unique brand portfolio, and we serve a global customer base with exciting products. We have a crystal-clear concept how we will frame our capabilities to succeed in the automotive transformation. Our size is unique, therefore, we benefit from economies of scale in key technology fields. We deliver an attractive financial outlook. Our steering focuses great performance in profits margins and in cash flow management. Finally, we steer our company flexibly with a high level of entrepreneurship, and we do expect the entire company to work with a clear orientation towards the capital market. After nine months, intense and successful teamwork, I'm personally convinced of the Volkswagen Group equity story and its huge future potential. I, myself, put skin in the game and invested myself, and will continue to do so in the future. Thank you all for your attention.
Thank you. Quite some content to digest, right? Yeah. You see here the people working, before we head to the Q&A. I would like to thank everyone who has participated over the webcast. It was a great pleasure to have you around. The webcast session is now ending.