Research and development risks

For this risk category, the likelihood of occurrence is classified as high (previous year: high) and the potential extent of damage is classified as medium (previous year: medium).

The most significant risks from the regular GRC process and QRP result from the inability to develop products in line with demand and requirements, especially with regard to e-mobility and digitalization.

Risks arising from research and development

The automotive industry is undergoing a fundamental transformation process. For multinational corporations like Volkswagen, this means risks in the areas of customer/market, technological advances and legislation. One risk is posed by the implementation of increasingly stringent emission and fuel consumption regulations, taking new test procedures and test cycles (e.g. Worldwide Harmonized Light-Duty Vehicles Test Procedure, WLTP) into account, as well as compliance with approval processes (homologation), which are becoming increasingly more complex and time-consuming and may vary by country.

On a national and international level, there are numerous legal requirements regarding the use, handling and storage of substances and mixtures (including restrictions concerning chemicals, heavy metals, biocides, persistent organic pollutants). There is therefore a risk of non-conformity in the manufacture, procurement and introduction of products such as automobiles or replacement parts.

The economic success and competitiveness of the Volkswagen Group depend on how successful we are in promptly tailoring our portfolio of products and services to changing conditions. Given the intensity of competition and speed of technological development, for example in the fields of digitalization and automated driving, there is a risk of failing to identify relevant trends early enough to respond accordingly.

The latest from the world of physics and other scientific findings are used to plot our course. In addition, we conduct trend analyses and customer surveys and examine the relevance of the results for our customers. We counter the risk that it may not be possible to develop modules, vehicles, or services – especially in relation to e-mobility and digitalization – within the specified time frame, to the required quality standards, or in line with cost specifications, by continuously and systematically monitoring the progress of all projects; at present also amidst the Covid-19 pandemic.

To reduce the risk of patent infringements, we intensively analyze third-party industrial property rights, increasingly in relation to communication technologies.

We regularly compare the results of all the analyses with the respective project’s targets; in the event of variances, we introduce appropriate countermeasures in good time. Our end-to-end project organization supports cooperation among all departments involved in the process, ensuring that specific requirements are incorporated into the development process as early as possible and that their implementation is planned in good time.

Risks and opportunities from the modular toolkit strategy

We are continuously expanding our modular toolkits, focusing on future customer requirements, legal requirements and infrastructural requirements.

As volumes rise, however, so does the risk that disruption in the supply chain – for example, as a consequence of the pandemic – or quality problems will affect an increasing number of vehicles.

The Modular Transverse Toolkit (MQB) is an extremely flexible vehicle architecture that was created to allow conceptual dimensions – such as the wheelbase, track width, wheel size and seat position – to be harmonized throughout the Group and utilized flexibly. Other dimensions, for example the distance between the pedals and the middle of the front wheels, are always the same, ensuring a uniform system in the front of the car. Thanks to the resulting synergy effects, we are able to cut both development costs and the necessary one-time expenses as well as manufacturing times. The toolkits also allow us to produce different models from different brands in varying quantities, using the same equipment in a single plant. This means that our capacities can be used with greater flexibility throughout the entire Group, enabling us to achieve efficiency gains.

We have also transferred this principle of standardization with maximum flexibility to the Modular Electric Drive Toolkit (MEB) and Premium Platform Electric (PPE), concepts developed for all-electric drives. The synergy effects and efficiency gains offered by the modular toolkit strategy will give us the opportunity to bring e-mobility into mass production worldwide with the introduction of the first MEB- and PPE-based vehicles.