Research and Development

Forward-looking mobility solutions with brand-defining products and services would be unthinkable without innovation. This makes our research and development work essential for sustainably increasing the value of the Company.

Together with our Group brands, we have launched measures based on our Group’s strategy to link development activities across the Group. At the heart of this is an efficient, cross-brand development alliance characterized by a close network of our experts, collaboration on an equal footing, an innovative working environment and the pooling of development activities. The development alliance plays a major part in driving the Volkswagen Group’s transformation and helping to make it fit for the future.

In view of this strategic focus, we concentrated in the reporting year on continuing to develop forward-looking mobility solutions, establishing technological expertise to strengthen our competitiveness, expanding our range of products and services and improving the functionality, quality, safety and environmental compatibility of our products and services.

CO₂ fleet emissions

We use the strategic indicator of CO₂ fleet emissions in Europe and the United States to evaluate the effectiveness of our measures to reduce CO₂ emissions emitted by our vehicles.

The Volkswagen Group’s new passenger car fleet in the 27 EU member states including Norway and Iceland (EU27+2) emitted an average of 118 g CO₂/km (according to WLTP – Worldwide Harmonized Light Vehicles Test Procedure)¹ in the reporting year in accordance with the statutory measurement bases. The statutory target is 122 g CO₂/km (WLTP)¹. The Volkswagen Group thus more than met the EU’s CO₂ fleet target. All figures are subject to confirmation of CO₂ data within the scope of the official publication by the European Commission. The targets will be tightened as from 2025: the European Commission has thus set a target of a 15% reduction in CO₂ emissions compared with 2021, which corresponds to a CO₂ target of less than 100 g CO₂/km for our new passenger car fleet in the EU. A reduction of 55% has been defined for 2030, equivalent to a CO₂ target of less than 50 g CO₂/km. A CO₂ reduction target of 100% for passenger cars has been set for 2035. Given the changes in the general framework for the sale of electric vehicles (including the general market trend and state subsidies), achieving the CO₂ target for the new passenger car fleet in the EU in 2025 is a major challenge. We continue to aim to achieve the 2030 target.

The Volkswagen Group’s new light commercial vehicles fleet in the EU emitted an average of 190 g CO₂/km (WLTP)¹ in the reporting year according to the statutory measurement bases. The statutory target is 195 g CO₂/km (WLTP)¹. The Volkswagen Group thus more than met the EU’s CO₂ fleet target. All figures are subject to confirmation of CO₂ data within the scope of official publication by the European Commission. The targets will be tightened as from 2025: the European Commission has thus stipulated a 15% reduction of CO₂ emissions compared with 2021, which corresponds to a CO₂ target of less than 180 g CO₂/km for our new light commercial vehicle fleet in the EU. A reduction of 50% has been defined for 2030, equivalent to a CO₂ target of less than 105 g CO₂/km. A CO₂ reduction target of 100% for light commercial vehicles has been set for 2035. Given the changes in the general framework for the sale of electric vehicles (including the general market trend and state subsidies), achieving the CO₂ target for the new light commercial vehicles fleet in the EU in 2025 is a major challenge. We aim to achieve the 2030 target. The Volkswagen Group’s new passenger car fleet met the statutory requirements for the reporting year in the United Kingdom taking into account the statutory flexibilities. In Switzerland, the Volkswagen Group’s new passenger car fleet narrowly missed the statutory requirements for the reporting year, according to the preliminary data from the Swiss Federal Office of Energy. The Volkswagen Group’s new light commercial vehicle fleet fell short of the statutory requirements for the reporting year in Switzerland. The new light commercial vehicle fleets in the United Kingdom have been assessed separately since 2024. Volkswagen Commercial Vehicles met the statutory requirements for 2024 taking into account the statutory flexibilities.

CO₂ EMISSIONS OF THE VOLKSWAGEN GROUP‘S EUROPEAN (EU27+2) NEW PASSENGER CAR FLEET

in grams per kilometer (WLTP)

The Volkswagen Group’s new light commercial vehicles fleet in the EU emitted an average of 190 g CO₂/km (WLTP)¹ in the reporting year according to the statutory measurement bases. The statutory target is 195 g CO₂/km (WLTP)¹. The Volkswagen Group thus more than met the EU’s CO₂ fleet target. All figures are subject to confirmation of CO₂ data within the scope of official publication by the European Commission. The targets will be tightened as from 2025: the European Commission has thus stipulated a 15% reduction of CO₂ emissions compared with 2021, which corresponds to a CO₂ target of less than 180 g CO₂/km for our new light commercial vehicle fleet in the EU. A reduction of 50% has been defined for 2030, equivalent to a CO₂ target of less than 105 g CO₂/km. A CO₂ reduction target of 100% for light commercial vehicles has been set for 2035. Given the changes in the general framework for the sale of electric vehicles (including the general market trend and state subsidies), achieving the CO₂ target for the new light commercial vehicles fleet in the EU in 2025 is a major challenge. We aim to achieve the 2030 target. The Volkswagen Group’s new passenger car fleet met the statutory requirements for the reporting year in the United Kingdom taking into account the statutory flexibilities. In Switzerland, the Volkswagen Group’s new passenger car fleet narrowly missed the statutory requirements for the reporting year, according to the preliminary data from the Swiss Federal Office of Energy. The Volkswagen Group’s new light commercial vehicle fleet fell short of the statutory requirements for the reporting year in Switzerland. The new light commercial vehicle fleets in the United Kingdom have been assessed separately since 2024. Volkswagen Commercial Vehicles met the statutory requirements for 2024 taking into account the statutory flexibilities.

In the United States, the emission pool – comprising the Group brands Volkswagen Passenger Cars, Audi, Bentley, Lamborghini and Porsche, plus the Bugatti Rimac brand, which is not part of the Group – commits to the Greenhouse Gas (GHG) and Corporate Average Fuel Economy (CAFE) regulations. Due to a model year – the accounting period used in the USA – differing in length from the calendar year, internal calculations are used to determine the figures for the current and preceding model year. The average GHG CO₂ value (internal data as of September 2024) for the passenger car and light commercial vehicle fleets in model year 2024 is 138 g CO₂/km (model year 2023: 134 g CO₂/km). The statutory target is 117 g CO₂/km (model year 2023: 123 g CO₂/km). Taking into account the statutory flexibilities for the GHG and CAFE regulations, the Volkswagen Group endeavors to comply with applicable requirements – subject to confirmation by the authorities. The figure given for model year 2024 is also subject to confirmation by the US Environmental Protection Agency (EPA). Achieving the CO₂ target of approximately 111 g CO₂/km for 2025 represents a major challenge. For 2030 we aim to increase the electrification of our new vehicle fleet.

CO₂ EMISSIONS OF VOLKSWAGEN GROUP PASSENGER CARS AND LIGHT COMMERCIAL VEHICLES UNDER GHG STANDARDS IN THE USA

in grams per kilometer for the model year

Fuel and drivetrain strategy

With a view to the legal regulations on emissions, we are currently developing a forward-looking vehicle and drivetrain portfolio: we have set ourselves the objective of increasing drive system efficiency with each new model generation – irrespective of whether it is a combustion engine, a hybrid or a purely electric drive system. The Volkswagen Group closely coordinates technology and product planning with its brands so as to avoid breaches of fleet fuel consumption limits. As part of our electrification campaign, we want to offer our customers worldwide an increasing range of battery-electric models, from high-volume models to premium vehicles. To this end, in addition to the Modular Electric Drive Toolkit (MEB), we have also developed an all-electric platform for our premium and sports brands – the Premium Platform Electric (PPE). Furthermore, we are currently concentrating our energies on designing the Scalable Systems Platform (SSP), the successor platform for our future all-electric vehicles. The strategic goals of this SSP platform are to further reduce variance by consistently enhancing synergies and thus tapping into considerable savings potential.

To offer sustainable, affordable mobility in the future for as many people around the world as possible, we offer a range of drivetrains with a focus on electrification. From today’s perspective, conventional combustion engines will still continue to make up a large share of the drive portfolio in the coming years. In the interest of using resources responsibly, it is therefore essential to further enhance this engine segment and systematically consolidate it for specific markets, such as via the new Premium Platform Combustion (PPC). Powertrain measures such as significantly more sophisticated exhaust gas purification or increased use of hybridization of drivetrains, as well as vehicle measures such as optimized aerodynamics or reduced rolling resistance will be necessary to fulfill future emissions standards. We are preparing intensively for this as we develop our product portfolio.

It is more important to us than ever to rigorously pursue the modular approach. We are reducing the number of individual modules so that we can make a large product portfolio economically viable. For example, we are reducing the number of versions of conventional combustion engines in the Group in the long term as part of our transformation towards e-mobility. This will create capacity for the development and production of new electric drives.

Life cycle engineering and recycling

Technological innovation for reducing fuel consumption is not enough on its own to minimize the effect of vehicles on the environment. We consider the environmental impact caused by our products throughout the entire vehicle life cycle and at all stages of the value chain. This includes the manufacturing process with the associated extraction of raw materials, the production of materials, the processes at our suppliers and our own production operations at our sites, the use phase with the resulting vehicle emissions and the necessary supply of fuel and charging current, and ultimately the recycling of the vehicle at the end of its life cycle. Using life cycle engineering, we identify the stages of the life cycle at which improvements will have the greatest effect and develop appropriate solutions. Recycling, for example, is an important means of reducing environmental impact and conserving resources. When developing new vehicles, we therefore pay attention to the recyclability of the required materials and give recommendations that enable good separability of materials. We specify the use of secondary materials if these meet the same quality standards as primary materials. Under the European Directive on end-of-life vehicles, passenger cars and light commercial vehicles must be 85% recyclable and 95% recoverable. Our vehicles registered in Europe comply with these standards. We use the life cycle approach to monitor our climate protection targets as well. For this purpose, we have developed the decarbonization index (DKI) as a parameter, which also recognizes the emissions of an average Group passenger car throughout its life cycle.

Leveraging synergies increases efficiency

When developing vehicles, we cooperate closely with our brands to leverage synergies. The joint strategy of our development alliance involves, for example, making the Group more competitive and viable in the long term by deploying resources more effectively and efficiently in the research and development of new mobility-related technologies, products and services. In our Group-wide development alliance, the brands therefore not only work with each other, but also for each other on key technologies, forming cross-brand networks of expertise to address topics of importance for the future.

The Volkswagen Group further streamlined its innovation portfolio, gearing it towards multibrand technologies of the future in order to provide effective support for the brands’ capacity for innovation. In Technical Development, the brands play a leading role within the Group in increasing efficiency and leveraging synergies in pre-development, module variance, components, parts and processes, with the aim of improving the consistency of the innovation process.

We coordinate the use of modules centrally to reduce costs, capital expenditure and complexity. We are seeking to reduce expenditure in the modular toolkits, while at the same time facilitating widespread electrification and a focus on autonomous systems. We intend to achieve this using streamlined platforms that synergize but do not overlap. To this end, the individual Group brands draw on the modular toolkits, thus creating synergies between the various models of a product line, as well as across the product lines. By optimizing the toolkits, we are giving ourselves the financial leeway needed for developments in topics of importance for the future.

Connectivity and automated driving

The mobility of people and goods is a prerequisite for economic growth and social development. But natural resources are dwindling and climate change is advancing. Customers call for comprehensive mobility concepts to minimize the environmental impact. Such solutions need to be efficient, sustainable, crisis-proof, customer-oriented and accessible anytime and anywhere.

We are researching and developing such concepts in our Group-wide alliance: when shaping the future of mobility, we are looking not only at the automobile and related services, but at all modes of transport, transport infrastructures and people’s mobility habits. Digital connectivity and automated driving allow for completely new approaches to solving problems. They can help us play our part in a comprehensive mobility system for the future and drive forward our industry’s transformation.

Software forms the basis. This is why the Volkswagen Group has declared software development to be one of its target core competencies in its strategy. The aim is to develop a sustainable, convenient, connected, safe automotive experience for the customers of our Group brands, with the support of synergetic Group software entity, CARIAD.

The Volkswagen Group systematically enhanced its software governance in 2024. CARIAD takes the lead on the cross-cutting technologies of automated driving, infotainment, and the field of data, backend and the cloud as part of software governance across all the Group’s architectures and software technologies. The aim is to make development and delivery of software faster and more efficient for the Group’s brands and to establish an even closer cooperation model between CARIAD and the Group brands in which the Volkswagen Passenger Cars brand takes charge of the E³ 1.1 electronic architecture and Audi of the E³ 1.2 electronic architecture.

CARIAD’s developers work in innovation centers at sites in Germany, Europe, China and the USA. The German parent company CARIAD SE employs around 6,000 specialists who drive the development of the following solutions in the Group:

• Integration of software for the global electronic architectures E³ 1.1 for volume vehicles, E³ 1.2 for premium and luxury vehicles, and the China Electronic Architecture (CEA) in collaboration with XPeng for vehicles developed in China
• Connection to scalable cloud platforms
• Infotainment platforms
• Driver assistance systems, automated parking functions and highly automated driving for private mobility
• Preparation of data as the basis for new mobility services and digital business models

Thanks to the transformation of CARIAD, we achieved supply capability in 2024, enabling the Audi and Porsche brands to launch their first models based on the new E³ 1.2 electronic architecture on the market. CARIAD’s software is used and is scalable in the all-electric vehicles from the PPE platform and the combustion-engine vehicles from the PPC platform.

CARIAD also delivered regular software releases and online updates for vehicles based on the E³ 1.1 and other existing architectures from the Volkswagen Passenger Cars, Škoda, SEAT/CUPRA and Audi brands in all major international markets in 2024.

Another key focus for CARIAD in 2024 was development of the Group’s own SDV Hub, in which CARIAD, Audi and Volkswagen jointly designed the basis for the next generation of software-defined vehicles (SDV). The uniform E³ 2.0 future architecture was reoriented and transposed to an SDV zone architecture. Responsibility for the development of SDV and the zone architecture for CARIAD was transferred to the joint venture Rivian and Volkswagen Group Technologies upon its formation.

The next generation of vehicle software is also designed to pave the way for the autonomous driving functions of the future. The development of autonomous driving is a core element of our Group strategy, with CARIAD responsible for developing partially and highly automated driving functions for the Volkswagen Group’s brands. These applications are to be progressively introduced in the new vehicle models at different performance levels. Volkswagen Commercial Vehicles is responsible specifically for the areas of Mobility as a Service and Transportation as a Service (MaaS/TaaS). Autonomous driving will be linked with new service models, i.e. shared mobility in these areas using robotic shuttles and vans.

Automated and autonomous drive technologies are being developed with development partners.

Pooling strengths with strategic alliances

The aim of our strategy is to transform our core business activities and to expand the mobility solutions business area at the same time. It is decisive to the success of this plan that we place our innovative strength on even broader foundations.

Within the Volkswagen Group, we combine our technological innovation activities in the Volkswagen Group Innovation unit. At seven locations worldwide in the USA, Europe and Asia, employees are working on sustainable solutions for urban and interurban mobility systems. Technologies and activities that are ready for pre-development are regularly transferred from Volkswagen Group Innovation to our Group brands to ensure that the areas of digitalization, sustainability and e-mobility receive continuous support in innovative projects. In this way, we are creating an agile innovation structure that allows us to initiate new milestone projects with innovative international partners, even at short notice.

Growth in the mobility sector is strongly defined through regional innovation activities. Volkswagen therefore concentrates its strategic venture-capital activities and partnerships in the Group’s international innovation ecosystem. This helps us to identify the regional needs of customers more precisely, to adjust our product range accordingly and to establish competitive cost structures. In doing so, we rely to a greater extent than in the past on partnerships, acquisitions and venture-capital investments and manage investment selection centrally so as to generate maximum value for the Group and its brands. Under this aspect, we have an alliance for light commercial vehicles and electrification with the Ford Motor Company involving a total of three vehicle projects: a city van (Ford Transit Connect based on the Volkswagen Caddy), a mid-size pickup (Volkswagen Amarok based on the Ford Ranger) and a one-tonne cargo van. The Ford Transit Connect and the Amarok have been on the market since 2022. The New Transporter (based on the Ford Transit Custom) had its world premiere in 2024, with the first vehicles delivered at the end of the year. In addition, Ford will use the MEB developed by Volkswagen for two electric volume models. The aim of the cooperation is to place both Volkswagen and Ford in a position to improve their competitiveness, tailor their products to better meet the needs of customers worldwide and at the same time leverage synergies related to cost and investment.

To design the framework conditions for the approval and introduction of our own self-driving system, we are actively involved in public projects. The experience we are gathering here benefits the Group brands and thus our customers.

The software subsidiary CARIAD is responsible throughout the Group for developing automated driving functions for our brands’ customers. In the Automated Driving Alliance, CARIAD and Robert Bosch GmbH are working to make partially and highly automated driving suitable for the volume segment. The functions to be developed will provide car drivers – within the regulatory requirements and limits – with comprehensive assistance when driving, such as providing both an active lane change assist system and a hands-free function when driving on the highway. While drivers will remain responsible for driving the vehicle, they will be able to take their hands off the steering wheel on the highway with the hands-free function, for example, when driving in their own lane.

CARIAD uses local partnerships in the Chinese market to further consolidate development expertise. The Volkswagen Group announced its partnership with XPeng in 2024: CARIAD China, Volkswagen Group (China) Technology Company and XPeng are working together to develop the new zonal electronic architecture, China Electrical Architecture (CEA), for the Chinese market.

Other key technology partnerships were promoted in the region in 2024: CARIAD is using a local partnership with Horizon Robotics to further consolidate development expertise in highly automated driving functions in the Chinese market in the joint venture Carizon.

CARIAD entered into a partnership in China with the software provider ThunderSoft in 2023. The focus of the CARThunder joint venture is a new customer experience when it comes to infotainment and connectivity.

CARIAD is also committed to open collaboration in the global developer community. In 2024, CARIAD published its Open Source Manifesto, was the first platinum member from the automotive sector to join the Zephyr Project, and joined the Linux Foundation. In addition, as a strategic member of the Software Defined Vehicle working group run by the Eclipse Foundation open-source community, CARIAD is involved in developing automotive software more efficiently and promoting innovation.

Volkswagen and US electric vehicle manufacturer Rivian announced their intention to establish a joint venture in June 2024. After reaching technical milestones and obtaining the necessary official approvals, Rivian and Volkswagen Group Technologies commenced activities in the reporting year. The two partners hold equal shares in the joint venture, which operates as an independent company. The aim of the partnership is to develop the next generation of software-defined vehicle (SDV) architectures to be used in future vehicles of both companies. The joint venture builds on Rivian’s software and electrical architecture to facilitate the joint development of best-in-class architectures and software for SDV of both partners.

Key R&D figures

In fiscal year 2024, we filed 6,740 (5,792) patent applications worldwide for employee inventions, the majority of them in Germany. The trend that an ever-increasing share of these patents is for important cutting-edge fields continued in 2024. These fields include driver assistance systems and automation, digitalization, e-mobility (including battery technology) and artificial intelligence.

The Automotive Division’s total research and development costs in the reporting year amounted to €21.0 (21.8) billion and were 3.6% lower than in the previous year; their share of the Automotive Division’s sales revenue – the R&D ratio – was at 7.9 (8.1)%. In addition to new models, our activities focused above all on the electrification of our vehicle portfolio, digitalization, new technologies and enhancements of our modular and all-electric toolkits and platforms. The capitalization ratio was 48.8 (51.2)%. Research and development expenditure recognized in profit or loss in accordance with the IFRSs increased to €18.0 (15.8) billion.

As of December 31, 2024, our Research and Development departments – including the equity-accounted Chinese joint ventures – employed 62,780 people (+5.3%) Group-wide, corresponding to 9.2% of the total workforce.