Good day, ladies and gentlemen, and welcome to the Volkswagen AG live audio webcast and conference call on the new group strategy 2030, NEW AUTO, mobility and for generations to come. For your information, today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Helen Beckermann, Head of Group Investor Relations for Volkswagen AG, and Ms. Nicole Mommsen, Head of Global Group Communications for Volkswagen AG. Please go ahead, madams. Ladies and gentlemen, we would now like to welcome you back to this dual Q&A session, directed once again towards investors, analysts and media. Firstly, we would like to apologize if you had any technical difficulties earlier in connecting to the stream. Our replay will be available as soon as possible on the ir website. Please note for today that we would very much appreciate you sticking to topics of a strategic nature. We have already published a pre-release of selected preliminary figures for H1. On coming Friday the 16th, our Volkswagen Group deliveries to customers for the first half of the year will be available. On the 29th of July, our group events on the half yearly financial report will take place, where, as usual, you will be able to ask any operating questions relating to H1. We look forward to open dialogue. Operator, I'll hand back to you to start the Q&A, please. Thank you, madam. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, to ask a question, please press star one. Our first question comes from the line of Stephen Reitman from Société Générale. Please go ahead. Yes, good afternoon. Thank you for doing this event. Just again, some questions about how the EV uptake is looking at the moment. If you could comment about the situation in China. I might have missed something because of the problems with the live stream. If you could talk about the agency model and the number of ID centers you're building out in China and how that is going to impact sales. Also, could you comment as well about the software updates and how you're now in terms of rolling that out. Thank you. If I may. Herbert Diess speaking. Uptake for EVs is good. We are on our plans for this year. We have a relatively steep ramp up because of the launches of the new models. We have been delivering 190,000 in the first half year, only EVs, then the same amount in plug-in hybrids. Models are coming along well through the lineup. We have basically lead times for e-tron, 4 months, 4.5 months. The Taycan still 3-4 months delivery time. Uptake for ID.4 is good. For Enyaq is excellent, close to 5 months delivery. e-tron GT, 5 months delivery. It's good. Order intake is around 14% now, which is more than we need. We are very happy with the uptake in Europe. Our launches in the U.S. are going really well. ID.4 is basically outsold. In China, as you said, we had a bit of a slow start, but it's coming along now well. We doubled sales basically last month, and the ramp up is coming. We have high order intake for the ID.6, which is the seven-seater model now, which seems to suit Chinese necessities even better than ID.4. We have a very close focus on all the, let's say launches. We are confident that we will make our volume. Software updates are also going well, though. Volkswagen first volume brand started now updating the reception. The first group receiving the updates was very positive. It's the first time that we do software updates in volume segment, and it's going well. We will increase the speed now and we have basically every 12 months or so, we are planning to do another update, enhancing functionalities, functions. Yeah, everything okay. I'm happy. Thank you. Thank you, Herbert. Oh, thank you. May we please take the next question, operator? Certainly. Our next question comes from George Galliers from Goldman Sachs. Please go ahead. Yeah. Thank you for taking my question, and thank you for the very interesting presentation. I wanted to ask about the initial test program in Hamburg in 2025. Could you give us some insight into whether this would be more focused on the pooling or the hailing side, how many vehicles you're thinking about for this initial test fleet and how long you will effectively have the test pilot program in place before you anticipate you'll be able to roll this out at scale to other cities across Europe? Thank you. Yes. Christian Senger speaking. It's a pleasure answering your question. Yeah, we aim to start in Hamburg with a commercial service without any Safety driver in the vehicle, and we try to do this in 2025. We are utilizing our service of MOIA already. Why MOIA? MOIA is expert in pooling, which is definitely favorite in European city administrations. We are focusing also on pooling here. We will combine the test of the autonomous driving system together with the interaction of real customers. We start the test phase roughly in 2023, and we have two years of testing and trials and proving that the system is good enough to go and has the positive feedback from the society. Thank you, Christian. Thank you. Operator, can we take the next question, please? First, Horst Schneider from Bank of America, please go ahead. Yes, thank you for taking also my questions. It's Horst from Bank of America. The first one that I have that relates to your targets that you communicated, the 2025 target update is well received. I don't know what is happening beyond 2025 in terms of financial targets now. Could you maybe elaborate a little bit on the direction of travel that we should expect thereafter? I know the time frame is very long, but at least maybe you can say to what extent you expect revenues to increase, market shares to gain, and if the margin is getting even higher than 8%-9%. The other question that I have that relates a little bit to the CapEx topic, because from time to time, you mention also that you want to IPO, for example, your battery activities, or maybe you think about a potential Porsche IPO. I ask myself, why would you need this cash? Because at the moment, you have got a very high level of cash. Looking at your profit margin target, I think there will continue to be a high level of cash generation. What is the need for maybe external funding for this growth strategy that you have? In that context as well, do you consider maybe any major acquisitions? Because we heard last time that you maybe consider to acquire, for example, a rental car company like Europcar. Thank you. Yes. Well, thanks for your question. I try to answer them in the right line. First, your margin question, 2025 and beyond. I mean, it's pretty straightforward that we increased our margin expectation, and it's basically as a foundation for the planning round. I think first and foremost, we have to back that with a fundamental planning in the Planning Round 70. Three major levers. First is we want to keep our ICE cars competitive and provide cash flows, and I talked a little bit about the levers there. Second, we see good margin improvement of our BEVs and eventually even margin parity within the next two to three years. Third, we work hard on our costs. Today I discussed a little bit on the elements of our cost program. Last but not least, we also have a good path on the battery cost. That should give us basically the foundation for this 8%-9% ambition. Beyond, it's been really difficult to project from today. We will rely on software revenues. We think we have a very good plan with our initial investment from today to gain a significant part of the revenue pool that will open in 2025 and beyond on the software side, specifically in terms of autonomous driving. It's really too early to give a very concrete figure there. Second, CapEx. As explained today, the next two to three years, we see upfront investment because we have to keep our ICE cars competitive and parallel ramp up battery electric cars and invest in software. But with the run out of the ICE cars, we see a good chance to reduce CapEx to 5%. On the other hand, what we also show today, the logic, how we want to invest into these platforms and value drivers will change a little bit. We won't do everything by ourselves, and we will work through corporations, we will work through partnerships, and we have to finance these partnerships as well. A good example is our BEV strategy. As said before, we will need 6 gigafactories for our demand in Europe alone. We expect from today that we have one gigafactory on our books, so basically one gigafactory in CapEx. The others we want to secure through partnerships and alliances. For these partnerships, we need basically cash flows as well. Same holds true for building up of a mobility platform. We discussed options to build it by ourselves, discussed options to build it together with a rental car company. If we want to acquire or partly acquire a company, for example, like a rental car company, that needs cash as well, but that cash won't sit on our books. Thank you, Arno. Operator, may we take the next question, please. Patrick Hummel from UBS, please go ahead. Yeah. Yeah. Hi, good afternoon, everybody. I would have a few questions. First one, probably to Herbert regarding the 2030 EV share of 50%. You know, if I put everything together, you're really going all in with the platform strategy, vertical integration, batteries. You're sort of running the ICE business as a cash cow. We're hearing regulators are accelerating the phase-out of ICE cars. Your premium brands talk about an electric-only future. Why is it only resulting in a 50% EV share globally? Shouldn't this be much higher, given that Volkswagen has been the leader amongst the global incumbent OEMs to go on that all-electric journey first? My second question, not sure if that goes to Christian or to Arno. It's great that you talked about these new business opportunities and every new field of revenues and profits related to software. What are you going to do over the next couple of years to really crystallize the value? Because it feels that it's you know, predominantly R&D for the next few years. Is there any activity that's either consumer-facing or business-facing that will make the revenue potential more visible, an entity that could be, you know, for which the value could be crystallized that would make the market say, "Hey, okay, now this is getting, you know, or moving from an abstract long-term revenue opportunity towards something really tangible." My third question, I'm not sure if Thomas is on the call. Regarding the decision to partner with Gotion for the battery cell plants, I'm just curious what drove that decision. What made you favor Gotion over the leading Korean names, for example, which already have a track record also when it comes to joint ventures with OEMs? Why Gotion and not those partners? Thank you. Patrick, the 50% EV share is already real. It will be really challenged, not only for us, because at the end to comply in Europe, finally, you end up at a 50% EV shares. Only for us, that means 6 gigafactories in Europe, which have to be financed, built up. It's not only the factories. You have to make sure supply chains. There's, you know, you need more material, you need mining activities, you need treatment for the raw materials. To do that in kind of 8 years to achieve those 50% will be really challenging, not only for us, for the whole industry. I think Thomas is preparing well. We will do that with partners, allowing us for scaling faster. If we would do it by our own, it would be impossible. I think we find the right way forward. We are standardizing a lot, but 50% will be a challenge. 50% also will be a challenge because that would mean that in Germany, we probably would end up already at 70%-80%, no, if you look at entire Europe. Still, we will have markets, so why not more than 50%? Because we don't think that it makes a lot of sense to electrify Latin America, parts of China because of a lot of coal-based energy production, and also some other regions, South Africa, where we have a plant. It just doesn't make sense, or India. It only makes sense if you have green energy available, and we think until 2030 we will have more green energy available, but still. It's ambitious. I think if we achieve it, we will be, I'm very happy, and I think there won't be anyone having a chance overtaking us until then. Crystalized value in the, what you call autonomous driving, yes, I think we will see progress. On the other hand, our figures show that the big impact on the automotive business or mobility business will come towards 2030. That has to do because it's really triggered by the possibility to autonomously drive the cars. Then you open up new revenue pools. You know, it's going to happen. A few things are going to happen gradually because we will have the customer closer to ourselves. We will have direct contact to the customer. We will keep the customer for a longer term when it comes to after-sales services. We will have more lease cycles, so we do more finance business. The business can gradually grow, but the big step change is really autonomous. Yes, I think you will be able to follow up when the first fleets are running. We will be able to have a clearer view how fast can we take out the driver, how fast can we scale, in which conditions it's running, and then we get a good plan. Towards 2026, Artemis and then rollout of Trinity, yes, you will see when the first cars are driving on the highways and, if people can work in the cars, then I think in two years, three years' time, you will have a more realistic judgment. We think that we are set up well, and also, we feel, comparing ourselves to our peers, we think we have a good plan. The last thing was for Thomas, no? The- Yeah. The cell lines. Potential partner. Yeah. Yeah. Yeah. Thank you. Hi, Patrick. Thomas speaking. Your question refers to why Gotion as a partner. First, I need to point out that Gotion is a really experienced cell supplier for a long time in China. It's a big one, sixth plant, more than 3,600 patents, more than 2,000 experts in depth development cells. We have a 20% share of Gotion. That means we are expanding our existing partnership, what gives us a much better leverage to work together. We even signed some months before a development agreement for further sales and designs to come. That means we are even working closely together to develop. Gotion, what is for us is important, is a leader of iron phosphate technology. What gives us or what will open the door for us to storage systems and entry chemistries, what is really important for us. Even Gotion has a broad supply chain. They do their own cathode supply and cathode material supply, which will help us also to secure raw material in the future. Finally, they bought into our Unified Cell concept, which is most important for us, Patrick. Hopefully answered all your questions. It does. Thank you very much. You're welcome. Patrick, let me detail a little bit more on where you can see this new revenue pools. As Herbert pointed out, there are basically three horizons. First is the topic software over the air updatability. The second then is really Level 4 that comes with our 2.0 stack and then autonomous driving. First, we will integrate the potential business of these three horizons in our planning round, and we might communicate then parts of that with our Planning Round 70 in November. Second, how can you really see that on our books? Software over the air should materialize already this year. It's not only that we want to sell additional features. What you also have to take into consideration, there are other chances. Like, for example, if we get cars back from a leasing cycle, we can update them over the air, get better residual value. This is the first level. As said before, basically Level 4 and beyond will materialize in 2025. This is a little bit the roadmap, and we give you more detail within our communication of Planning Round 70 in November. Thank you. Great. Thank you, Arno. May we now take the next question, please, operator? Certainly. As a reminder, if you find that your question has already been answered, you may remove yourself from the queue by pressing star two. We kindly ask you to limit yourself to one question in order to allow more people to ask their questions. Our next question comes from Christoph Rauwald from Bloomberg. Please go ahead. Yes, Christoph Rauwald here from Bloomberg. Thank you for taking my question. I have one regarding the brand group structure that you've outlined earlier. In the new group structure, you bundled the luxury brands together with Audi instead of Porsche like you did before. Should we see this as a strategic step to have the option for a potential Porsche IPO if needed, or are there other reasons for this step? Thank you. The consideration was that really, we have to put premium together. So far, Bugatti was still dependent here. It was integrated more or less in Volkswagen, which didn't make a lot of sense. Now, because technology is so different, it's different engines, different chassis technology, and it just increases complexity. The move to hand over Bugatti to Porsche and then to go into a minority stake, selling majority, I think makes a lot of sense. It's good potential. We reduce complexity. Porsche will stay close to Bugatti. They have much more synergies than Volkswagen did, and they together with Rimac, I think they are in good shape to electrify also those segments in a very efficient way. The relationship between Porsche and Rimac is very close when it comes to sport electrification. That makes a lot of sense. The next, let's say, trail we have been running so far was consolidate the premium business in one basket. We have now a very competent team at Audi with Markus Duesmann at the helm, with Hildegard Wortmann, this huge background in premium. The team is really. Markus Duesmann's background is also motor racing, sports cars. We have also motorbikes, by the way. We have now a chance to organize also the premium segment in a very efficient way, leveraging all synergies between the brands. Most importantly, Bugatti, Bentley makes much more sense with Audi because if you consider Audi's situation that the brand for the brand, it's difficult to penetrate every segment Mercedes is occupying so far. Combined with Bentley leveraging the same technology when it comes to autonomous driving, drivetrains with Audi makes a lot of sense. We think that the premium set up now with this very close tie-ups between Bentley and Audi, also leveraging the synergies in the sports business with Lamborghini and the top-level sports cars from Audi, it makes really sense for us, and it takes away complexity from the group. We really let them run. Arno is also changing the reporting, so the reporting will change into a kind of premium group structure, and the group will pull out of the most decisions, at least of the detailed decisions. We only will intervene anymore when it comes to major platform changes or brand acquisitions or other things. That is really a step change, and we think we are really well organized. We have three groups. Volume, clearly led by Volkswagen, providing all the economies of scale, all the platforms and guiding Škoda and Volkswagen Nutzfahrzeuge, and also CUPRA into this next era. I think it's very compact, and the ties are very close. It's not anymore only competition between the brands, but they're really working good together now and leveraging synergies of scale. The other group then is premium, clearly led by Audi. Then Porsche, we really let Porsche go fast. They are really fast. They are not only building fast cars, they are fast in developing, they have shorter cycles, and we want them to really only pick the right economies of scale from the group, but carry on their own way and their own strategy. That, I think, makes us really strong as a group, no. We are really strong in volume leveraging all synergies. We are really strong in premium, which are different segments, no. The synergies are different, and the business logics are different. Then we have Porsche, which is a kind of its own. It's really, I think there's very little comparison with Porsche, and I think they're doing best if they focus on their business and staying profitable and fast. Thank you. Thank you, Herbert. Could we please take the next question, operator? Tim Rokossa from Deutsche Bank, please go ahead. Yeah, good afternoon. Thank you very much for taking my question. It's Tim from Deutsche Bank. Maybe to Herbert or Christian, when you say you expect a similar market share for BEVs compared to your ICE market share right now, it obviously depends on when you launch BEVs on a larger scale in the respective region. In which year should we judge you by that target on a global basis, and then specifically in China? Then just as a follow-up to a previous question, because I think that's quite important, the software-enabled revenues, Arno, is the share of revenues that you intend to have in 2030 similar to what you see for the global auto pool that you display on your slide? Or do you expect something much smaller? Thank you. On the EV side, our ambition is clearly to get higher share in EVs than on the ICE business. Now we are first mover, and our investment was big with the platforms we are putting there. And if you look at the brands, now Audi is pioneering the premium segment, when it comes to electrification. Volkswagen is pioneering the volume segment. That should result in a higher shares of market shares, at least in our home regions, no. That should apply for Europe. The target is that we have to defend this position, the actual position of ICE in China, which will be more difficult because, you know, we are in China, we have a very high market share. It's about over 20% market share in a market where we have fierce competition from local producers on the ICE business. The Chinese industry was geared up to take the market shares away with the electrification. But still, we think there's a chance to achieve that. I think our setup is well. We have two dedicated plants for our MEB products. We just founded two joint ventures with majority, one for Audi, one for Volkswagen, dedicated to EVs. We have a 20% stake in Gotion, which is one of our major battery suppliers, and we are building up facilities for EV-only plants. We are also ramping up our software capabilities in China. We have a subsidiary now from CARIAD, which is also already about 800-900 people strong, software development team. We will fight for achieving similar market shares in EVs than we currently have on the ICE business, because we consider China as one of our home markets and we will do the utmost to defend this position. For sure, it will be more difficult than it's probably in Europe, which is our home turf. In America, we had a very good start now with our electric cars. I think we should be soon in a position where we have a better position on the EV side than we have on the ICE side. You know, we are only limping around 4%, 4.5% in the United States total market share. That's not our target. Our strategy towards 2030 is clearly focused that we should get close to a 10% market share in the United States, and the way forward is electrification. We will come forward in the next months with an aggressive plan for bringing more cars, more aggressive volume aspirations to the United States. The target is to be as soon as possible on the EV side in a better position than on the ICE side, no. I think it's an historic chance because, yeah, we have invested in charging infrastructure about $2 billion. We are among the first investors in EV production sites with Chattanooga. We are investing in local battery production. We made the right decisions. We come with good product momentum. The ID. Buzz is coming back to the United States. ID.4 should be selling well, and we will add more product still. We think we have a historic chance to get us in a better position in them, mainly through the Biden plan and through the electrification, because now everyone starts with a white sheet of paper. We already have some drawings on that sheet. Yes, our aspiration clearly is that our market shares in BEVs or NEVs should be higher, at least at the same level as ICE. Tim, you asked for the third revenue pool, and let me explain a little like that. I mean, Herbert said or Herbert explained that we have a good chance to increase ICE or at least keep ICE market share and even increase our BEV market share for various reasons Herbert just mentioned. In that third revenue pool, we think of four layers. The first layer is basically the autonomous stack, the software stack. The second layer is somebody has to build special purpose cars for mobility as a service, transport as a service. The third layer is running the fleet, and the fourth layer is running the mobility platform. So we have to distinguish between revenue pools and profit pools. Where we need to and want to get in is the first layer, the software stack, together with Argo, and basically the mobility platform. From today's perspective, running the fleets will be also interesting, but it might be not as profitable as the first and the fourth layer. We have to decide how big we want to be in running the fleet, and that depends on our then basically market share. We basically concentrate rather on the revenue pools, on profit pools, and enter the segment or the layers we think that are profitable, and this is for sure Level 1 and 4. In order to be successful in Level 4, you have to have certain competencies in running a fleet, not on a global scale, but at least as a nucleus. This is how our strategy currently works. Of course, we work on special purpose vehicles as well, but the focus is, for the time being, on Level 1 and Level 4, and the prerequisites we need to be successful there in the other two layers. You want to add something, Christian? No. Thank you. Arno, could we take the next question, please, operator? Larry Vellequette from Automotive News, please go ahead. I was going to ask another question, but something Dr. Diess just said I want to follow up on. First, can you clarify when customers will be able to buy a Level 4 equipped vehicle, especially customers in the U.S.? And number two, if I'm looking at your market share rate currently in the U.S., right now you're at about 2.5% through the first half of the year, and you envision that quadrupling by 2030? 2.5% is probably Volkswagen brand alone. Now, with all our input costs, we should be close to 4%. I can't say exactly now whether it's 4.5% or so. This is where we basically run around. Actually, we are very happy with the development in the United States because we could increase profitability quite a lot, and the new lineup is coming along well. Also, we are suffering constraints because of chip supply. Our team, and I had a chance to talk this morning with Scott Keogh, they are really upbeat because we are making a lot of progress. The new only SUV lineup is coming along well, and the uptake for EVs is good. Yes, this is not where we want to stay because, you know, we have premium brands, we are a volume manufacturer, we are running at over 20% in China, over 20% in Europe. Our aspiration has to be 10% in the United States. Now, whether we end up then at 9% or at 12%, I can't say, but the aspiration has to be 10%. On the other question. Four, you said? Level four. Yeah, Level 4, sorry. Level 4 rollout will start with our Artemis project, which is basically where we are focusing all our technology stack, the next software stack. The rollout will begin end of 2025, so I would expect 2026, we should be able to drive Level 4 in Europe, and then a little bit later in the United States. Thank you, Herbert. Operator, can we take the next question, please? Stuart Pearson from Exane BNP Paribas. Please go ahead. Good afternoon, everyone. Just wanted to come back to the ICE, the parity point that you mentioned in two to three years, and just follow on from some of the questions there. I guess I wanted you to comment a little bit on how that might look, regionally, because I guess we think about China. There certainly seems to be no shortage of local players willing to price their range and technological capabilities quite aggressively, and subsidies are lower. On one hand, I presume it might take longer there. On the other hand, I guess the U.S., we're getting some generous subsidies, but also fuel costs are lower. What's the break-even timing for the U.S. and are EVs an opportunity perhaps for you to improve the profitability you struggled with there? That's my main question. The one quick add-on is just some of your peers are now thinking about disclosing BEV profitability and revenues, et cetera, separately from ICE. Is that something you'd consider in the next few years? Thank you. Yeah, thank you, Stuart. Let me basically explain a little bit the mechanism behind it. The parity depends on, of course, the margin of the ICE cars and the margin improvement in the BEV. Of course, depending on local legislation on what we have to do in terms of emissions, we see different margin expectations for the ICE business. For example, Euro 7 will deteriorate margins in Europe. Of course, we have to work with pricing against that. There might be regions where the deterioration of ICEs will be slower due to like ICE volume are higher and also from a regulation point of view. On the other hand, battery costs will improve. Volume gets better, scale gets better, battery costs will get better, and also factory utilization will improve. The principle of margin parity, we will see in every region, and there might be regions where we see it faster, and there might be regions where it takes a little bit longer. From today's perspective, it might be a little bit earlier in Europe, and it might take a little bit longer, for example, in the U.S. We see that principle concept, you can apply throughout all the regions. Thank you. Arno, may we take the next question, please? As a reminder of time, we kindly ask you to limit yourself to one question in order to allow more people to ask their questions. The next question comes from José Asumendi from JP Morgan. Please go ahead. Thanks very much. José Asumendi, JP Morgan. Herbert Diess and the rest of the team, thanks for the very interesting presentation. I just had one clarification. Would love to understand a bit better what is the difference between Gotion and Salzgitter collaboration that you have there, and the Northvolt and Salzgitter production that you have there. If you could provide some clarity there. Also, if you could provide any color, please, with regards to the Spanish gigafactory that you're building there. You know, who is your partner, and what kind of economics do you have in terms of sharing the investments. As that is clearly, I think, one of the drivers in order to hit your CapEx targets by 2025. Yeah. Okay. Thomas speaking. First question, Northvolt, Gotion. The difference is that we do the bigger demand of cells we have from 2025 on. The original idea, Northvolt, splitting Northvolt volume in two sides, Salzgitter and Skellefteå in Sweden, didn't work out. We are bundling the premium segment cells with Northvolt in Sweden, and we go for a different chemistry in a different segment with Gotion and Salzgitter for industrialization. That's the difference between Northvolt and Gotion. Different chemistry, different technology approach. Second question, Spain. Spain, we are really early phase. We will not tell little bit more details about partnering and so on. We are aiming for doing in Spain, but we need now officially formal approval of the public aid PERTE program we applied on. We see and we develop in the next weeks and communicate for sure the plan of partnering for Spain. Thank you. Thank you very much. Thank you. Thank you very much, Thomas. Operator, may we take the next question, please. Kai Mueller from Barclays, please go ahead. Hi. Thank you very much for the presentation. It was super interesting earlier. Maybe the first question was really on your increased margin target for 2025. Can you outline a little bit again what the drivers for that is? Is it really the break-even point between ICE and BEVs getting closer? Is it your fixed cost saving program coming through? Or how much of the current market environment do you extrapolate into that? Maybe if I just, you know, put one extra one. On your platform strategy, going to the SSP from MEB and PPE, what is your thought behind this, and how much carryover is there from the existing platforms, given you talked about EUR 800 million R&D, which seems very limited, actually, comparing to what you spent on the MEB platform at the start? Basically, talking about 2025, there's really three levers from our point of view that gives us the confidence. First, we said our ambition is to keep our ICE cars competitive. As in the presentation laid out, with the MQB, we think we have a unique opportunity to keep them competitive and keep the cash flow stable and the margin stable because we can bundle the remaining cars in factories. ICE, the MQB gives us the flexibility to keep scale high, even if the overall volume goes down. This is the first lever, competitive and margin of ICEs. The second really is increasing margins in BEVs. We have a disciplined ramp-up. We see better margins, factory costs. We see the scale in battery and also the R&D we have there. As in the ICEs, we have really good synergy concepts. For example, like, multi-brand BEV production in Zwickau, where cars are really differentiated in front of customers, but we use even more synergies. Third, you named it, cost and efficiency programs. Our productivity improves. We launched a program on purchasing 7% until 2023. Last but not least, our overhead program works quite well. We had a very promising start on that, and we are convinced that we will achieve the 10% reduction until 2023 versus 2019. That basically is the same as the 5% versus 2020 forecast. We think all these three levers gives us the confidence that we can achieve a higher margin. Regarding platform, you know, we are coming from a world where I think we have a lot of knowledge when it comes to platforms and a lot of positive experience, starting in the early days with Ferry and Piëch driving the company into that. We had several different architectures always. One more premium or two more premium defined with longitudinal mounted engines, one front-wheel driven, one back-wheel driven. We have the big volume on the MQB modular transversal toolkit in the combustion engine side. The world is changing, and as the engines are all the same, it's a rear engine and it's a front engine, so there's just one, and even the levels of sophistication, the electrification becomes very similar. We have 800-V in most of the segments. Battery sizes are scaling. We have different performance levels, probably from 80 to 800 kW, but there are many more commonalities than in the old world. We can use the same heating, cooling devices, electrics, electronics, is scalable. It's just now the point where you reconsider and say, "So why would you need two platforms?" I have to say, we probably if we would have thought earlier, we would have avoided to come forward with MEB and PPE. I think it's now time to consolidate those. For sure, we will use the existing investment to a maximum point in our investment in the engines, in the batteries, cells. But we will make sure that we are only using one toolkit for the group anymore. It's just the right time, and that should give us really very competitive economies of scale. We know now, this morning we had a decision-making meeting where we agreed on the different platform layers from 85 to 800 or 1000 kW with the different battery sizes. It's already on the build-up. We are working on it, but for sure we will carry on with whatever we can from the existing investments. Thank you, Herbert. For all participants and for the operator, I would just like to mention that we will extend the call for a further 10 minutes since we still have a lot of participants left in the line. Please, the next question, operator. Sure. Christiaan Hetzner of Fortune, please go ahead. Yes, many thanks for allowing me to ask a question. I just really wanted to address the issue of Tesla. A lot of what you talked about today basically is sort of, you know, copied straight out of the pages of your competitor, only they've already been doing things like full software stacks, OTA software updates, and so on and so forth, you know, cell-to-pack, and whatnot. What gives you the confidence that you can outpace your competitor when they are already faster than you right now and already engaging in many of the same things you're talking about today? Many thanks. Yeah, I think we are already deeply industrialized. Now we have up and running dealer franchises worldwide. We have a good infrastructure. I think it's an advantage to have different brands, you know, where Porsche can focus really on the premium segment with driving towards more performance, where Audi can capitalize on their customer base when it comes to the build quality, customer user experience. Then we have Volkswagen and Škoda also addressing their segments. I think we can address a much wider range of customers. We can deliver with very similar technology, address different customer needs and brand propositions. That should be an advantage, and scaling with the MEB should allow us to be at least as fast in the growth as well. We have fully prepared two plants in China. The ramp up should be smooth. Scale-wise and from the industrialization, we should have advantages over Tesla for sure. We have to make sure that we keep the distance when it comes to technology. Next generation of autonomous driving of battery. We see also that in the core development of, let's say, when it comes to cell, the electric drivetrains, this industry is also already consolidating towards very comparable solutions. I think just the recent dismantling of our products, comparing it with Tesla is showing that. That the engines are becoming similar, the concepts are becoming similar, and in the next generation, we will get even closer. This is why we think, yeah, now we are in second position, but until 2025, I think we should have a good chance to overtake. Great. Thank you, Herbert. Can we take the next question please, operator? We have Jan Schwartz from Reuters. Please go ahead. Yes. Hi. Thanks for taking my question. I have a question on your battery plans for Eastern Europe. Have you made any progress in, you know, narrowing down the choice of location? I mean, you've made comments on Spain today and a possible second factory in Germany. You've also said that you want to build a plant in Eastern Europe, and you've commented on the possible choices for location. Have you made any progress on where that could be? Thank you very much. Okay. Three months after announcing that we have a demand of 6 plants, we fixed 50%. That means Skellefteå, Salzgitter, and Spain. We're really close to execute that, and we are evaluating now further plans for Eastern Europe. There's not so many Eastern Europe countries as you know. We make progress day by day. It's clear, but we will not announce today a country. We are deep in the evaluation. We are negotiating where there are the best places, but give us the freedom to fix in the next few months also. Thanks, Thomas. Okay. Thank you very much. Can we take the next? Thank you very much. May we take the next call, please? Daniel Schwarz from Stifel Europe, please go ahead. Yes. Thank you very much for taking my question. It's actually on cash flows. So far you are guiding for more than EUR 10 billion by 2025. Now you guide for 100 basis points higher EBIT margin, 100 basis points lower CapEx spending. So, is that simply implying the target moves from more than EUR 10 billion to more than EUR 15 billion? And would that also imply a higher dividend payout ratio in the long term? Thank you. I said before, for the time being, we just, like, communicated our ambition for the margin target for 2025. Until November, we work on the Planning Round 70, and together with the communication of our Planning Round 70, we also update our cash flow guidance. I wouldn't be surprised if we raise the guidance as well. What I can say from today, we stick to the 30% payout ratio, which was communicated before. Okay, thanks, Arno. Operator, can we take the next question, please? Tom Narayan, RBC. Please go ahead. Tom Narayan, RBC. Thanks for taking the question. It's a question on long-term margins. You know, I appreciate the commentary on how the MQB platform keeps ICE margins competitive, you know, despite lower volumes as ICE volumes come down. At some point, I would think, you know, you could just shut down these BEV plants. Now, wouldn't this result in a meaningful margin lift? I know this is like 2030 or beyond, but it seems important because this would signal a completely new business. Or do you expect something like pricing getting competitive with BEVs down the road with more competitors coming in from the outside and maybe some price deflation happening? Just curious what you think about long-term margins given the dynamic of your shutting down ICE plants. Thanks. Yeah. As I said before, there will be challenges in the long-term margin expectations of ICEs. But we think we have a really convincing plan. And that plan basically is based on the MQB. The MQB is invested. The product substance is still high. So MQB in the second phase, in the run-out phase, won't need too much structural funding. And we can consolidate the remaining, let's say, in inverted commas, "remaining cars" in our factories, so keep relative scale per factory high. So, we think we could keep margins and cash flows relatively stable over the transition due to that point. Yeah. The second thing is, when we talk about capacity and our plant structure, basically, we rework our plants as we did in Zwickau. Plant by plant, we will now convert to better electric vehicles and use the infrastructure there, and the remaining plants will operate then on full capacity on ICEs. Together with that level, we still discuss that topic of multi-brand plants. This is a level we can draw in the ICE and in a BEV world. Last but not least, in 2030, there we still 50% of the volume in ICEs. Combining all these factors should give us a relatively good chance to keep margins and cash flows high in order to finance the transformation. Thanks, Arno. May we take the next question, please? Henning Gropp from Business Insider. Please go ahead. Good afternoon. I will skip my questions for Mrs. Werner and Mr. Antlitz and send them to Nicole Mommsen. I have only one question then left for the CEO. Mr. Diess, as Arno Antlitz said in his presentation, the orientation towards Integrity and Law will continue to serve as the, let's say, basis or foundation for the Strategy 2030. Now, are you personally in favor of keeping the board position of the same name, Integrity and Law, until 2030 and beyond? Of course, top personalities are a matter for the supervisory board. I know that, but nevertheless, are you personally campaigning for the contract of Hiltrud Dorothea Werner, Group Board Member for Integrity and Law, to be extended? Thanks. Herr Gropp, sorry, this is the [Foreign language]. Operator, could we take the next question? Sorry, do you have a second question? Yes. I would use the opportunity and ask Mr. Antlitz. Mr. Antlitz, you have announced a quite extensive procurement program as an important area of work. Could you please name two or three specific levers that VW expects to have particularly beneficial effects for the entire company? And will the group reduce the total number of its global suppliers? Thanks. Mr. Gropp, what we said, we will give a deep dive later in this year on our purchasing program, and I would suggest that Murat Aksel is doing that by himself. He designed the program, he's drawing the levers. I would suggest let's postpone this discussion when Murat Aksel is there and can present this lever. Thank you, Arno. May we take the next question, please? Eric Béziat from Le Monde. Please go ahead. Hi. Thank you for taking my question. It's about the ICE ban for 2035. Are you okay with the ICE ban for 2035? And what about the PHEVs? President Macron told the French car industry yesterday he would support an exception for PHEVs after 2035. So, what do you think about it? Yeah, first of all, we are not promoting a ban, no, but I think we can cope with a ban if it's in Europe. We are well prepared. It will be a tough program because it would even require a steeper ramp up coming closer to 2030 for batteries. This will be very demanding not only for us but for the industry. PHEVs, yes, we have a broad range of PHEVs in our lineup. All brands have, and we think that PHEVs, yes, they are an alternative also in two aspects, also from the standpoint of the environment, but also economically. If I compare the current PHEV, take a Golf with now 50 km range, it's base, it's a similar price point to our EVs with a long-range battery. For the customer, it's an option to choose, but also from the standpoint of CO2 reduction, it's a serious consideration because the smaller battery accounts for much less CO2 emissions than the bigger battery on the EV, no? If you compare, it's about 4 tons of CO2 for an EV battery in Europe, produced in Europe, and it's about 700 kg of CO2 for the PHEV battery. If the PHEVs are charged at home with renewable energies, it's an absolutely viable way to drive down CO2 emissions. For the customers still scared about charging with this range anxiety, it's really a serious option. I would also always strongly argue and push for tax schemes which allow for PHEVs. It's currently a privilege here in Europe. I think it makes a lot of sense, and I'm happy that France is following Germany's way. On the other hand, we have to see it's only working if there are tax allowances. It's mostly working here in Europe, not so much in the United States. We are well prepared. We have the PHEVs in our lineup, so we can supply, I wouldn't say any demand, but quite strong demands in PHEVs and EVs. Thanks, Herbert. Can we take the next question, please, operator? Hazel Southwell from The Drive. Please go ahead. Hi. Thank you for letting me ask a question. I really appreciate your time. I just had a follow-up from really early in the call. There was you were talking about the ID. Buzz leading on a strategy to make particularly the U.S. really love the Volkswagen brand again. I wanted to hear a bit more about that. I think there's a lot of people who kind of don't believe the ID. Buzz is really coming and so they've just to hear more about that rollout. Yeah. Thank you for that question because it's also very emotional one for me as well because I was pushing when I still was in charge of the Volkswagen brand very strongly for that product because I think also in the electrified world, we need emotional products. The most iconic product we have in our entire product range is probably the Volkswagen Bus. In America, it's really tied to the lifestyle and experience and memories of the 70s. It really adds something to the brand, which competitors don't have. No, there's still so many memories in the United States, and it's really a pity that we lost the United States as a core market, basically in a decline from the 60s, 70s, 80s, 90s, and we couldn't regain momentum until now. Now we have a historic chance. I think with electrification, we can bring back really a specific edge to the Volkswagen brand, which could come close to American buyers' hearts and probably their memories. We have a really exciting lineup for the United States to come. ID.4 is hitting the road and received nicely. An ID. Buzz, and we had that experience in Pebble Beach some three years ago. There was really an uproar in the United States when people saw the first time the bus. The West Coast would be the ideal place to drive around in such a bus. I think the design will come very close to what people would expect from a remake of an ID. Buzz. It will come with this very nice features as well, so very clean design. I think it can help, and I can promise it will come to the United States, I hope soon. It will be one part of a new lineup for Volkswagen, which will include more electric cars, which we are currently reworking. Thank you, Herbert. Can I take the next question, please? Alberto Annicchiarico, Il Sole 24 Ore. Please go ahead. Grazie. Thank you. I would like to know something more about your vision for the future of Italian brands, Lamborghini and Ducati. Another thing, how do you see the evolution of relations with the Italian component supply chain, considering the new presence of Stellantis? Thank you. The last question I can't. What do you mean with the new presence of Stellantis? Can you- Yeah, I mean, you have a strong relationship with Italian supply chain. Do you think that you will improve this relation or not in the next years? We have a strong supply base in Italy, and you know, and they're very famous brands. We are working with mostly our sports cars now, mentioning Brembo, many sports parts suppliers, a lot of it in Northern Italy, foundries. I think we are very happy with the supply and the performance. Lamborghini is working very closely. They are fast. They are able to respond fast and producing good quality. I don't see any reason why we should give up that stronghold. Also, Italdesign, which is involved in many of our early project work when it comes to prototypes, when it comes to car design, they have a strong footprint in Northern Italy, and we will keep that. My view is that Ducati has a good strategy, good lineup. Lamborghini, we have been investing over the past years, billions. We are investing currently in a new Huracán and Aventador, which will come to market in the next years with new engines, new gearboxes. A lot of investment going into our Italian brands currently. They are electrifying as well. Ducati has a few projects where they are considering electrification in some segments. I think the lineup is good. I still would ask you to raise your question then on the Audi press conference or next press conferences, because they are much more into the details now, and they are in charge. Thank you, Herbert. Could we take the next question, please? Operator, we would like to finish at 22:25 CEST. Thank you. The next question comes from Kosei Fukao, Nikkei. Please go ahead. Hi. Thank you for taking my question. My question is about also about margin parity between ICE and BEV. Could you tell us to what extent the increase in raw material prices for batteries has been taken into account? Are you not too worried about that? To what extent have you been able to secure those materials? Please allow me to do a brief double-check regarding the battery production in Zwickau. Am I correct in understanding that you will be forming a joint venture with Gotion High-Tech? Thank you. You mentioned the raw material topics. First, we must say that the raw material increase is both true for ICEs and for battery electric cars. Of course, we talk about different materials. In BEV, we talk about materials we see in the cathode. On the other hand, we have a raw material increase in catalytic converters in the precious metals in the ICEs. We see basically that more as a parallel. Of course, we work against that. We have hedging strategies. Also, what Thomas, my colleague, mentioned, we would like to get more of the value chain within the batteries, cathode materials, raw materials in battery. Basically, that doesn't significantly change our expectation on that. On the other hand, like, if we see raw materials, of course, we work against that with our purchasing program. We talked about the potential of pricing. Basically, that's more like a shift in parallel. Thanks, Arno. I think we have time for one very last question, please. Now our last question comes from Jan Edgardh from Ny Teknik. Please go ahead. Yes. You were mentioning about the slimming down of the models offered, and I guess engines. We're talking ICE cars towards 2030. Could you give us a bit more details about how this will roll out? I mean, what engines will be dropped and what will be left? Yeah, engines and models. Yeah. We don't want to give or can't give a detail on model by model basis. What's clear, of course, within the next 10 years when we talk about run out, we will keep models that are in scale, at high volume, that are global models. We need also models in regions where electrification doesn't come so fast. Brazil, other regions, and these are the things. The same holds true for engine gearbox combinations. We will reduce them in order to keep scale. There also we will concentrate on high volume engine gearbox combinations. But be assured we will keep our cars, our ICE cars as long as we sell them, we keep them competitive. We make sure that the cars we sell and we offer, they will be competitive in front of the customers. Not in every variant, not in every model line, but the cars we will offer, they will be competitive. We will keep them competitive. Okay. I'd like to pass over to Nicole for some closing words. Yes. Thanks, everybody. Thanks for dialing in today. I think it was a very good call. I hope you did too. Very international with many international participants. Thanks for dialing in. I hope you also enjoyed the presentation earlier. If there are questions, we're going to be available at any time. Colleagues, Helen and team in the IR department, myself, Christoph Adomat and team in the public relations department. As we mentioned before, we're going to have further deep dives over the next months through the end of the year to explain more about our strategy and then obviously as we implement it through the next years. Have a good day. Stay healthy. Thank you very much. Bye-bye. Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.