VW Split

The sum of the parts

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Workers assemble an electric car at a VW factory in Dresden, Germany. Source: Reuters

Electric cars have a long list of components that are different from parts in cars with internal combustion engines, such as a need for batteries and electric motors and not needing transmissions. Facing a transition to more electric vehicles in the next decade, carmakers are preparing by spinning off their parts manufacturers, allowing them to move jobs out of high-wage locations like Europe.

Volkswagen is the latest company to get on the bandwagon for separating components manufacturing from its car business. A company spokesman confirmed Tuesday that a new division for vehicle components will be established with 80,000 employees working at 56 factories around the world. These factories will make parts for both combustion and electric vehicles, though not at the same sites.

The separation of the car parts business is just one of the steps VW CEO Matthias Müller is taking to revamp the company two years after a scandal about emissions testing cost the firm €30 billion in fines and lawsuit settlements. VW also is changing its relationship with car dealers, introducing online car shopping and reducing the number of showrooms in Europe.

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