Volkswagen’s leaders have approved a five-year spending plan that aims to further the German automaker’s goal of transforming itself into a leading force in electric cars.
Europe’s largest carmaker by unit sales will spend more than €34bn on electric cars, autonomous driving and new mobility services by the end of 2022, it said following a supervisory board meeting. Total group investments by 2022 will total about €72bn, the group said.
“With the planning round now approved, we are laying the foundation for making Volkswagen the world’s number one player in electric mobility by 2025,” CEO Matthias Mueller said
in a statement.
Until it admitted two years ago to cheating on US diesel emissions tests, Volkswagen had been slow to embrace electric cars and self-driving technology.
But the emissions fraud plus new Chinese quotas for electric cars have prompted a strategic shift to zero-emission and self-driving technology with Volkswagen now pledging to offer an electric version of each of its 300 group models by 2030.
The plan puts Volkswagen on track to spend about €14.4bn a year, compared to recent annual spending levels of €12bn. The increase shows the pressure to manage the sweeping changes in the auto industry.
Mr Mueller is prodding the company to take a leading role in battery-powered vehicles and unveiled a plan in September to make electric versions of all 300 models in the 12-brand group’s lineup.
At the same time, Volkswagen will be “more disciplined” with its spending and do better at leveraging the firm’s enormous scale to save costs, the CEO said.
Volkswagen’s drive to get spending under control follows years of poor budget discipline and bloated costs squeezed returns.
“Investors should welcome a commitment toward more contemporary investment discipline,” Arndt Ellinghorst, a London-based analyst at Evercore ISI, said in a note.
Production of electric cars for European markets will largely be focused at a German factory in Zwickau. The factory will manufacture the first vehicles of the Volkswagen brand’s planned ID electric car range starting in 2019 as well as battery-powered models for sister brands Audi, Seat and Skoda. Electric cars for VW’s largest market, China, will be produced locally.
Reuters and Bloomberg