VW sticks with 2025 target for electric car costing around €25,000
Over two thirds of Volkswagen's five-year investment budget is allocated to electrification and digitalisation. File picture
Volkswagen is still aiming to bring an affordable electric car — costing around €25,000 at today's prices — to market by 2025, produced on a second-generation version of its all-electric MEB platform.
It comes as it plans to invest €180bn over five years in areas including battery production and raw material sourcing in a bid to cut electric vehicle costs and protect its market share, it has said.
Over two-thirds of the company's five-year investment budget is allocated to electrification and digitalisation, including up to €15bn for batteries and raw materials.
With markets in turmoil over the collapse of Silicon Valley Bank, or SVB, chief financial officer Arno Antlitz told analysts that the company could postpone some battery investments if the market did not grow as expected. "The overall target is having at all times solid financials," Mr Antlitz said.
Volkswagen, Europe's top carmaker, is striving to close a gap with electric vehicle pioneer Tesla by expanding its slice of the growing market for battery-powered cars.
Mr Antlitz said he hoped the company would by 2025 have struck enough raw material sourcing deals and expanded battery production to bring down electric car costs, 40% of which stem from the cost of the battery.
"We expect to reach 20% electromobility in new sales from 2025 and are already investing two-thirds in that area," he said. "On the other hand we need to keep combustion engines competitive... that is a double burden."
The carmaker said it is finalising high-performance software for its premium and luxury brands which could in the medium term be applied across the company, in an attempt to improve operations at its software unit Cariad. The unit set up under former CEO Herbert Diess has gone over budget and fallen behind on its goals, suffering an operating loss of €2.1bn in 2022 on revenue of €800m.
Volkswagen met analysts' expectations in 2022 on revenues but missed the consensus estimate for earnings before interest and taxes by 3%.
The investment decisions are targeted towards fulfilling a 10-point plan developed by Volkswagen CEO Oliver Blume after he took the helm in September. Board member Thomas Schmall said this week the carmaker's needs were covered in Europe by the three plants already in the works, and that it was in no rush to pick new sites. It also announced its first North American plant in Canada, due to start production in 2027.
The carmaker this month issued an optimistic outlook for the year ahead that sent shares soaring, forecasting a 10% to 15% rise in revenue on 14% higher deliveries.
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