Volkswagen said Tuesday it would spend $193 billion on software, battery factories and other investments as it aimed to make every fifth vehicle it sells electric by 2025.
The automaker, the world’s second-biggest behind Toyota, will also focus on expanding its presence in North America, where it has struggled for years, and becoming more competitive in China, one of its most important markets, Oliver said. Blume, CEO of Volkswagen.
Mr. Blume laid out a 10-point plan to help Volkswagen transition to electric vehicles, a path that began in earnest when it ditched diesel technology after an emissions cheating scandal in 2015. The centerpiece of the plan is the investments totaling 180 billion euros, or about $193 billion. Two-thirds of that sum will go toward battery cell production, software development and strengthening supply chains for critical raw materials.
“It is important to me that we have a clear direction of where we are going,” Blume told reporters, adding that 2023 would be “a breakthrough year” for the company. He is his first as CEO; in September he replaced Herbert Diess, who aggressively lobbied Volkswagen to embrace electric cars but was forced to retire after just four years due to disagreements with the company’s board.
Blume hopes to use part of the proceeds from a 2022 Porsche initial public offering, where he is also chief executive, to strengthen Volkswagen’s electrification strategy. The listing contributed 43,000 million euros.
Volkswagen reported a 2022 net profit of 15.8 billion euros, or $16.7 billion, an increase of 2.6% from a year earlier, as supply chains disrupted by the coronavirus pandemic began to normalize.
The rise of electric vehicles
- Acquire more volume: Electric vehicles are often a more environmentally friendly option. But as they grow, their emissions savings and other environmental and safety benefits start to diminish.
- Tesla: The company will open up some of its fast chargers, which had been exclusive to its customers, to all electric vehicles by the end of next year, the Biden administration said.
- Ford: The automaker plans to build a $3.5 billion electric vehicle battery factory in Michigan using technology licensed from a Chinese company that has become one of the biggest players in the industry.
- Prices drop: Faster than seemed possible a few months ago, sticker prices for electric vehicles are falling closer to the point where they could match gasoline models this year.
The Russian invasion of the Ukraine last year sent energy prices up and contributed to high inflation, especially in Germany. Addressing those challenges, while balancing demand for combustion-engine vehicles as the company pivots to electric vehicle production, will be the main focus in Europe, Volkswagen said.
“We must transform ourselves into a technology and mobility services group,” Arno Antlitz, Volkswagen’s chief financial and operating officer, said at Tuesday’s press event. “We need to focus on our platforms, like our hardware for battery-powered electric vehicles, a unified software stack, batteries, mobility, autonomous driving.”
In the short term, Volkswagen will continue to produce combustion-engine cars, generating profits that the company must pay to transition to battery-powered vehicles. In 2022, Volkswagen sold 8.2 million cars and trucks.
Despite the German government’s call for companies to diversify their operations in Asia away from China, Volkswagen continues to invest in the country in partnership with local companies.
Volkswagen is the largest producer of combustion-engine vehicles in China, but has lost ground to domestic automakers in the fast-growing market for electric cars. Last year, Volkswagen unveiled a “in China for China” strategy that it plans to expand, including developing technology and software specifically for consumers there, including in-car karaoke.
The automaker’s problems in North America are somewhat different. After years of trying to become a bigger player specifically in the United States, it remains far behind American automakers like General Motors and Ford Motor and Asian companies like Toyota and Hyundai.
Volkswagen revamped its Chattanooga, Tenn., plant last year to start producing electric vehicles, and now produces the ID.4 sport utility vehicle there. On Monday, Volkswagen said it had chosen a site in Ontario for a new battery plant. And in early March, the company said it would set up a factory in South Carolina to build trucks and SUVs to be sold under the moribund Scout brand.
In Europe, a key element of the company’s approach includes its first battery cell plant, a €2 billion factory being built in a field in Salzgitter, Germany, near the company’s Wolfsburg headquarters. The new plant sits behind a site where Volkswagen has been building engines for more than 50 years and is slated to become the automaker’s main supplier of battery cells.
