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Volkswagen cranks up investments in digitalisation and e-mobility

Volkswagen cranks up investments in digitalisation and e-mobility

Business news |
By Christoph Hammerschmidt



Following an increase in profits last year despite a persistent chip shortage and falling unit sales, the Volkswagen Group has significantly revised its investment plans upwards. At the same time, the company announced details of its plans for a battery gigafactory outside Europe.

In total, Europe’s largest carmaker plans to invest the sum of €180 billion over the next four years – €21 billion or 13.2 per cent more than in the last round of planning. At the core of the investments is the strengthening of competitiveness, especially in China, as well as the development of its own battery production. More than two-thirds of the investment sum is to flow into the digitalisation of cars and the development of the IT infrastructure for the “connected cars” of the future, as well as into the expansion of electromobility.

According to VW CEO Oliver Blume, 7% of the vehicles sold last year were equipped with a battery-electric drive. What sounds rather puny at first glance is a record for the vehicle manufacturer, and Blume wants to increase this share quickly. Indeed, the moment seems favourable for this, as electromobility is rapidly gaining market share. However, the introduction of presumably cheaper e-models from Chinese competitors in Europe is just around the corner, and Blume needs to show more speed in the switch to electric models.

25 new BEV models in the pipeline

This is reflected in the investment plans of the VW CEO, who also heads the car manufacturer Porsche. In total, the group plans to invest €180 billion in the most attractive profit pools between 2023 and 2027. These include, in particular, the group’s battery strategy, expanding its presence in North America and increasing competitiveness in China, the latter especially in the area of digitalisation. More than two thirds (68%) of the investments are to flow into the future fields of digitalisation and electrification. In the previous five-year plan, the figure was 56%. As early as 2025, every fifth VW sold worldwide is to have a purely electric drive; by 2030, Volkswagen plans to launch 25 new BEV models.

A major reason for the increase in total investments is the up to €15 billion for the construction of cell factories of the battery start-up PowerCo and advance payments for securing its raw materials as part of the implementation of the battery strategy. This first battery cell factory of the VW Group in North America is to be built in St. Thomas in the Canadian province of Ontario. It is intended to supply the BEVs of Group brands in North America with advanced battery cells and is part of a larger plan that Volkswagen and PowerCo agreed with the government of Canadian Prime Minister Justin Trudeau in August last year. The memorandum of understanding signed at the time focuses on battery value creation and raw material security to promote electromobility in the country. By 2030, PowerCo is expected to generate annual revenues of more than €20 billion.

However, not all market observers share Blume’s optimism. According to „Handelsblatt“, Patrick Hummel, automotive analyst at the bank UBS, expressed clear scepticism. “We believe that Volkswagen has largely lost its position as a pioneer in electric matters,” Hummel told the newspaper. VW is making too slow progress in implementing its strategy; Tesla and Chinese OEMs are bringing their new electric models to market much faster.

https://www.volkswagenag.com/en.html

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