According to a statement released by Volkswagen on Tuesday, the company intends to invest 180 billion euros ($192.76 billion) over the next 5 years in sectors like battery production and its operations in North America. From 2025 onward, spending on internal combustion engines will decline.
The investments come as VW, the largest automaker in Europe, strives to catch up to Tesla (TSLA.O), the inventor of the electric vehicle (EV), by increasing its share of the booming market for battery-powered vehicles.
Around two-thirds of the five-year investment budget, up from 56% in a five-year plan it had issued a year earlier, is earmarked for electrification and digitalization as it strives to achieve a sales target of 50% electric vehicle (EV) globally by 2030.
Volkswagen is anticipated to give an update later on Tuesday on how it will enhance operations at its software subsidiary Cariad, which was established under former Chief Executive Herbert Diess but has exceeded budget and lagged on its objectives.
Company’s Financials
According to Volkswagen’s annual report, which was revealed on Tuesday, the unit had an operating loss of 2.1 billion euros in 2022 despite 800 million euros in revenue.
Despite supply chain issues, the automaker predicted a 10% to 15% increase in revenue on 14% higher deliveries for the upcoming year, which sent shares surging.
A Peek into the EV Investment Plan
The company’s most recent investment plan sets aside 15 billion euros for battery factories and raw materials, with a priority placed on securing the raw materials before moving forward with the construction of new locations.
Thomas Schmall, a board member at Volkswagen, stated on Monday that the automaker was not in a rush to choose new locations because it had three plants under construction to cover Europe. The first North American factory, scheduled to begin operations in Canada in 2027, was also announced.
According to the manufacturer, which has more aggressive electrification ambitions than other competitors, investment in combustion engine technology will reach its high in 2025 and then begin to drop.
The investment choices are meant to accomplish a 10-point strategy that Chief Executive Oliver Blume created after taking over the manufacturer in September.
Volkswagen is also anticipated to announce the outcomes of an exercise Blume initiated called a “virtual equity tale” later on Tuesday. To become more appealing to financial markets, the company’s brands, which range from Audi to Bentley, were all required to get ready for an IPO.
Sources have revealed that negotiations were held in November with investors about the possibility of investing in PowerCo’s battery business division before a potential partial IPO. It has been suggested that PowerCo is the most probable contender for the stock market investment.
About the Automaker- Volkswagen
The German government established the VW Group, commonly known as Volkswagen AG, in 1937, intending to mass-producing an affordable “people’s car.” The German city of Wolfsburg serves as the headquarters.
One of the most well-known automakers in the world is the VW brand. With top-sellers like the Beetle, Golf, and all-electric ID. Family for the future era of transportation, they have been enabling breakthrough technologies, the best quality, and appealing designs for more than 70 years.
They have a presence in more than 140 markets and have 29 manufacturing facilities across 12 nations. On the road to attaining climate-neutral mobility for all, they are establishing high goals for us. They want to introduce ten new electric vehicles to the road by 2026.
