Volkswagen: VW increased investment in electric mobility

11:45am

"Over the coming five years to the end of 2023, the company will be spending nearly 44 billion euros alone on the future issues of e-mobility, autonomous driving, new mobility services and digitalisation", VW said in a statement.

The carmaker also plans to increase the productivity of its factories by 30 per cent by 2025, by building more vehicles with different brands on the same production line, it said. It wants to lower the carmaker's research and development ratio at the group's automotive division to six percent of revenues from 2020 onward.

The Wolfsburg-based manufacturer, which plans to have some of the new offering in the market by 2023, said the 44-billion euros ($50 billion) investment in what CEO Herbert Diess describes as an "electric offensive", includes an imminent partnership with United States carmaker Ford Motor.

Nevertheless customers have remained loyal, helping Volkswagen to record sales previous year. German peers Daimler AG and BMW AG have cut their outlook, while Toyota Motor Corp. and General Motors Co. reported strong results.

Volkswagen is also considering building a new plant in Bulgaria or Turkey, as two Czech Skoda factory is already working nearly at the limit of their capabilities, and clearly will not be able to take all models of the parent company.

Labor unions, who control half the seats on Volkswagen's supervisory board, need to sign off on the plan to create global production capacity for 1 million electric vehicles by 2025 amid their concerns that assembling battery driven cars will require fewer workers. Another 15% is expected to be hybrids, which combine an electric motor with a traditional internal combustion engine, and 60% of the cars will be powered by gasoline or diesel engines that are more fuel-efficient than today. With less complexity and fewer model variants, VW may be able to produce the auto in roughly half the time needed to assemble a Golf hatchback, according to the people.

Volkswagen is converting three of its German plants from internal combustion to battery auto production as it pivots away from diesel vehicles in the wake of its emissions scandal.

The plant in Emden will specialise in building small electric cars and sedans for several of the group's brands, while the Hanover factory will make the ID Buzz, the clean-energy version of VW's iconic camper van.

Money for programs related to elektromobile, the company intends to seek at the expense of multi-billion dollar saving programs in the production of other models.

VW expects significant synergy effects from this alliance, which may allow potential for developing a next generation Amarok pickup truck series and more SUVs, Diess said.

Diess said any arragement with Ford would exclude business strategy, marketing and pricing.

He added: "That was never the goal of these talks. Ford remains a competitor".

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