In the next five years, Volkswagen Group will invest 180 billion euros ($193 billion) in areas such as battery cell production, digitalization in China, and expanding its presence in North America, while spending on combustion engines will decrease.
More than two-thirds of the five-year investment budget (122 billion euros) is earmarked for electric vehicles and software as the group, whose brands include Porsche, Audi, Bentley, Volkswagen Group, and Skoda, ramps up its efforts to challenge Tesla’s leadership in electric vehicles.
In comparison to the previous annual update, the automaker is increasing overall spending by 13%. The difference from the previous plan is primarily due to increased investment in its battery business, raw materials, and a $2 billion Scout brand plant in South Carolina, according to Chief Financial Officer Arno Antlitz.
Volkswagen Group is still aiming to launch an affordable EV by 2025, priced around 25,000 euros ($26,795) at current prices and built on a second-generation version of its all-electric MEB platform.
Antlitz expressed hope that by then, the company would have struck enough raw material sourcing deals and expanded battery production to reduce EV costs, which account for 40% of total EV costs. Volkswagen Group’s investment in combustion engine technology will peak in 2025, when the European Union’s strict new Euro 7 emissions regulations go into effect, and then decline as the company works towards its goal of 50 percent all-electric sales globally by 2030.
In an effort to improve operations at its software unit Cariad, Volkswagen Group said it is finalising high-performance software for its premium and luxury brands, which could be applied across the company in the medium term.
According to the carmaker’s annual report released on Tuesday, the unit has gone over budget and missed its targets, suffering an operating loss of 2 billion euros in 2022 on revenue of 800 million euros. Cariad will be ready to deliver the premium software package to Porsche in time for the launch of the full-electric Macan SUV in 2024, according to Blume on Monday.
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