Audi has planned a total investment and expenditure of €37 billion for research and development expenditure and investment in property, plant and equipment over the next five years (till 2024). Out of this €37 billion (Rs 292,070 crore), the manufacturer is planning upfront expenditure of €12 billion (Rs 94,725 crore) solely for electric mobility.
The company claims that Audi Transformation Plan (ATP) is freeing up the necessary funds. The ATP has already contributed €4 billion (Rs 31,577 crore) to earnings. The current planning reflects a significant improvement in investment and cost discipline, as well as the strong prioritisation of investments in electric mobility.
Alexander Seitz, a board of management member for finance, China and legal affairs at Audi said, “With our Consistently Audi strategy, we are accelerating our roadmap towards electrification. Our investment planning takes this into account. At around €12 billion, we will spend more than ever before on electric mobility by 2024.”
By 2025, the Audi Group intends to have more than 30 electrified models in its product range – 20 of which will be fully electric. Audi intends to achieve about 40 percent of its worldwide unit sales with all-electric and hybridised automobiles by then. In order to achieve the rapid scaling of electric mobility, Audi is working with Porsche to develop the premium electrification architecture (PPE) for large electric cars, and the Modular E Drive System (MEB) is being developed together with Volkswagen. The cross-brand architectures will enable high Group synergies to be utilised in the future.
Audi claims that in order to finance the high investment required to realign the business model, the company launched the Audi Transformation Plan (ATP) two years ago. This earnings-improvement program is to free up a total of €15 billion (Rs 118,416 crore) for future investments by 2022. The ATP has already contributed more than €4 billion to operating profit since it was launched. CFO Seitz: “With the ATP, we have significantly improved our spending discipline and our focus on investment. The course has been set for Audi to return to an operating return on sales within the strategic target corridor of 9 to 11 percent in the medium term. Measures have already been identified for 80 percent of the program.”
Furthermore, measures taken in the context of Audi.Zukunft are to free up approximately €6 billion (Rs 47,366 crore) for future investments by 2029. Audi.Zukunft is a fundamental agreement which includes the market-oriented optimization of strategic production capacities at the two German plants and socially responsible workforce adjustments. By strengthening new job profiles in apprenticeships and further training and by extending the employment guarantee until the end of 2029, the Works Council and the company’s management are sending an important signal to the employees of the plants in Germany.