Volkswagen Group to boost 5-year e-mobility and tech spend to 73 billion euros

by Autocar Pro News Desk , 13 Nov 2020


The Volkswagen Group is pressing ahead with its transformation into a digital mobility company. As decided in Planning Round 69, the Group will spend around 73 billion euros (Rs 603,491 crore) on electrification, hybrid powertrains and digital technology over the next five years.

This was announced following today’s Supervisory Board meeting. Investments in capex and R&D for future technologies will be raised to 50 percent from 40 percent of the Group’s total investments of around 150 billion (Rs 1,240,050 crore). Investments in digitalisation will double to 27 billion euros (Rs 223,209 crore) by mid-decade, reflecting the Group’s strong focus on building up software capabilities. Approximately 35 billion euros (Rs 289,345 crorer) will be spent on battery-electric vehicles. A further 11 billion euros (Rs 90,937 crore) has been earmarked for the development of hybrid vehicles of existing models.

“As part of Volkswagen Group’s investment planning, the Board of Management and Supervisory Board today set the cornerstones for securing the Group’s future success. The transformation of the Group and its brands and the strategic focus on the core areas of mobility will be consistently implemented. Considering the enormous challenges we face in the coming years, our financial basis is very solid,” said Hans Dieter Potsch, Chairman of the Supervisory Board of the Volkswagen Group.

“Having set the course for a battery-electric future in the Volkswagen Group early on, we are now a global leader with our electric platforms and a broad range of electric vehicles,” said Herbert Diess, Chief Executive Officer of the Volkswagen Group. “In the coming years, it will be crucial to also reach a leading position in car software in order to meet people’s needs for individual, sustainable and fully connected mobility in the future. To that end, we have doubled our digitalisation spend.”

The Planning Round is based on the expectation that the global economy will grow moderately over the next five years. Moderate growth with regional differences is also anticipated for the individual markets. The increase in productivity of 30 percent and savings in administration are to secure the transformation financially. In addition, the Group is systematically working on the optimization of its product portfolio. Thus, model variants, engine-transmission combinations and features that are less in demand will be streamlined in order to reduce the complexity and increase the efficiency of the portfolio. The planning excludes the joint venture companies in China, since they are not part of the consolidated group and finance investments in plants and products from their own resources.

Electric mobility and hybrid technologies
Volkswagen was the first automaker to commit to the Paris Agreement and aims to become climate neutral by 2050. Over the next 10 years, the Group intends to launch approximately 70 all-electric models by 2030. Around 20 of these are already in production, with 50 more to follow. In addition, around 60 hybrids are planned by the end of the decade, slightly over half of which are already being manufactured.

The Planning Round envisages production of approximately 26 million fully electric cars by 2030. Some 19 million of these vehicles will be based on the Modular Electric Drive Toolkit (MEB), with most of the remaining seven million to use the high-performance PPE platform. The Group estimates production of around seven million hybrid vehicles over the same period.

Significantly greater emphasis on digitalisation
Due to the crucial role that software will play for Volkswagen’s future success, capital spending on digitalisation will total around 27 billion euros, double the amount set in the previous Planning Round. This includes spending on the Group’s Car.Software organisation, which was launched earlier this year.

The goal is to build a proprietary software stack, which will be deployed in Audi’s Artemis project from 2024. The company's own share in software is to increase from 10 to 60 percent. In addition, a large share of the funds earmarked for digitalization will be invested in the mission-critical fields of artificial intelligence, autonomous driving and digitalization of significant business processes.