Photo: Volkswagen | Edited
Volkswagen Group has announced a massive $193 billion investment plan in the next five years, with more than two-thirds allocated toward electric vehicles and software development. The German carmaker also sees investment in combustion engine technology peaking in 2025 once Euro 7 regulations come into force.
Volkswagen Group under Oliver Blume plays an interesting game, as revealed by the company’s five-year plan presented on Tuesday. On the one hand, its Porsche brand promotes e-fuels, while Germany blocked a pan-European initiative to ban combustion engines from 2035. On the other hand, Volkswagen announces massive investments in electric vehicles, batteries, and software. This is not very different from what Toyota tried to do in the U.S. when it lobbied against tighter emissions regulations. At the same time, Toyota pretended to be launching a massive EV offensive that never happened.
We guess we’ll see a similar game from the German carmaker after CEO Oliver Blume announced plans to invest 180 billion euros ($193 billion) for the next five years. Most of the money (more than two-thirds of them) will go into developing new electric vehicles and software. This is a marked increase over the previous five-year plan, where only 56 percent of investments were earmarked for EVs and software. Volkswagen also wants to phase out ICE technology investments after 2025 as it works toward its target of 50 percent of EV sales globally by 2030.
The automaker will increase overall spending by 13 percent to accelerate its battery efforts. Volkswagen intends to build as many as six new battery factories in Europe, although the IRA incentives in the U.S. might derail European plans. Volkswagen’s battery business PowerCo is expected to generate sales of more than 20 billion euros ($21.4 billion) by the end of the decade. The German carmaker wants to invest 15 billion euros ($16 billion) in battery plants and raw materials.
On Monday, Volkswagen announced plans to build a battery factory in Canada, its first outside Europe. The factory would begin battery cell production in 2027 to provide batteries for Volkswagen assembly plants in Tennessee and (soon) South Carolina. The German company shared very few details, including the production capacity or the value of the investment. Volkswagen’s latest plan also mentions a $2 billion investment into a new plant in South Carolina for its Scout brand.
Volkswagen has yet to reveal the locations of its next European plants. According to Reuters, the company is in no rush until it finds out what incentives Europe could offer to match the IRA tax credits in the U.S. Part of the five-year plan is also to prepare all Volkswagen Group brands, from Audi to Bentley, for a possible listing as a training exercise. The most likely to be listed on the capital market is the battery unit PowerCo, as Volkswagen already initiated talks with investors ahead of a possible partial listing.
We guess we’ll see a similar game from the German carmaker after CEO Oliver Blume announced plans to invest 180 billion euros ($193 billion) for the next five years. Most of the money (more than two-thirds of them) will go into developing new electric vehicles and software. This is a marked increase over the previous five-year plan, where only 56 percent of investments were earmarked for EVs and software. Volkswagen also wants to phase out ICE technology investments after 2025 as it works toward its target of 50 percent of EV sales globally by 2030.
The automaker will increase overall spending by 13 percent to accelerate its battery efforts. Volkswagen intends to build as many as six new battery factories in Europe, although the IRA incentives in the U.S. might derail European plans. Volkswagen’s battery business PowerCo is expected to generate sales of more than 20 billion euros ($21.4 billion) by the end of the decade. The German carmaker wants to invest 15 billion euros ($16 billion) in battery plants and raw materials.
On Monday, Volkswagen announced plans to build a battery factory in Canada, its first outside Europe. The factory would begin battery cell production in 2027 to provide batteries for Volkswagen assembly plants in Tennessee and (soon) South Carolina. The German company shared very few details, including the production capacity or the value of the investment. Volkswagen’s latest plan also mentions a $2 billion investment into a new plant in South Carolina for its Scout brand.
Volkswagen has yet to reveal the locations of its next European plants. According to Reuters, the company is in no rush until it finds out what incentives Europe could offer to match the IRA tax credits in the U.S. Part of the five-year plan is also to prepare all Volkswagen Group brands, from Audi to Bentley, for a possible listing as a training exercise. The most likely to be listed on the capital market is the battery unit PowerCo, as Volkswagen already initiated talks with investors ahead of a possible partial listing.
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