The Volkswagen Group announces plans to invest €180 billion ($193 billion) over the next 5 years as part of a widening focus on battery-electric vehicles, automotive software development and the electrification of existing internal-combustion-engine models.
The planned investments, which include a new manufacturing factory for the revived Scout brand in the U.S. and a battery-production facility in Canada, are being made as Europe’s largest automaker attempts to establish itself at the forefront of BEV sales through its large portfolio of passenger car brands, including VW passenger cars, VW commercial vehicles, Audi, Bentley, Cupra, Lamborghini, Porsche, SEAT and Skoda.
Speaking Tuesday at the company’s 2023 Annual Accounts Conference in Berlin, Volkswagen Group Chief Financial Officer Arno Antlitz reiterates a target of seeing BEVs account for up to 50% of global sales annually by 2030, and says €122 billion ($131 billion), or 68% of the 5-year investment budget is allocated to electrification and software development.
Canadian battery plant will supply Volkswagen products including ID. BUZZ van.
This is up from the €89 billion ($95 billion) or 56% allocation for electrification and software development in the previous 5-year investment budget revealed last year by former VW CEO Herbert Diess.
“We expect to reach 20% electromobility in new sales from 2025 and are already investing in that area. On the other hand, we need to keep internal-combustion engines competitive,” said Antlitz. “That is the double burden.”
The Group confirms it is finalizing software for its premium and luxury brands, which it says it may employ across all brands in the future in an attempt to improve economies of scale at its software unit CARIAD.
The software unit, established under Diess in 2020 and based in Wolfsburg, Germany, suffered an operating loss of €2.1 billion ($2.25 billion) in 2022 on revenues of €800 million ($857 million), according to figures released by the automaker.
Among the key expenditure within the new 5-year business plan is a greenfield BEV manufacturing plant for the Scout brand in South Carolina as well as a battery-production factory to be established in St. Thomas, ON, Canada, the latter of which is to be run by the Volkswagen Group’s PowerCo battery division.
Volkswagen’s Scout Motors concept.
Overall, the Group plans to build as many as seven battery factories, including six in Europe.
In its 2023 Annual Accounts Report, the Volkswagen Group has allocated up to €15 billion ($16 billion) for the establishment of battery plants and raw-material procurement. Overall, it expects to generate annual battery sales of more than €20 billion ($21.5 billion) by the end of the decade.
While its focus is tilted heavily toward BEVs and software development, the Group says it will continue to develop ICE technology to meet tough new Euro-7 emission regulations, though it says it expects investment in this area to peak in 2025.
Group profits for 2022 totaled €22 billion ($23.5 billion), an increase of 12.5% compared to 2021. Included was a profit of €4 billion ($4.3 million) from its Volume Brand Group, which includes Volkswagen, Cupra, SEAT and Skoda, as well as €7.6 billion ($8.2 billion) from its Premium Brand Group, including Audi, Bentley, Lamborghini, Porsche and the Ducati motorcycle brand.
Further contributors include the Traton Commercial Vehicles brand with an operating profit of €1.6 billion ($1.7 billion) and Volkswagen Financial Services, which added €5.7 billion ($6.1 billion) to the bottom line.
The automaker’s best-selling BEV in 2022 was the VW ID.4 and ID.5 with 193,200 sales globally. The VW ID.3 recorded 76,600 sales and Skoda Enyaq iV and Enyaq iV Coupe had 53,700.
New BEV models planned for launch in 2023 include the facelifted ID.3, ID.7 sedan, ID. Buzz long wheelbase, Cupra Tavascan and Audi Q8 e-tron. The target is for a BEV share of up to 10% of total sales by 2024.
