The Volkswagen Group has committed to investing $131 billion (122 billion euros) on electrification and digitalization over the next five years.
The investment, announced at today’s annual general meeting at its Wolfsburg, Germany, headquarters, will include a new battery factory in Canada and at least one new North American EV manufacturing facility.
It has also revived the Scout brand, with the first production Scout EVs due in 2026, while the Volkswagen-branded ID.7 and ID.Buzz will debut in North America in 2024.
The investment figure comes on the back of the Volkswagen Group’s 2022 profit of €22.5 billion ($24.1 billion), which was up 13% on its 2021 performance and at the upper end of its 8.1% predicted margin.
Of the committed EV investment, fully €15 billion ($16.1 billion) of it has been allocated to battery development and manufacture, and the sourcing of raw materials.
Volkswagen has insisted it does not need any more EV manufacturing facilities in Europe, where it already has three plant either in full swing or under development, while its Canadian battery plant will be on stream by 2027.
It will continue to increase spending on combustion engines until 2025 (giving a total five-year development investment of $193.15 billion (€180 billion), when it plans to gradually decrease its investments and divert them to EV development and production.
“We have set clear and ambitious targets and took necessary decisions to streamline processes in financial year 22. FY23 will be a decisive year for executing strategic goals and accelerating progress across the Group,” Volkswagen Group CEO Oliver Blume insisted.
“We made headway on executing our strategy, despite extreme headwinds. BEVs accounted for a record 7% share of total deliveries – a significant milestone that we will build upon this year as our popular model range continues to grow.”
Volkswagen has allocated 68% of its future investments are planned for electrification and digitalization – up from 56% in the last five-year plan, announced by former CEO Herbert Diess in 2018.
The Volkswagen Group’s lessons from the semiconductor crisis look baked in, with the conglomerate pulling in an 8.1% operating margin despite a 7% decline in overall deliveries to 8.3 million vehicles.
A rich model mix, with a higher percentage of higher-margin models, left the automotive division with €4.8 billion in net cash flow, with Porsche profits helping it to a net liquidity of €43 billion.
It also claims it has a 1.8-million strong order book for the current financial year.
With a slice of Porsche floated successfully, the next likely Volkswagen Group float looks to be its battery startup, PowerCo, which is expected to have €20 billion in annual sales by 2030.
With 26% growth in EVs in 2022, battery-powered vehicles made up 7% of Volkswagen Group sales in 2022, though they make up fully 16% of the Volkswagen Group forward order book. Of the Volkswagen brands (Audi, Bentley, Seat, Skoda, Porsche, Lamborghini and Volkswagen), only Lamborghini is yet to confirm an EV production plan, though it is rumored to have an EV coming in the second half of the decade.
The Volkswagen Group’s highest selling EVs in 2022 included the Volkswagen ID.4 (193,200 sales), the Volkswagen ID.3 (75,600) and the Skoda Enyaq iV (53,700).
It already has plans to launch the upgraded ID.3, the ID.7, the ID.Buzz long wheelbase, the Cupra Tavascan and the Audi Q8 e-tron this year, with a target penetration of 10% EVs in 2023.
It is not all good news at Volkswagen, which still has the problem of the crisis at the much-touted Cariad digitalization unit, which lost €2.1 billion last year on only €800 million in revenue. The Berlin-based operation, set up by Diess to develop software and digital solutions for the entire Volkswagen Group, has been
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