VW brand investing 9 billion in electrification

Following the investments by the VW company, Porsche and Audi, the Volkswagen brand itself has now presented an investment plan for their electrification initiative, in which the Wolfsburgers have reserved approximately 9 billion euros for the electrification of their vehicles.

About 11 billion euros in total have been earmarked for the future tech fields of electric mobility, digitalisation, autonomous driving and mobility services – electrification enjoys a clear prioritisation here. Both sums are planned for the investment period between 2019 and 2023.

In order to finance their venture, Volkswagen is planning to improve their production capacities and costs, aiming for about 30% efficiency improvements at their factories. At the same time, a major savings plan will be put into effect, with this year already being planned to lower costs, saving up to 2.2 billion euros, in order to help pave the way for the investments beginning next year. By the end of next year, the sum saved should total 3 billion euros, which means that should they prove successful this year, much of the financial work has been done for the next year. As cost reduction plans, the company has cited a reduction of their model portfolio, the expansion of platform use, optimisation of material use and the slimming of administrative processes.

Regarding platform orientation, the first wave of MEB electric vehicles will hit the market in 2019, with up to 15 million vehicles. To compare, VW has built more than 50 million combustion vehicles based on the MQB platform – plans are to continue in this volume over the next years, but we can see a clear trend of combustion being phased out quickly, with the last production period for a combustion vehicle platform planned for 2026, according to VW head of the strategy unit, Michael Jost. If the statement is to be taken at face value, that means that VW has just committed to abandoning combustion vehicles within the next few years. If things come to pass as such, Volkswagen’s last combustion vehicle will be sold somewhere around 2040.

Volkswagen as a brand currently has two fully electric vehicles in their line-up, which will be expanded to about 20 by 2025. Next ot three future electric vehicle manufacturing locations in Germany, two more factories are being constructed in China in Anting and Foshan. The joint venture between VW and FAW invested in their factory in Foshan in order to boost production capacity from 300,000 vehicles to 600,000. Also in the USA, VW is currently decided on a location for a vehicle factory.

Speaking of the USA, recently it has been discussed that VW could also use existing facilities from US manufacturers such as Ford, in order to build their electric vehicles. It is unclear if this would potentially replace the additional facility, or would just be a temporary or additional measure. In November, there had already been first information about a possible cooperation between the two companies.

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