Volkswagen To Invest EUR 180 Bln Over 5 Years To Meet EV Targets

German auto giant Volkswagen Tuesday said it plans to invest 180 billion euros over the next five years by 2027, mainly with an aim to boost its targets for electrification and digitalization, and to grow its presence in the North America region. The company also said its solid financial performance in fiscal 2022 lays basis for profitable growth in key markets. Volkswagen shares were losing around 3 percent in German trading.

Arno Antlitz, Volkswagen Group CFO and COO, said, “Under challenging conditions, we delivered 572,100 BEVs and increased our overall revenues and operating profits. FY23 will be no less challenging in view of the overall economic developments. Nevertheless, our strong brands, with their convincing product offerings and the order backlog of around 1.8 million vehicles allow us to look ahead to FY23 with confidence. We aim to again generate robust returns in the current year.”

Antlitz added that the firm’s strong financial base helps it to continue investing in the electrification and digitalization, even in a challenging economic environment.

In a statement, the company noted that between 2023 – 2027, it would invest 180 billion euros in the most attractive profit pools and regions, including in particular the Group’s battery strategy. More than two-thirds or around 68 percent of the investment will flow into the future fields of digitization and electrification.

In the last five-year plan, the figure was 56 percent. As early as 2025, every fifth vehicle sold worldwide is expected be one with an all-electric drive.

With the investment, the company would focus to grow its presence in the North America region, increase the competitiveness in digitalization and products in China, as well as continue to develop its product portfolio.

Volkswagen said a major reason for the investment increase is the up to 15 billion euros ringfenced for the construction of cell factories by the battery start-up PowerCo and upfront expenditures for securing raw materials as part of the implementation of the battery strategy.

By 2030, PowerCo is expected to generate annual sales of more than 20 billion euros. Additionally, there will be ongoing investments in the last generation of combustion engines.

The company projects the peak in investment to be reached in 2025, after which it will continuously decline.

Regarding its financial performance, Volkswagen said it remains well-positioned for future growth, despite weak deliveries in fiscal 2022.

Earlier in March, the automotive giant had recorded fiscal 2022 operating profit of 22.5 billion euros, up 13 percent from the previous year, with strength of Volkswagen Group brands.

Overall delivery numbers declined 7 percent to 8.3 million vehicles in 2022 amid an increase in working capital due to supply chain and logistics issues, especially towards the end of the year.

However, Battery Electric Vehicles or BEV deliveries rose 26 percent in 2022, with further significant models to be released in 2023.

The company increased China BEV deliveries by 68 percent in 2022, with strong demand for its highly competitive, unrivalled e-model range. Overall, BEV deliveries in US were up 18.8 percent to 44,200 units.

With a high order book of 1.8 million vehicles, the company expects supply chain bottlenecks to gradually ease in 2023.

In Germany, Volkswagen shares were trading at 126.82 euros, down 2.79 percent.

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