Volkswagen plans to invest 180 billion euros ($192.76 billion) over the next five years in areas such as battery production and its operations in the United States, the company announced Tuesday, while spending on combustion engines will be slashed from 2025.
With a goal of reaching 50% of electric vehicle sales worldwide by 2030, more than two-thirds of its five-year investment budget will go to electrification and digitization, up from 56% in the five-year plan published the year before.
Under its latest plan, 15 billion euros are allocated to battery factories and raw materials and 2 billion euros to a plant in North Carolina, in the United States, for its Scout brand.
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Investment in combustion engine technology will peak in 2025 and then decline thereafter, according to the automaker, which has more ambitious electrification goals than some competitors.
Investment decisions are geared towards meeting a 10-point plan laid out by CEO Oliver Blum after he took over the automaker’s helm in September.
Throughout Tuesday, Volkswagen is expected to share the results of an initial public offering exercise instigated by Blume. In it, all of the company’s brands, from Audi to Bentley, are preparing to go public as a training exercise in becoming more attractive to capital markets.
The most likely candidate is the battery powered PowerCo. Reuters reported in November that there were talks with investors to buy the division ahead of a possible partial listing.
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The automaker this month issued an upbeat forecast for the year ahead sending shares higher, with revenue expected to rise 10-15% on the back of a 14% increase in deliveries, despite supply chain issues.
Volkswagen’s profit margin for 2022 came in at the high end of its forecast of 8.1%, with sales and profits exceeding 2021 levels despite supply chain disruptions depressing net cash flow, well below target.
Volkswagen announced on Monday that its first battery factory outside Europe will be in Canada, with production starting in 2027. It was in no rush to decide on a location for its next European plant until it learned what incentives Europe would offer, council member Thomas Schmoll said. .
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