Volkswagen (VOWG p.DE) said on Tuesday that it aims to invest 180 billion euros ($192.76 billion) over the next five years in sectors such as battery production and its North American operations, with expenditure on combustion engines declining beginning in 2025.
As it works toward a global objective of 50% EV sales by 2030, more than two-thirds of the five-year investment budget is dedicated to electrification and digitalization, up from 56% in the previous five-year plan.
The automaker is due to deliver an update later Tuesday on how it plans to improve operations at its software business Cariad, which was established under former CEO Herbert Diess but has gone over budget and behind schedule.
According to the carmaker’s annual report released on Tuesday, the unit had an operational loss of 2.1 billion euros in 2022 on revenue of 800 million euros.
In the most recent investment plan, 15 billion euros are set aside for battery plants and raw materials, with the firm first focused on obtaining the raw materials it requires before constructing new facilities.
Board member Thomas Schmall stated on Monday that the carmaker had three plants under construction in Europe and was not in a rush to select additional locations. It also announced the opening of its first North American plant in Canada, which will begin production in 2027.
Investment in combustion engine technology will peak in 2025 and then fall, according to the manufacturer, which has more aggressive electrification goals than other competitors.
The investment selections are aimed at implementing a 10-point plan devised by Chief Executive Oliver Blume after taking over the manufacturer in September.
Volkswagen is also scheduled to publish the results of a ‘virtual equity story’ exercise initiated by Blume later on Tuesday. As a result, all of the company’s brands, ranging from Audi to Bentley, were preparing for a listing as a training exercise to become more appealing to capital markets.
PowerCo, a battery company, is the most likely stock market candidate. Reuters reported in November that investors were in talks to purchase into the division ahead of a possible partial IPO.
The automaker offered an upbeat view for the coming year, sending shares surging, anticipating a 10% to 15% increase in sales on 14% higher deliveries despite supply chain issues.
Despite supply chain problems driving its net cash flow far below target, Volkswagen’s profitability margin in 2022 was at the upper end of its 8.1% estimate, with sales and earnings outperforming 2021 levels.
($1 = 0.9338 euros)
