Volkswagen cranks up electric car investment

German auto giant Volkswagen said on Thursday that it would bulk up its investment in electric vehicles and digitalisation to 89 billion euros ($101 billion) over the next five years.

The 12-brand group will dedicate 56 per cent of its 159 billion euros of investment to developing the cars of the future, up from 50 per cent, and estimates that “one in four cars sold in 2026 will have a battery-electric motor”.

“We are in the middle of the biggest transformation in the history of Volkswagen,” chief executive Herbert Diess told reporters after a meeting of the group’s supervisory board to agree the investment plan.

Under pressure to reduce the sector’s role in climate change, major automakers around the world have announced targets to gradually phase out fossil fuel-powered vehicles.

Germany’s newly minted coalition under the leadership of Chancellor Olaf Scholz is aiming to speed up the move towards electric cars with a target to have 15 million on the road in the country by 2030. In 2020, Volkswagen announced 73 billion euros of investment in the vehicles of tomorrow for the period up to 2024.

The need to raise the commitment through 2025 was “mainly due to the accelerated ramp-up of e-mobility as part of the green deal” agreed by the European Union, the group said in a statement.

The heightened investment will go into the opening of six new battery factories through partnerships with other companies over the coming years. 

The allocation for electric cars increased by 50 per cent to 52 billion euros, while the sums set aside for hybrid “transition technology” went down by 30 per cent to eight billion euros.

The digitalisation of its vehicles and the group’s organisation will cost a further 30 billion euros.