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Volkswagen to spend ~€44B on e-mobility, autonomous driving, new mobility services and digitalization through 2023

Over the coming five years to the end of 2023, the Volkswagen Group will be spending almost €44 billion alone on the e-mobility, autonomous driving, new mobility services and digitalization in its vehicles and at its plants.

This represents approximately one-third of total expenditure for the 2019-2023 planning period and is the outcome of the Group’s planning round, which has now been completed and was discussed and endorsed by the Supervisory Board of Volkswagen Aktiengesellschaft at its meeting on Friday.

The Volkswagen Group is working consistently on improving earnings at all brands and companies in order to finance the enormous challenges of the future from its own resources. Programs to secure the agreed targets have been initiated by the brands and companies.

Both the capital expenditure ratio and the research and development ratio in the Group’s Automotive Division are to continue to decline to a competitive level of 6% from 2020 onward. The net cash flow target of a minimum of €10 billion by 2020 remains valid. The diesel crisis will, however, still impact cash outflows in planning years 2019 and 2020.

The joint ventures in China are not consolidated and are therefore not included in the plans. These joint venture companies provide their own funding for investments in plants and products.

EV production. At its meeting, the Supervisory Board of Volkswagen Aktiengesellschaft approved the new plant assignment plans—specifically, Emden and Hanover to become electric vehicle plants. (Earlier post.) The strategic plant assignment reflects the challenges of the next five years and lays the necessary foundations.

The plants in Emden and Hanover will be converted to build electric vehicles: models from the ID. family will begin rolling off the assembly lines there from 2022. In order to serve growth in Europe going forward, the Group will be expanding its production capacity post-2022 with an additional plant in Eastern Europe.

All-electric cars will begin leaving the assembly lines in Emden and Hanover from 2022: going forward, electric small cars and sedans from several brands will be built in Emden, while Hanover will specialize in the production of the ID. BUZZ family in addition to building vehicles with conventional drives.

Production of the Volkswagen Passat family will be moved to the ŠKODA plant in Kvasiny, Czech Republic, and these models will be built there together with the ŠKODA Superb and Kodiaq from 2023. The ŠKODA Karoq and the SEAT Ateca, currently produced in Kvasiny, will be transferred to a new Group multi-brand plant. The Group is looking for a new location in Eastern Europe.

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The most important criteria for plant assignment are optimal utilization of existing capacity, platform orientation and volume bundling. As a result, flexible multi-brand plants will become increasingly common in order to harness the advantages of the flexible production network.

Efforts will be systematically geared to reusing existing resources and factory structures and to cross-brand standardization with a view to increasing productivity and reducing factory costs and investments. The Group is addressing the digital transformation of its plants to leverage further efficiencies.

Group Production has targeted a 30% increase in productivity by 2025. Backed by good progress in recent years, the environmental impact of Group plants is to be almost halved within the same timeframe.

Ford. In addition to investment planning, the Supervisory Board also consulted on further groundbreaking future projects at its meeting on Friday. The talks with Ford about an industrial cooperation announced earlier are progressing positively so far, Volkswagen said. The two companies complement each other very well in terms of both products and regions. The joint development and manufacture of a range of light commercial vehicles is at the core of the envisaged cooperation.

Volkswagen expects significant synergy effects from the potential to lower costs or increase performance via scales. Ford and Volkswagen will nevertheless remain competitors, as the proposed cooperation does in no way concern commercial, marketing or pricing strategies. Additional fields of cooperation outside the light commercial vehicle segment with the potential for expanding collaboration have also been identified.

Comments

HarveyD

Excellent plan to provide funds to accelerate transition to automated drive extended range e-vehicles.

How much efforts and funds will be used for next generation batteries R & D and lower cost mass production?

More JVs with Asia producers (and Ford?) may be required.

Lad

It's going to take a lot of resources and money for the legacy makers, who have build their profits round the internal combustion engine, to transition to EVs. However, I don't worry about VW; they have money to burn witnessed by their dieselgate payoffs. I fear Ford is the one 'lost in EV space' and is incapable of changing with the times.

EVs are simple, i.e., a battery, motor control and an electric motor...all the car makers will be able to build electric drive trains...it will be the added features that distinguish one EV from another. Falcon doors, online updates, track mode, driving assist, supercharging, map online updates, a frunk, etc. Tesla already offers EVs with these features and Ford must only build ICE Pickups and SUVs to stay in business,

If Ford management was smart they would be trying to tie into Tesla's success with joint ventures. But, their egos will preclude rational behavior and in the end they will be crying for tax payer assistance for relief.

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