Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Volkswagen unveils new €180B investment plan as part of electrification push

Published 14/03/2023, 09:34 pm
© Reuters.
VOWG
-
VOWG_p
-
VWAGY
-

By Scott Kanowsky 

Investing.com -- Volkswagen AG VZO O.N. (ETR:VOWG_p) outlined a sweeping €180 billion (€1=$1.0708) plan to invest in battery production and boost performance in key auto markets like the U.S. and China over the next five years.

In its annual report on Tuesday, the German carmaking giant said more than two-thirds of this investment will flow into "digitization and electrification." The company has set a target of 50% electric vehicle sales by the end of the decade, and is setting its sights on optimizing its software offerings as cars become ever more connected to other devices.

"As early as 2025, every fifth vehicle sold worldwide is expected be one with an all-electric drive," VW said in a statement.

The group added that a major reason for the investment uptick stems from the €15B it has set aside for the construction of cell factories by the battery start-up PowerCo, as well as expenditures for securing raw materials needed to produce batteries. By 2030, PowerCo is seen generating annual sales of over €20B. Investment in traditional combustion engines will also peak in 2025 before they begin to decline "continuously."

VW is attempting to use this push into electrification to expand its market share in North America to 10% by 2030, up from its current level of 4%. Meanwhile, the company is keen to grow its presence in China, the world's largest auto market, noting that the country's importance will rise over the next ten years, "especially in the field of electromobility."

But analysts flagged that performance was weak in VW's eponymous brand during the fourth quarter, with the earnings before interest and tax margin at the unit slipping to 1% from 3.8% in the prior three months. Analysts at RBC Capital said the segment's results were hit in part by the expiry of German government incentives for plug-in hybrids at the end of 2022, as well as knock-on effects from the war in Ukraine.

Shares in VW fell on Tuesday and have dropped by more than 9% over the past one-year period.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.