VW raises spending to boost EV, software efforts

BERLIN — Volkswagen Group will invest 180 billion euros ($193 billion) in the next five years into areas including battery cell production, digitalization in China and expanding its presence in North America.

More than two-thirds of the five-year investment budget is allocated toward electric vehicles and software, up from 56 percent in the previous five-year plan, with 15 billion euros of that ringfenced for battery plants and raw materials.

Investment in combustion engine technology will peak in 2025 and decline from then on, VW said, as it works toward its target of 50 percent all-electric sales globally by 2030.

VW is increasing overall spending by 13 percent compared with its last annual update.

“We have set clear and ambitious targets and took necessary decisions to streamline processes,” CEO Oliver Blume said in a statement. This year “will be a decisive year for executing strategic goals and accelerating progress across the group,” he added.

In the latest plan, 2 billion euros will be put toward a plant in South Carolina for its Scout brand.

Late last year, VW delayed setting new goals on investments, citing a lack of visibility amid the war in Ukraine and significant supply bottlenecks.

Blume, in office since September, has come under pressure to reveal more about his strategic priorities after focusing on fixing the company’s chaotic software push and scrutinizing costly projects.

On Monday, VW announced plans to build a battery plant in Canada, its first outside Europe, as the company seeks to fast-track an expansion in the key U.S. market.

VW earlier this month sent shares soaring with an optimistic outlook for the year ahead despite ongoing supply chain challenges, forecasting a 10 to 15 percent rise in revenue on 14 percent higher deliveries.

Its earnings margin was at the upper end of its forecast for 2022 at 8.1 percent, with sales and earnings above 2021 levels despite supply-chain turmoil dragging its net cash flow far below target.