Volkwagen is beefing up its bet on electric cars, approving a 34 billion euro ($40 billion) spending plan that will accelerate its shift away from combustion-engine vehicles.
The world’s largest automaker by unit sales will spend the money on electric cars, autonomous driving and new mobility services by the end of 2022. It had previously pledged two months ago to invest more than 20 billion euros on electric and self-driving cars through 2030.
“We are laying the foundation for making Volkswagen the world’s No. 1 player in electric mobility by 2025,” Chief Executive Matthias Mueller told a news conference.
Volkswagen is aiming to offer an electric version of each of its 300 group models by 2030, with a total investment of about 72 billion euros of total investments in electric vehicle capacity and projects will amount by 2022.
The company had been slow to embrace electric cars and self-driving technology until it was swept up two years ago in a scandal over cheating on diesel emissions tests. As Reuters reports, “the emissions fraud, and new Chinese quotas for electric cars, prompted a strategic shift to zero-emission and self-driving technology, and Volkswagen now has one of the most ambitious targets in the industry.”
China has decreed that all manufacturers must sell the equivalent of 10% electric vehicles by 2019.
To fund the spending on electric vehicles, VW will draw on cost savings in all areas of operations, including vehicle development, administration and manufacturing, as well as strong cash reserves. It has liquid assets of around 24 billion euros even after paying 17 billion euros to cover costs for of the diesel emissions.
Electric vehicle pioneer Tesla Motors spent about $10 billion on research and development from 2014 through the first half of this year, according to one estimate.
“Volkswagen, which had $217 billion in revenues last year, is a much bigger beast, and is also trying to solve many of the same problems Tesla is, with a far bigger pot of money,” Jalopnik commented. “The race to the future continues.”