VW to triple electrified car budget to €9bn over next five years

Volkswagen chief executive Matthias Müller suggested the world’s largest automaker is not too late to the electrical car party.

Mr Mueller, speaking at the Vienna Auto Display on Friday, said media got a little carried away with its “New Hammers Old” headlines after Tesla’s market value surpassed GM earlier this month.

“This has little to do with the reality on our streets: the Volkswagen Group produced Ten.3m vehicles last year — Tesla around 80,000,” he said. “And the fact is, electro-mobility resumes to be a niche.”

Mr Mueller said 750,000 electrical cars were produced around the globe last year, or just 0.9 per cent of the total car market.

He conceded that “the future of driving is electrical,” but projected that by two thousand twenty five three out of four VW cars would still be run by diesel or petrol engines, so it was significant to invest across the spectrum.

He said the VW Group will spend €20bn by two thousand twenty two on more efficient, cleaner engines. By contrast, the VW Group has invested €3bn in “alternative” drive technologies in the last five years. “Over the next five years, we will triple this figure to around €9bn,” he said.

Analysts have been worried that the German carmakers have not been doing enough to rival with Tesla. Despite the US upstart’s low sales, it has built massive brand value around its vision of future mobility, with its network of charging stations, its “Gigafactory” battery plant in Nevada and self-piloting technology.

Meantime, China, the world’s largest market for car sales, is so quickly building its own electrified car market that “it could prove a structural threat to the German auto industry,” wrote auto analysts at Evercore ISI earlier on Friday.

But Mr Mueller said VW is ramping up its own plans on electrified cars, and next year it will begin to suggest low-price electrified vehicles in China. He said battery technology will have to become a “core competency,” as it accounts for almost a third of an electrical car’s value.

Beginning in 2019, he said VW will suggest customers with electrical cars with a range of 600km “at the price of today’s diesel.”

Meantime, VW is pushing to reduce complexity in the production process, so that by two thousand twenty engine production should be ten to fifteen per cent more efficient.

One motor VW introduced last year can be used in forty five models across the group’s Audi, Seat and Skoda brands.

“Expensive and nonsensical parallel developments are a thing of the past with us,” he said.

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