VW Group (Part 1): Investing EUR 73 billion in EV, HV and digitalization in 2021-2025

Producing battery cells with Northvolt, increasing in-house software development

2021/02/01

Summary
Electrification strategy: launching VW ID.4 in late 2020, Audi Q4 Sportback e-tron in 2021
Converting plants in Europe, China and US to EV plants: manufacturing battery cells in-house
Autonomous driving technology: investing USD 2.6 billion in Ford’s subsidiary Argo AI
Increasing in-house software development: establishing independent Car.Software unit
VW starts EV ride-hailing service with Uber, introduces ID.3 to WeShare service

Summary

VW brand’s first all-electric SUV ID.4 (Photo: VW)

In November 2020, Volkswagen AG (VW Group) announced that it would invest EUR 73 billion for next-generation technologies including electrification and digitalization in the five-year period 2021 through 2025 (in the previous plan, this amount was EUR 60 billion for the period 2020 through 2024). While total investments comprising capex and R&D expenditures will be the same level as the period of 2020-2024 at EUR 150 billion, the share of investment for future technologies was raised by 10% to 50%. Of the EUR 73 billion, EUR 35 billion will be spent on electric vehicles (EVs), EUR 11 billion will be used for hybrid vehicles (HVs), and EUR 27 billion, which is doubled from the previous plan, will be earmarked for digitalization.

According to its electrification plan, the VW Group plans to launch around 70 EVs and nearly 60 HVs by 2030. Over the same period, the plan estimates production of 26 million EVs (of which 19 million are underpinned by the MEB platform developed by VW and 7 million will use the PPE high-performance car platform) and 7 million units of HVs.

In the new EV model launch plan, the VW brand will roll out several models from its EV sub-brand ID. family including the ID.4 compact SUV in December 2020 and the ID.BUZZ microbus in 2022. Audi plans to release the Q4 Sportback e-tron, the SUV coupe version of the Q4 e-tron. Skoda and SEAT are also planning to introduce EV models using the MEB platform. Skoda will launch the Enyaq iV while SEAT will release the el-Born from its high-performance brand CUPRA.

The VW Group is renovating and building plants in Europe, China and the U.S. to implement its plans to produce EVs in these regions. In Germany, the automaker started production of the ID.3 and ID.4 using the MEB platform at the Zwickau plant which was converted to a plant exclusively for EVs. In China, SAIC-VW’s Anting Plant and FAW-VW’s Foshan Plant also started building the Chinese versions of the ID.4. As for batteries which are indispensable components for EVs, the VW Group is securing its battery supplies from external producers and building up further production capacities with battery manufacturers. The VW Group and Northvolt AB, a Swedish battery producer, established a joint venture that plans to manufacture battery cells starting 2024 with an annual production capacity of 16 GWh.

In the field of autonomous driving, the VW Group agreed to expand its alliance with Ford to include the field and invested USD 2.6 billion in Argo AI, Ford’s self-driving system development subsidiary, in June 2020. Regarding software development that is essential to autonomous driving and connected cars, the Group established Car.Software, a software development subsidiary, in 2020. As for mobility services, VW introduced the ID.3 into its WeShare EV car sharing service in Berlin.

Please refer to Part 2 of this series on the VW Group regarding new model launch plan, Europe, China and the U.S. market trends, sales volume, financial results, and LMC Automotive’s sales forecast.

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