German automaker Volkswagen said Friday it will spend tens of billions of dollars refocusing the company on the making of electric cars, autonomous vehicles and new mobility services.
The Wolfsburg-based manufacturer, which plans to have some of the new offering in the market by 2023, said the 44-billion euro ($50 billion) investment in what CEO Herbert Diess describes as an “electric offensive,” includes an imminent partnership with US carmaker Ford Motor.
Both companies are fine-tuning details on a deal to jointly make a range of light commercial vehicles, and Dess hopes the agreement will be ready before the end of the year.
Collaboration between the two firms is viewed as a path to significant savings on research and development, while at the same time delivering big revenue.
Ford makes about 40% of all full-size pickups sold in the US, while VW sells almost 15% of the vehicles purchased in China, the world’s largest auto market.
“Volkswagen must become more efficient, more productive and more profitable in order to finance the high expenditure in the future and in order to stay competitive,” Diess said during the press conference.
He noted that Volkswagen was also “seriously considering involvement in battery production.”
One million e-cars
VW has been actively promoting the electric push by creating global production capacities for the construction of 1 million electric cars. On Wednesday, it announced it was converting three of its plants in Germany to build electric cars, ramping up production of zero-local emission cars ahead of tougher European emissions standards.
The company said it would begin local production of electric-powered vehicles at its facilities in Emden and Hannover in 2022, adding that a plant in Zwickau has already been designated for e-car production.
Recent studies show carmakers will need to add electric cars to their sales lineups to meet the new European Union rules on greenhouse gas emissions from 2021. They also highlight how German carmakers need to rethink their business as the growing adoption of electric vehicles (EVs) is expected to cost the country’s key auto industry about 75,000 jobs by 2030, according to a report carried out by the Fraunhofer Institute of Industrial Engineering.
Those figures, the institute said, were calculated on the assumption that by 2030, a quarter of all vehicles on Germany’s roads will be fully electric. Another 15% is expected to be hybrids, which combine an electric motor with a traditional internal combustion engine, and 60% of the cars will be powered by gasoline or diesel engines that are more fuel-efficient than today.
A more rapid adoption of electric vehicles could threaten up to 100,000 jobs, the study warned, adding that regardless of the final number, there will be suppliers that simply won’t be able to adapt their business model, especially among small- and medium-sized companies.
While relatively slow to catch onto the ongoing EV boom, German carmakers have stepped up their efforts in the wake of VW’s 2015 “diesel gate” emissions cheating scandal, which tainted the reputation of diesel cars and spurred a push towards more environmentally friendly engines.
BMW recently said raw materials needed for car batteries will grow 10-fold by 2025, adding it has been surprised by “just how quickly demand will accelerate”. BMW plans to offer 25 electrified vehicles by 2025 and, like many of its peers, it prefers nickel-manganese-cobalt batteries or NMC. EV pioneer Tesla’s favoured battery technology –nickel-cobalt-aluminum or NCA – already uses less than 3% cobalt.