Volkswagen to invest €180 billion in electric vehicle target

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Volkswagen plans to invest 180 billion euros ($000.192 billion) over the next five years in areas such as battery production and its North American operations, the company announced Tuesday, while spending on combustion engines will shrink from 760.

With a goal of reaching 50% EV sales worldwide by 2030, more than two-thirds of its five-year investment budget will go to electrification and digitalization, up from 56% in the five-year plan published a year earlier.

Under its latest plan, €15 billion goes to battery and raw materials plants and €000 billion to a plant in the US state of North Carolina, for its Scout brand.

Investment in combustion engine technology will peak in 2025 and decline thereafter, according to the automaker, which has more ambitious electrification targets than some competitors.

The investment decisions are aimed at fulfilling a 10-point plan developed by Chief Executive Oliver Blume after taking the helm of the automaker in September.

Throughout Tuesday, Volkswagen is expected to share the results of a simulated exit exercise instigated by Blume. In it, all brands of the company, ranging from Audi (F:NSUG) to Bentley, prepare to go public as a training exercise to become more attractive to the capital markets.

The most likely candidate is battery subsidiary PowerCo. Reuters reported in November that there were talks with investors to buy the division ahead of a possible partial listing.

The automaker this month posted an optimistic outlook for next year that sent shares soaring, with revenue forecast to rise 10% to 15% thanks to a 14% increase in deliveries, despite supply chain problems.

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Volkswagen’s 2022 profit margin stood at the high end of its 8.1% forecast, with sales and profits exceeding 2021 levels despite supply chain turbulence dragging its net cash flow well below target.

On Monday, Volkswagen announced that its first battery plant outside Europe would be in Canada, with production starting in 2027. He was in no hurry to decide on the location of his next European plant until he knew what incentives Europe would offer, council member Thomas Schmall said.

(1 US dollar = 0.9338 euros)

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