VW to invest $A118 billion in EV and digital technology in “race to keep up with Tesla”

German automotive giant Volkswagen Group has announced investments worth around €73 billion ($AU118.7 billion) to accelerate the company’s transformation into a digital mobility company, with investments focusing on electrification, hybrid powertrains and digital technology.

The company’s decision to proceed with the investments will feature a doubling in spending on digitalissation to€27 billion by 2025, approximately €35 to be spent on battery electric vehicles, and a further €11 billion pushed into the development of hybrid vehicles of existing models.

Volkswagen’s new investments are part of the company’s larger commitment to the Paris Climate Agreement and its target of becoming climate neutral by 2050.

Volkswagen has committed to launch approximately 70 all-electric vehicles by 2030, of which 20 are already in production. The company plans around 60 hybrids by the end of the decade, with just over half already being manufactured.

But it is also part of an effort to keep pace with the industry leaders, specifically Tesla. “Yes, it is going to be a race with Tesla,” CEO Herbert Diess said. “We have to be seen as a tech company.”

“In the coming years, it will be crucial to reach a leading position in car software in order to meet people’s needs for individual, sustainable and fully connected mobility in the future. To that end, we have doubled our digitalisation spend.”

VW predicts production of approximately 26 million fully electric vehicles by 2030, with 19 million of these to be based on the company’s Modular Electric Drive Toolkit (MEB), and with the majority of the remaining seven million to use the high performance PPE platform.

Over the same period, Volkswagen expects to produce around seven million hybrid vehicles.

The lion’s share of investments earmarked for digitalisation will be invested in mission-critical fields such as artificial intelligence, autonomous driving, and digitalisation of significant business processes.

A new production line will be built at the company’s Hannover site, to complement the site’s transformation towards electric mobility and becoming a multi-brand plant.

The fully electric ID. BUZZ due to begin rolling off the production line as early as 2022.