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Volkswagen to Invest $193 Billion Over 5 Years to Help Meet EV Goals

Volkswagen has announced a $193 billion five-year investment plan as the pace of electrification accelerates.

Volkswagen plans to invest €180 billion ($192.76 billion) over the next five years in areas including battery production and its North American operations, with spending on internal combustion engines set to decline from 2025, the company said on Tuesday.

Over two-thirds of the five-year investment, budget is allocated to electrification and digitalization to meet the target of 50% of global electric vehicle (EV) sales by 2030, up from 56% in the five-year plan released each year earlier.

In the latest plan, €15 billion will be spent on battery factories and raw materials, and €2 billion will go to a factory in North Carolina for its Scout brand.

The automaker said investment in combustion engine technology will peak in 2025 and then decline, and its electrification goals are more ambitious than some rivals.

The investment decisions aim to fulfil a 10-point plan laid out by Chief Executive Oliver Blume after he took over the automaker in September.

Later on, Tuesday, VW is also expected to share the results of a “virtual equity story” campaign launched by Blume. Getting all the company’s brands, from Audi to Bentley, ready to go public as a training exercise to increase their appeal to the capital market.

The most likely stock market candidate is the battery unit PowerCo, which Reuters reported in November was in talks with investors to buy the unit ahead of a possible partial listing.

The automaker this month issued an upbeat outlook for the year ahead, sending shares soaring as it expects revenue to rise 10% to 15% and deliveries to rise 14% despite supply chain challenges.

Volkswagen’s 2022 profit margin is at the upper end of its 8.1% forecast, with sales and earnings above 2021 levels even as supply chain turmoil has dragged its net cash flow well below target.

On Monday, Volkswagen announced that its first battery factory outside of Europe will be in Canada and start production in 2027. VW is in no rush to decide on the location of its next European plant until it knows what incentives Europe will offer, board member Thomas Schmall said.

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