Volkswagen Group announces €180 billion investment in electric vehicles (EVs)

The Volkswagen Group  has announced solid year results for 2022, despite global economic headwinds. The Group’s battery electric vehicle  (BEV) strategy continued to advance in 2022 and demonstrated the popularity of the latest model range, with robust performances across all regions. 

The Group remains the BEV segment market leader in Europe and continues to grow in China. Significant new models arriving in 2023 will add further tailwind and improve the Group’s market position. As a consequence Volkswagen has increased what it plans to invest in the future, committing €180 billion between 2023 and 2027. 

This €180 billion is a 13 per cent increase on last year’s pledge of €159 billion. The Group says more than two-thirds (68%) of the investment will be used for the transition to electric vehicles and digitisation as cars become increasingly connected. A large part of this will be used to manufacture its own batteries and expand in the world’s biggest markets in the US and China.

Oliver Blume, Volkswagen Group CEO, said: “Financial Year 22 was an important year for the Volkswagen Group. We made headway on executing our strategy, despite extreme headwinds. BEVs accounted for a record 7 per cent share of total deliveries – a significant milestone that we will build upon this year as our popular model range continues to grow. 

“In line with our Ten-Point Plan, we took important steps to execute our strategy, including new product strategies for our brands, the streamlining of our platforms and a revised software roadmap. 

“We continued to strengthen our global presence by concentrating the production and development of our excellent products and technologies even more locally in the markets. FY23 will be a decisive year for executing strategic goals and accelerating progress across the group.”

As early as 2025, every fifth vehicle sold worldwide is expected to be an all-electric vehicle. A major reason for the investment increase is the up to €15 billion ringfenced for the construction of cell factories by the Group’s battery start-up PowerCo  and upfront expenditures for securing raw materials as part of the implementation of the battery strategy. By 2030, PowerCo is expected to generate annual sales of more than €20 billion. 

Arno Antlitz, Volkswagen Group CFO and COO, said:“Financial Year 22 has impressively demonstrated the robustness of our business model. Under challenging conditions, we delivered 572,100 BEVs and increased our overall revenues and operating profits. 

“FY23 will be no less challenging in view of the overall economic developments. Nevertheless, our strong brands, with their convincing product offerings and the order backlog of around 1.8 million vehicles allow us to look ahead to FY23 with confidence. 

“We aim to again generate robust returns in the current year. Our strong financial base puts us in a position to continue investing in the electrification and digitalisation of our company, even in a challenging economic environment”.

Market-Leading BEV Portfolio

Volkswagen Group’s product portfolio is highly competitive and has seen notable success in particular in the BEV segment. BEV growth has continued and the Group saw 26 per cent growth in total BEV vehicle deliveries. The company achieved an overall BEV share of seven per cent in 2022. BEVs now account for 16 per cent of the Group’s order book. This is a sequential increase over 2021 reflecting the strategic priorities of the Group.

Volkswagen’s Best-Selling BEVs in 2022:

Volkswagen ID.4 /ID.5  193,200

Volkswagen ID.3  76,600

ŠKODA Enyaq iV  (incl. Coupé) 53,700

The Group continues to develop new models tailored to customer demand and remains well-positioned to benefit from further growth in this segment. In 2023, several significant new models for the Group will be presented, including the new ID.3 , ID.7, ID. Buzz Long Wheel Base, CUPRA Tavascan and Audi Q8 e-tron. With the launch of these new models, the Group aims to reach a BEV share of around 10 per cent of total deliveries in FY 2023.

Premium Brand Group margin increased to 12.3 per cent (10.6 per cent) seeing a resilient demand for well-equipped premium vehicles, a high order bank and strong results from the Lamborghini , Bentley  and Ducati  brands. 

Premium brand revenue for the Group rose to €61.8 billion (EUR 55.9 billion) in 2022. Porsche’s operating margin advanced to 18.6 per cent, seeing higher volume, improved pricing and better product mix as its BEV share amounted to over 11 per cent of total deliveries. The Porsche Taycan  reached the production milestone of 100,000 vehicles in 2022, after only two years.

Traton Commercial Vehicles increased revenues to €39.5 billion by compensating for lower capacity utilisation and higher product costs through price implementation and mix. The Traton Group improved its operating margin to 4 per cent (1.3 per cent) with an operating profit of €1.6 billion.

North America

Volkswagen Group’s expansion in the North American market continued throughout 2022, with several key milestones being met during the year. This includes a strengthened US leadership team, the first ID.4  electric SUVs rolling off the production line in Chattanooga in 2022 and the announcement of the iconic Scout brand to deliver its first all-electric vehicles in 2026. 

Overall, BEV deliveries in the US were up 18.8 per cent to 44,200 units, with the Group ranking fourth overall in the all-electric segment. The Group currently has four per cent market share in the total market including ICE vehicles, which it aims to increase to 10 per cent by 2030. In large part, this will be driven by the expansion of the broadest US product range, including the debuts of the ID.7 and ID. Buzz in 2024. 

China

China continues to play an important role in the transformation of the industry and in meeting the Group’s decarbonisation goals. The introduction of a cross-brand China Board aims to accelerate decision-making and development processes in the region, thereby leveraging more synergies between the brands. 

In 2022, the Group’s ‘in China for China’ approach helped to further extend local partnerships. With the Horizon Robotics partnership, the Group will drive forward the development of driver assistance systems and highly automated driving in China. In addition, the Group established CARIAD China to accelerate research and development, expand the approach to software development and push forward a China-specific technology concept. 

This will enable the Group to satisfy the needs of local customers more effectively, regularly bring them fresh, smart and comfortable travel experiences and realise its goals in the region. China’s importance will increase even further in the coming decade, especially in the field of electromobility.

Already, this approach is achieving impressive results and in 2022 the Group saw deliveries of all-electric vehicles in the ID. family more than double in China. In total, 143,100 ID.3, ID.4 and ID.6 models were sold there in 2022. This is an increase of 102.9 per cent year-on-year. Overall, BEV deliveries in China were up 68 per cent year-on-year.