Volkswagen announces five-year, $193 billion investment plan as electrification gathers momentum

People look at the Volkswagen id buzz electric car during press day at the Los Angeles Auto Show in Los Angeles, California on November 17, 2022.

Mike Blake | Reuters

Volkswagen announced Tuesday plans to invest 180 billion euros ($192.6 billion) between 2023 and 2027, with more than two-thirds targeting “electrification and digitalization.”

The German auto giant earlier this month reported full-year 2022 operating profit of €22.5 billion, up 13% year-on-year, with battery and electric vehicle (BEV) shipments up 26%.

BEV expansion was fueled by a 68% increase in China, while the company also completed landmark electrification of its Chattanooga, Tennessee plant.

However, overall deliveries fell 7% to 8.3 million vehicles in 2022, and the auto division’s net cash flow fell to 4.8 billion euros from 8.6 billion euros in 2021.

In Tuesday’s annual report, the company attributed this to “an increase in working capital due to supply chain and logistics issues, particularly towards the end of the year” and forecast that this should “broadly reverse” during 2023.

CEO Oliver Blume said Volkswagen “set clear and ambitious goals and made the necessary decisions to streamline processes” in 2022, while the coming year will be “crucial” for the implementation of the group’s strategic goals.

Arno Antlitz, Volkswagen Group CFO and COO, said that the company’s strong financial position should allow it “to continue investing in electrification and digitalization even in a ‘challenging economic environment'”.

“We have rising interest rates and overall demand is falling slightly from a customer perspective and from a market perspective, but on the other hand we are still in an environment, in an economy, that is characterized by [semiconductor] Supply that’s still not enough,” Antlitz told CNBC on Tuesday, adding that this global semiconductor shortage is abating.

“Based on that, we have an order backlog of almost 1.8 million cars. With our strong products, strong brands and this backlog, we’re pretty confident about 2023.”

The automotive division’s net cash flow rose to 43 billion euros by the end of 2022, fueled by the luxury brand’s successful IPO Porschewhich on Monday reported record profits and issued an ambitious long-term outlook. Volkswagen announces five-year, $193 billion investment plan as electrification gathers momentum

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