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

People today glimpse at the Volkswagen id buzz electric powered auto during the push working day at the Los Angeles Car Clearly show in Los Angeles, California, November 17, 2022.

Mike Blake | Reuters

Volkswagen on Tuesday declared plans to spend 180 billion euros ($192.6 billion) among 2023 and 2027, with additional than two thirds concentrating on “electrification and digitalization.”

The German automotive big before this thirty day period posted a comprehensive-calendar year 2022 functioning income of 22.5 billion euros, up 13% from the previous 12 months, with battery and electric powered motor vehicle (BEV) deliveries increasing 26%.

The BEV growth was driven by a 68% spike in China, when the enterprise also finished the landmark electrification of its plant in Chattanooga, Tennessee.

Nonetheless, general delivery numbers declined by 7% to 8.3 million vehicles in 2022 and the automotive division’s net income flows reduced to 4.8 billion euros from 8.6 billion euros in 2021.

In Tuesday’s annual report, the firm attributed this to “an enhance in doing work funds owing to offer chain and logistics problems, specially toward the conclusion of the calendar year,” and projected this really should “largely reverse” in excess of the program of 2023.

CEO Oliver Blume mentioned Volkswagen “established obvious and bold targets and took required choices to streamline processes” in 2022, when the coming yr will be “decisive” for executing the group’s strategic aims.

Volkswagen Team CFO and COO Arno Antlitz said that the firm’s robust monetary situation should permit it to “keep on investing in electrification and digitalization” even in a “demanding financial surroundings.”

“We have curiosity premiums rising and the total desire is a little coming down from a shopper perspective, from a industry viewpoint, but on the other hand we are even now operating in an environment, in an economic system, that is characterised by [semiconductor] provide that is nonetheless not adequate,” Antlitz told CNBC on Tuesday, introducing that this world wide scarcity of semiconductors is easing.

“Primarily based on that, we have an order e-book which is just about 1.8 million vehicles. Based on our strong products and solutions, potent brands and that get ebook, we are rather confident for 2023.”

Web hard cash flow in the automotive division increased to 43 billion euros by the finish of 2022, fueled by the thriving IPO of luxury brand Porsche, which described report earnings on Monday and issued an formidable long-phrase outlook.