(Bloomberg) — Volkswagen AG will invest 89 billion euros ($101 billion) in new technology over the next five years to narrow the gap to Tesla Inc. and keep incumbent rivals like Toyota Motor Corp. or Stellantis NV at bay.
Spending on future tech like software and electric cars will amount to more than half of total outlays for the first time, VW said Thursday in a statement during a meeting of the group’s supervisory board. The projected outlay is up from 2020’s five-year forecast of 73 billion as the carmaker seeks to accelerate the shift, expecting about a quarter of all sales to be electric-only by 2026.
“Our exceedingly robust and solid financial base enables us to finance the necessary investments on our own,” VW Chairman Hans Dieter Poetsch said in a statement. “We are also therefore very confident that these investment decisions will steer the Volkswagen Group to future success.”
VW also announced a number of management board changes following weeks of internal tensions. Chief Executive Officer Herbert Diess will cede responsibility of VW’s China business, which will move to Ralf Brandstaetter, the head of VW’s main car brand.
Europe’s largest automaker is working to get its overhaul back on track after momentum fizzled in recent months when chip supply bottlenecks disrupted manufacturing and the carmaker lost market share in China, its biggest market. After delivering a much-praised electric-vehicle strategy in March to tackle Tesla’s dominance, renewed infighting among key stakeholders has overshadowed the industry’s biggest push into electric cars.
In the run up to the meeting, Diess caused outrage among powerful worker representatives by suggesting that massive job cuts might be needed to compete with much nimbler rivals like Tesla that’s about to start making cars at a new factory near Berlin. The brouhaha caused Thursday’s supervisory board meeting to be delayed by a month and speculation about Diess’s future as CEO.
Beyond internal wranglings, VW shares got a boost this week after Handelsblatt reported that the Porsche and Piech family is exploring a sale of part of their stake in the automaker to support a separate listing of the Porsche sports-car subsidiary, while no decision has been made. A spokesman for Porsche SE declined to comment on the report.
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