Volkswagen has raised its planned investment in electric and digital vehicle technologies to 73 billion euros ($ 86 billion) over the next five years, as it seeks to hold its crown as the world’s largest automaker in a new green era. Under a plan unveiled on Friday, Volkswagen said it would spend almost half of its € 150 billion investment budget on electric mobility, hybrid cars, a seamless software-based vehicle operating system, and autonomous driving technologies.
In last year’s plan, the German car and truck maker, which owns brands like Volkswagen, Audi, Porsche, Seat, and Skoda, allocated 60 billion euros for electric and autonomous cars with a budget of 150 billion.
The global emissions restriction, stemming in part from Volkswagen’s diesel pollution scandal in 2015, is forcing automakers to accelerate the development of low-emission technology, even for their low-margin conventional models.
“The transformation of the company and its brands, as well as the strategic focus on the core areas of mobility, will be implemented consistently,” said Hans Dieter Putsch, Chairman of the Volkswagen Supervisory Board.
Jefferies analyst Philip Houchois said that while the overall investment budget remained unchanged, Volkswagen’s priorities had seen “a significant reallocation of software, digitization and continued priority for Germany.”
Volkswagen said the EU’s stricter emissions targets would force it to increase the share of hybrid and electric vehicles in car sales in Europe to 60% by 2030, up from the previous target of 40%.
Pressure has also increased to overhaul factories to build electric cars after California, which accounts for 11% of US car sales, said in September that it planned to ban the sale of new gasoline-powered cars and trucks starting in 2035.
The reduction in emissions has already prompted Volkswagen to review the future of its Lamborghini, Bugatti, and Ducati brands as it seeks to harness economies of scale to shift to mass production of electric cars.
In its new plan, Volkswagen will double its digitization spending to € 27 billion, to develop new vehicle operating systems and autonomous technologies. He said that around 35 billion euros of budget spending will be invested in e-mobility, and 11 billion euros have been allocated for the development of new hybrid cars.