FRANKFURT
Volkswagen AG is discussing a 72 billion-euro ($85 billion), five-year investment plan that would considerably increase the carmaker’s commitment to electric vehicles, according to people familiar with the matter.
Spending in other areas has been reined in as the world’s biggest carmaker seeks to reduce capital expenditure to 6 per cent of sales, said the people, who asked not to be identified because the plan isn’t public. Volkswagen’s supervisory board is discussing the rolling five-year plan at a meeting on Friday and an announcement could come later in the day, they said.
A spokesman for the Wolfsburg, Germany-based automaker declined to comment by phone.
The plan puts Volkswagen on track to spend about 14.4 billion euros a year, compared to recent annual spending levels of 12 billion euros. The increase shows the pressure on the world’s biggest automaker to manage the transition to an era of self-driving, electric cars. Chief Executive Officer Matthias Mueller is prodding the company to take a leading role in battery-powered vehicles and unveiled a plan to make electric versions of all 300 models in the 12-brand group’s line-up.
At the same time, Volkswagen is seeking to get its spending under control and has pledged to reduce capital expenditures to 6 per cent of sales by 2020. The spending ratio ballooned to 6.9 per cent last year.
“Investors should welcome a commitment toward more contemporary investment discipline,” Arndt Ellinghorst, a London-based analyst at Evercore ISI, said in a note this week.
Volkswagen shares rose as much as 1.6 per cent to 160.75 euros and were up 0.6 per cent at 12:54pm in Frankfurt. The stock has climbed 19 per cent this year to largely erase the losses since the diesel-cheating scandal erupted in September 2015.
Production of electric cars for European markets will largely be focused at a German factory in Zwickau while battery-powered vehicles for VW’s largest market, China, will be produced locally, according to the people.
