Volkswagen embarks on $50 billion electrification strategies

Volkswagen expects to become the most profitable producer of electric cars due to a multi-billion euro expansion strategy to mass produce battery driven vehicles, CEO Herbert Diess stated on Friday.

VW will invest almost 44 billion euros ($50 billion) on developing electric cars, autonomous driving and new mobility services by 2023 and discover more areas of collaboration with U.S. automaker Ford.

Diess stated he hoped to have an outline agreement on collaboration with Ford completed by the end of the year and at first they will focus on commercial vehicles. He added that a merger with the American automaker was not their motive and also said there were no strategies to take a stake in the company.

Mass producing electric cars would help the automaker to decrease the cost to the same level as present diesel vehicles, Diess stated at a news conference in Wolfsburg.

“Very emotional vehicles, high economies of scale, I think we will be the most profitable company in electric vehicles,” Diess stated.

The supervisory board of Volkswagen voted on far reaching capital spending strategies to start the mass production of electric automobiles in Europe.

Volkswagen will retool three of its German plants to construct electric cars and to check alliances with battery partners and rival automakers.

Volkswan plans to boost productivity of its factories by 30 percent by 2025 by constructing more vehicles from different brands on similar production line. It wants to reduce the automaker’s research and development ratio at the group’s automotive division to six percent of earnings from 2020 onward.

“Volkswagen must become more effective, more productive and more profitable in order to finance the high costs in the future and stay competitive,” Diess stated.