VW sets ambitious target for electric cars
Although the rewards for the switch to e-mobility may be years away, the company is finding ways to save money while it channels funds towards the transformation
Frankfurt — Volkswagen AG (VW) said it aims to produce almost 50% more electric cars in the next decade than it previously targeted, boosting a bet that already has strained profit margins.
The increase to 22-million vehicles magnifies an electrification push that’s already the biggest in the industry. Profit margins, meanwhile, fell at the company’s three core brands VW, Porsche and Audi in 2018 , the company said.
“The supertanker is picking up speed,” CEO Herbert Diess said on Tuesday while presenting full-year earnings. “We are aligning Volkswagen with e-mobility like no other company in our industry.”
The payoff for the electric switch could be years away as buyers remain on the fence. Diess is under pressure to find ways to save money while he funnels more cash towards the company’s biggest transformation in decades. VW is spending €44bn through 2023 on electric and connected cars. Keeping profitability level in 2019 from 2018 will be an achievement given the US-China trade spat and falling demand in China, VW’s biggest market, Diess said in a Bloomberg TV interview.
VW rose 0.4% to €147.28 at 9.02am in Frankfurt trading. The stock has declined 5% in the past year, compared with a 21% drop in the Stoxx Europe 600 Automobiles & Parts Index.
VW is making progress on a plan for a partial share sale in trucks unit Traton SE. A date will be agreed “in the foreseeable future” with VW weighing up market conditions “in the next days,” Diess said in speech notes. The division is valued at as much as €30bn.
To help gain scale and save costs, VW is opening up its dedicated electric-car platform to others. The company is also in talks to deepen a cooperation with Ford Motor beyond working together on vans, adding on Tuesday that discussions about further possible collaborations in e-mobility and autonomous driving are at an advanced stage.
VW in February already presented preliminary earnings that met expectations.
For the Audi E-Tron and the Porsche Taycan, VW’s first two battery cars part of a 70-model onslaught until 2028, VW said it has received 20,000 reservations each — with Porsche boosting planned production because of high demand.
As VW faces the costly dawn of the electric era, legacy issues from the 2015 diesel-emissions cheating continue to crop up. The company has earmarked €29bn to deal with the fallout of its biggest corporate scandal, an increase of €1bn from a year ago. Separately, German prosecutors have opened a new probe into potential market manipulation against managers, according to VW’s annual report, which could lead to fresh fines.
VW on Tuesday confirmed a forecast for revenue to rise by as much as 5% for in 2019, despite weakening markets globally, as well as maintaining profitability between 6.5% and 7.5% of sales in 2019. The predictions assume markets improving during the second half of the year, Diess said.