VW, China spearhead $300 billion global drive to electrify cars







VW’s sweeping electrification plan envisions capacity on three continents to build up to 15 million electric vehicles by 2025, including 50 pure electric and 30 hybrid electric models. Eventually, VW plans to offer electrified versions of all 300 models in its 12-brand global portfolio, which includes Audi and Porsche.

VW’s staggering EV budget dwarfs that of its closest competitor, Daimler, which has committed $42 billion. In comparison, General Motors, the No 1 U.S. automaker, has said it plans to spend a combined $8 billion on electric and self-driving vehicles.

Roughly 45 percent of the global industry’s planned EV investment and procurement spending, more than $135 billion, will occur in China, which is heavily promoting the production and sale of EVs through a system of government-mandated quotas, credits and incentives.

As a result, EV spending by major Chinese automakers from SAIC to Great Wall could be matched or even exceeded by multinational joint-venture partners such VW, Daimler and GM, as they dramatically expand their electric vehicle portfolios in China and ramp up battery purchases from Chinese suppliers.

Reuters analyzed investment and procurement budgets made public over the past two years by 29 of the world’s top automakers, based primarily in the United States, China, Japan, Korea, India, Germany and France. The figures do not reflect planned investments and purchases that have not yet been made public.

Actual spending by vehicle manufacturers on r&d, engineering, production tooling and procurement likely will be much higher. The analysis also does not include related spending by automotive suppliers, technology companies and large corporations in other industries, from energy and aerospace to electronics and telecommunications.

“There has been a rush” to invest in EVs and batteries, said Alexandre Marian, AlixPartners managing director and co-author of a 2018 study that forecast total EV spending of $255 billion through 2023 by global automakers and suppliers.

Marian said the industry has increased spending budgets on EVs and batteries, while seeking more alliances and partnerships to help spread the higher investment costs.

Alliances, such as those between VW and its Chinese partners, will be among the greatest spurs to innovation, especially in the global rollout of EVs.

CEO Diess said VW is “evolving from the model where we have been developing and bringing European technology into this market to a new phase where we will co-develop part of the automotive technology in China for the rest of the world. I think this is a significant step change.”