German automaker Volkswagen will spend €73 billion to bolster efforts to accelerate the production of electric and autonomous vehicles. The investments are earmarked for electrification, hybrid powertrains, and digital technology over the next five years.

According to the Volkswagen Group, investments in capital expenditures and R&D for future technologies will be raised to 50%t from 40% of its total investments of around €150 billion. Investments in digitalization will double to €27 billion by mid-decade, reflecting the Group’s strong focus on building up software capabilities. Approximately €35 billion will be spent on battery-electric vehicles. A further approximately €11 billion has been allotted to the development of hybrid vehicles of existing models.

“Having set the course for a battery-electric future in the Volkswagen Group early on, we are now a global leader with our electric platforms and a broad range of electric vehicles,” said Herbert Diess, CEO of the Volkswagen Group. “In the coming years, it will be crucial to also reach a leading position in car software in order to meet people’s needs for individual, sustainable, and fully connected mobility in the future. To that end, we have doubled our digitalization spend.”

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According to Volkswagen, capital spending on digitalization will total around €27 billion, which is double the amount set in the previous Planning Round. The amount is allocated to its software organization which was launched this year. The goal is to build a proprietary software stack, which will be deployed in Audi’s Artemis project from 2024. The company’s own share in software is to increase sixfold from 10%%.

Digitalization

The Group highlighted that a large share of the funds alloted for digitalization will be used in leveraging emerging technologies — or what it calls “mission-critical fields” — such as artificial intelligence, autonomous driving, and digitalization of significant business processes.

“As part of Volkswagen Group’s investment planning, the Board of Management and Supervisory Board today set the cornerstones for securing the Group’s future success,” said Hans Dieter Pötsch, chair of the Supervisory Board of the Volkswagen Group. “The transformation of the Group and its brands and the strategic focus on the core areas of mobility will be consistently implemented. Considering the enormous challenges we face in the coming years, our financial basis is very solid.”