VW has power to be world’s most profitable

Source: Xinhua | 2018-11-19

Volkswagen expects to become the world’s most profitable manufacturer of electric cars thanks to a multi-billion-euro plan to mass produce the battery driven vehicles, said chief executive Herbert Diess.

VW will spend almost 44 billion euros (US$50 billion) on developing electric cars, autonomous driving and new mobility services by 2023, as well as explore further areas of cooperation with Ford.

Mass producing electric cars will help VW reduce the cost to the same level as current diesel vehicles, Diess said.

Volkswagen will retool three of its German plants to build electric cars and will explore alliances with battery partners and rival carmakers.

VW plans to increase productivity of its factories by 30 percent by 2025 by building more vehicles from different brands on the same production line. It wants to lower the carmaker’s research and development ratio to 6 percent of revenues from 2020.

“Volkswagen must become more efficient, more productive and more profitable in order to finance the high expenditure in future and stay competitive,” Diess said.

Labor unions, who control half the seats on Volkswagen’s supervisory board, need to sign off on the plan to create global production capacity for 1 million electric vehicles amid concerns that assembling battery driven cars will require fewer workers.

Around 436,000 industrial jobs in Germany are tied to building petrol and diesel engined vehicles.

Jobs are under threat because a combustion engined car has 1,400 components in the motor, exhaust system and transmission, while an electric car’s battery and motor has only 200 components.

Ford chief executive Jim Hackett said it was open to investment in its autonomous vehicle business by automakers, but cautioned that expanding partnerships with VW was a “delicate dance.”