Volkswagen plans to sell 1 million electric cars this year, significantly ramping up its push in the market as it seeks to rival Tesla and keep traditional rivals at bay.
The German manufacturer said on Tuesday that it aims to become the global electric vehicle market leader by 2025. By 2030, the share of fully electric vehicles in Europe is set to rise to as much as 60 per cent of its deliveries.
Europe's largest vehicle maker is overhauling its sprawling operations to free up funds for new technologies as it plans to build the industry's largest fleet of electric vehicles. The company is introducing several new battery-powered models, has unveiled Europe's boldest battery-production push and struck a deal with unions to cut more jobs in Germany.
VW’s preference shares rose as much as 5 per cent in Frankfurt to €204.50, the highest intraday price since July 2015.
The Wolfsburg-based manufacturer is now valued at about 117 billion euros ($139 billion). VW said it will use a “platform” approach to leverage economies of scale and raise the efficiency of deploying technologies including software, batteries and charging infrastructure.
The company plans to bolster its software operations to 10,000 staff as it develops automated-driving features and in-car operating systems. The hiring push would make VW one of Europe's largest software firms behind SAP, improving its chances of catching up to Tesla and counter the existential risks posed by the automotive ambitions of Apple Inc. and Alphabet Inc.
Unit performances
Operating profit at VW’s namesake passenger-car brand plummeted to €454 million in 2020, from €3.8 billion in 2019.
The Audi division, which leads the group's software expansion, saw operating profit decline to €2.7 billion from €4.5 billion. Porsche, the group's most profitable brand, emerged from the pandemic largely unscathed with €4 billion in operating profit, compared with €4.2 billion in the previous year.
Last month, the company said it expects profitability to improve this year. It kept its dividend proposal unchanged even as analysts braced for a cut, and said rising vehicle deliveries will push up revenue up significantly.
By 2025 at the latest, VW wants to generate an operating return on sales of 7 per cent to 8 per cent.
The company’s revamp efforts were jolted last year by the health crisis, which shuttered factories and showrooms. While many European countries still wrestle with rising infections and slow vaccinating, the industry is also suffering from a shortage of semiconductors that has disrupted production.
– Bloomberg