Volkswagen raises R&D spend to $100 billion

If anybody wondered about the Volkswagen Group’s commitment to an electric vehicle future, then think again. The German automotive group just raised its spending on electric car technology to €60 billion ($A97b) by 2024.

It confirmed it would deliver 75 electric cars and variants, plus another 60 plug-in hybrid models over the next five years.

And none of this includes its market-leading operations in China, which has its own fleet of EVs and PHEVs either already in showrooms or on the way.

To get to its new figures for the non-Chinese world, the Volkswagen Group will increase its spending on pure electric cars by about 10 per cent to €33 billion, even as the VW ID.3, the first car off its all-new mass-market Modular Electric Matrix (MEB) architecture, begins production.

There will be a flood of new electric cars to follow the ID.3 off the MEB platform, including the sleeker ID.4 SUV and an ID station wagon, all to be built at any of four factories in Emden, Germany, by 2022.

It plans to sell at least 20 million EVs around the world in the next decade (or about two years’ production at its current sales rates) on the MEB platform, which will play host to Audi, Skoda, Seat and Volkswagen models.

That won’t be the end of it for the MEB, though, because Ford and a small German ride-sharing operation have confirmed they will borrow it too, and Volkswagen has thrown it open to be used by any manufacturer.

The ID 4 crossover will be built in Emden, in the heart of the German state of Lower Saxony (which, coincidentally, holds a 20 per cent voting stake in the Volkswagen Group).

“It will likely be one of the most important models of the future generation,” Lower Saxony Premier Stephan Weil insisted.

Porsche has sworn off the MEB electric architecture and will go another way, using the J1 and PPE high-powered and high-premium electric architecture to.

The C-BEV architecture beneath the Audi e-tron will be cycled out relatively quickly, with insiders admitting the Volkswagen Group already had two newer production-ready premium EV architectures before the e-tron even went on sale.

Instead, the Group plans on selling six million EV sales on both the J1 and the latest PPE architectures sitting beneath cars wearing Porsche, Bentley, Audi and possibly Lamborghini badges.

(The PPE is a development of the J1 modular architecture that sits beneath the Porsche Taycan and will soon also see service with the Audi e-tron GT.)

The Group’s new five-year spending plan is a 36 per cent rise on the outgoing one, Volkswagen confirmed today, with almost all of the spending either allocated to electrification, digital technologies, new factories and factory upgrades to EV production.

It all adds up to a shockingly huge pile of play money for Markus Duesmann, who will arrive at the Volkswagen Group in April next when his BMW management contract’s non-compete clause expires.

Deusmann will take over immediately as Audi chairman, plus will join the Volkswagen Group board of management as the director of research and development.

He takes that role from his former BMW colleague, Volkswagen Group CEO Dr Herbert Diess, who will shift his hands-on “second job” to director of sales.

Current Audi boss, Bram Schot, was parachuted in from his sales director board seat after long-time CEO and chairman Rupert Stadler was jailed on fraud allegations over dieselgate. He has agreed to leave the company on March 31.

“Bram Schot took over the management of Audi at a difficult time, very successfully managed the business and initiated important changes,” Dr Diess explained.

“For this he has our sincere thanks. As an excellent engineer, Markus Duesmann will do everything in his power to leverage the full potential of the Audi brand and as such will once more demonstrate our commitment to the promise ‘Vorsprung durch Technik’.”

Adding up to around €12 billion a year in spending, the new commitment upgrade was approved by the group’s supervisory board yesterday, along with Deusmann’s arrival.

"We are resolutely pressing ahead with the transformation of the Volkswagen Group and focusing our investments on the future of mobility," Chairman Hans Dieter Poetsch said in a statement.

Insiders at the Volkswagen Group have expressed frustration that Tesla has received a glowing run in the German press with its announcement of an EV plant near Berlin while it has planned to either build or switch four German plants (Wolfsburg, Hannover, Emden and Osnabrück) to EV production.

It has also slashed sales expectations for this year by 900,000 cars after weak demand in China, particularly, and a need to slash its own inventories.