Volkswagen Slashing Spending By $1 Billion, But Focusing More On Electric Vehicles

Originally published on EV Obsession.

Planned investments into Volkswagen’s Automotive Division will be slashed by around €1 billion in 2016 as a response to the ongoing diesel emissions cheating scandal, according to recent reports.

The move means that planned investments by the company will be capped at around €12 billion next year. Regardless of that overall cut in investments, the company will actually be increasing its investments into “alternative drive” technologies (electric vehicles, etc) by around €100 million next year as well.

This increased level of investment will be used to move things along at a faster rate, with regard to electric offerings from Volkswagen, Audi, and Porsche.

The Chairman of the Board of Management of Volkswagen AG, Matthias Müller, commented: “We are operating in uncertain and volatile times and are responding to this. We will strictly prioritize all planned investments and expenditures. As announced, anything that is not absolutely necessary will be cancelled or postponed. We are not going to make the mistake of economizing on our future. For this reason we are planning to further increase spending on the development of e-mobility and digitalization.”

Green Car Congress provides more:

Most of the capex is earmarked for new products, the continuing rollout and enhancement of the modular toolkits, and the completion of ongoing investments to expand capacity. Examples include product start-ups such as the next-generation Golf, the Audi Q5, the new Crafter plant in Poland, as well as upfront expenditures for the modular electric toolkit (MEB). Approximately 50% of capex will be spent on the Group’s 28 locations in Germany.

Müller also outlined the first projects as examples where investments are being spread out to a greater extent or cut back. For example, construction of the planned new design center in Wolfsburg is being put on hold, saving approximately €100 million. In addition, the construction of a paint shop in Mexico will be reviewed. In the model range, the successor to the Phaeton—a pure-play electric model—is being delayed.

Apparently, the company’s joint ventures in China won’t be affected, though, as they aren’t consolidated — and investments from these joint ventures are financed with the joint ventures’ own funds.