Volkswagen is driving forward the electrification of its fleet and intends to invest a total of 180 billion euros by 2027. Two-thirds of this should flow into electrification and digitization, said Europe’s largest car company on Tuesday when the 2022 balance sheet was presented in Berlin. In view of a net liquidity of 43 billion euros, in which 16 billion euros from the IPO of the sports car subsidiary Porsche have flowed in, the Wolfsburg-based company sees itself in a position to handle the investments that will be made in the current year. For the coming years, Volkswagen is counting on continued robust business with a high inflow of cash.
When it comes to investments, Volkswagen says it wants to concentrate on the most attractive profit pools. These include above all the battery strategy, the expansion of the presence in North America, the increase in competitiveness in China in the area of digitization and the products as well as the further development of the model range of the group.
68 percent of all investments flow into the future fields of digitization and electrification. In the past five-year plan, it was still 56 percent. By 2025, every fifth vehicle sold worldwide should have a purely electric drive.
Construction of cell factories drives up investments
A major reason for the increase in total investment is the up to 15 billion euros for the construction of cell factories by the battery subsidiary PowerCo and advance payments for securing raw materials. By 2030, PowerCo is expected to achieve annual sales of more than 20 billion euros. Added to this are ongoing investments in the latest generation of combustion engines. The peak of the investments should be reached in 2025, after which the expenses should decrease continuously.
The VW Group is building its next plant for the production of its own battery cells for electric cars Canada in the province of Ontario, the company confirmed on Monday. The manager magazin had already reported at the beginning of March
that the group is planning two major investments in the failed North American market of all places – the production of pick-ups and SUVs and battery cells. “2023 will be a crucial year to implement strategic goals and accelerate the Group’s progress,” said Blume.
The VW share
lost 3.2 percent at the end of the Dax. Bernstein analyst Daniel Roeska was critical of the increase in investments. With the plan, the average annual investment sum increases from 32 to 36 billion euros – only around 26 billion euros were expected on the market. That should worry investors. For VW, there could be significant pressure on the free cash flow.
Blume earned around 7.39 million euros in 2022
With the presentation of the balance sheet, the car company also gives an insight into its board salaries. Oliver Blume (54) earned 7.39 million euros last year in his dual role as CEO and CEO of Porsche, as the remuneration report shows. For comparison: its predecessor Herbert Diess (64) even came up with a total of 11.8 million euros in 2022. However, Blume has only been leading the Volkswagen Group since September.
Blume should still be one of the top earners among the Dax board members. SAPCEO Christian Klein (42) received 4.67 million euros for the past year, Mercedes-Benz boss Ola Källenius (53) earned 6.11 million euros thanks to the car manufacturer’s greatly improved earnings situation.
Group plans significant increase in sales and returns
Volkswagen already had Surprised with an optimistic outlook in early March. According to this, sales should increase by 10 to 15 percent in view of the high order backlog and the operating return should end up in a range between 7.5 and 8.5 percent. In terms of net liquidity, the group is aiming for a value of between 35 and 40 billion euros.
In the past year, the core brand of the Volkswagen Group achieved a better result despite a sharp drop in its deliveries. The profit rose in the current business – special factors excluded – by 22.5 percent to almost 2.65 billion euros. Sales of the main VW division climbed by 8.7 percent to 73.8 billion euros. The fact that more was left in the cash register in the end was partly due to the higher car prices, which had risen noticeably in 2022 as a result of general inflation, but also because of the scarce supply on the new and used car markets.