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VW announces R&D investment increase

Big spender: The Volkswagen Group Supervisory Board has announced an increase in investment for the brand's electric and autonomous vehicle research.

E-mobility and autonomous research to benefit from €10b Volkswagen investment boost

19 Nov 2018

VOLKSWAGEN has announced a huge increase in research and development funding for the areas of e-mobility and autonomous technology, with the aim of improving the pace at which the company produces innovative technology.
The investment will now total €44 billion ($A68.63b) over five years from 2019-2023, a €10b ($A15.6b) increase over the previous figure and enough to make up one-third of the company's total expenditure over that period.
Volkswagen aims to be a world-leading provider of sustainable mobility at the end of 2023 by expanding in the areas of e-mobility, autonomous driving, mobility services and digitalisation, and increasing its portfolio of electric models across the Volkswagen Group family.
Currently, the brand has six battery-electric vehicles in its line-up, but aims to increase that number to more than 50 by 2025.
As part of the investment, the company will convert two further plants in Germany to produce electric vehicles, and will add plants that cater to different brands under the Volkswagen Group umbrella in order to simplify production. A new multi-brand facility will be built somewhere in Eastern Europe to cater for planned growth.
The Ebden plant will be repurposed to produce small electric hatches and sedans, while the facility in Hanover will gradually be converted for e-mobility, with a special emphasis on the ID Buzz family of vehicles.
The plants will produce vehicles from different VW Group brands built on the same platform, while overall VW is targeting a 30 per cent increase in productivity of its network by 2025.
In the announcement, Volkswagen also spoke on its commercial vehicle partnership with Ford, even suggesting what many have speculated – that the next-generation Amarok and Ranger pick-ups will share the same underpinnings. 
Speaking after a meeting of the Volkswagen Supervisory Board, CEO Herbert Diess said the light-commercial tie-in would offer “potential for continuing our Amarok series on a
profitable basis and for further robust SUV derivatives”, suggesting Volkswagen may even offer an alternative to the Ford Everest in the future.
The company said the early talks with Ford were progressing positively so far, and that the two brands complement each other well in terms of products and regions. 
Volkswagen also mentioned it is considering expanding its collaboration with Ford outside of the light-commercial segment, suggesting a potential joint-venture for electrified future vehicles.
The company is also mulling whether to get involved in battery production. At present, VW Group sources its batteries from suppliers such as SKI, CATL, LG Chem and Samsung, however due to the predicted increases in battery usage, the company is considering branching out into battery production itself.
Volkswagen Group expects its capital expenditure ratio to decrease to 6.0 per cent from 2020 onwards, however it retains its prediction of a net cash flow target of €10b by 2020. The ongoing dieselgate scandal is expected impact cash outflow for the company in 2019 and 2020.

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