VW Boss Says Electric Cars Will Cost Company More than Forecast

The head of the Volkswagen Group is warning that the company’s big plan to go big on electrification could come with a big cost. Bigger than they expected.

VW had planned to spend $23 billion adding battery power to every model in their lineup. Now CEO Herbert Diess says that it’s not enough cash. How much will it take? Diess isn’t saying.

“The burden for our company, such as the cost of bringing to market electric cars, will be higher than expected,” Diess said in a company newsletter. “This is particularly so since some of our competitors have been making more progress.”

The solution to increases in electrification is decreases in spending in other areas and boosting profits.

Volkswagen has been able to lift profitability over the last few years, up to 4.1 percent of sales last year from 1.8 in 2016 in just the VW brand. The group has outlined a goal of 8 percent profits by 2025, up from 7.4 percent last year. They’ll need that money to help pay to electrify the company’s 300 models by 2030. “We need higher profits to finance our future,” said Diess. “Four percent is a minimum, 5 percent to 6 percent allow for some future investments and with 7 percent to 8 percent we’re crisis-ready,” Diess said.

[source: Automotive News Europe]

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