Germany automobile major Volkswagen plans to spend 44 billion euros or $50 billion on electric cars, autonomous driving and new mobility services by 2023, Reuters reported.
The supervisory board of Europe’s largest carmaker voted on far reaching capital spending plans to begin mass production of electric vehicles in Europe.
Volkswagen will retool three of its German plants to build electric cars and to explore alliances with battery partners and rival carmakers.
VW plans to increase productivity of its factories by 30 percent by 2025 by building more vehicles from different brands on the same production line. It wants to lower the carmaker’s research and development ratio at the group’s automotive division to six percent of revenues from 2020 onward.
“Volkswagen must become more efficient, more productive and more profitable in order to finance the high expenditure in the future and stay competitive,” Volkswagen CEO Herbert Diess said at a press conference in Wolfsburg on Friday.
Labor unions, who control half the seats on Volkswagen’s supervisory board, need to sign off on the plan to create global production capacity for 1 million electric vehicles by 2025 amid their concerns that assembling battery driven cars will require fewer workers.
Around 436,000 industrial jobs in Germany are tied to building petrol and diesel engined vehicles.
Jobs are under threat because a combustion engined car has 1,400 components in the motor, exhaust system and transmission, while an electric car’s battery and motor has only 200 components, according to analysts at ING.
Volkswagen’s management this week outlined plans for converting car plants in Zwickau, Emden and Hannover to build electric cars, providing job guarantees to workers until 2028.
The first ID electric car is due to roll off the production line in Zwickau in 2019, as the plant ramps up to a production capacity of 330,000 electric vehicles. Zwickau currently builds the VW Golf and the Golf Estate.
Volkswagen’s MEB electric vehicle platform is being eyed by Ford as the two companies continue exploratory talks about an alliance to develop self-driving and electric vehicles.