Volkswagen has begun a massive push to create new electric vehicles, and these efforts come at a price. The brand says it will streamline its product portfolio and reduce vehicle variants as it invests in new EVs and other technologies.
Volkswagen Group wants to introduce 15 million vehicles based on the new MEB platform for electric vehicles in its first wave. That’s up from previous plans to make just 10 million vehicles. Through 2023, the VW brand will invest more than 11 billion euros in EVs, autonomous driving, and other new technologies, with 9 billion of these euros earmarked for the I.D. family.
The first I.D. model will enter production in Germany in late 2019. After the small hatch arrives, VW will expand the I.D. lineup with a crossover, sedan, and van. By 2025, the brand plans to sell 1 million electric cars annually around the globe. At this time, the VW brand will have 20 electric models in its lineup instead of the current two. Meanwhile, it will make a decision “soon” on a production location for building EVs in North America.
To support these investments, VW aims to save 3 billion euros by 2020, of which $2.2 billion will be achieved by the end of this year. VW will make additional cuts of 3 billion euros by 2023, reports Reuters. This will help the brand boost its profit margins by at least 6 percent by 2022, three years earlier than previously anticipated.
How will it achieve these savings? Again, VW said it will streamline its portfolio and reduce variants, but didn’t name any specific vehicles that are on the chopping block. It also wants to slash administrative expenses and increase the productivity of its plants by approximately 30 percent by 2025. Earlier this week, Volkswagen Group CEO Herbert Diess said the German automaker might use Ford plants to build cars in the U.S. This could be part of the new collaboration between the two companies that will create synergies, including joint work on commercial vehicles. More news on the partnership between Ford and VW is expected in January.