Volkswagen Group to expand production of electric vehicles worldwide on a massive scale

“Roadmap E” is picking up speed: 16 production sites for electric vehicles by the end of 2022

The Volkswagen Group is driving forward with the transformation to e-mobility. 16 locations
around the globe are to produce battery powered vehicles by the end of 2022. This was
announced by Matthias Müller, CEO of Volkswagen AG, at the Group’s Annual Media
Conference in Berlin. The Group currently produces electric vehicles at three locations, and in
two years’ time a further nine Group plants are scheduled to be equipped for this purpose. To
ensure adequate battery capacity for the massive expansion of environmentally-friendly electric
mobility, partnerships with battery manufacturers for Europe and China have already been
agreed. The contracts already awarded have a total volume of around EUR 20 billion. A supplier
decision for North America will be taken shortly.
“Over the last few months, we have pulled out all the stops to implement ‘Roadmap E’ with the
necessary speed and determination,” CEO Müller explained in Berlin. When “Roadmap E” was
launched last fall, Volkswagen announced plans to build up to three million electric vehicles
annually by 2025 and market 80 new electric Group models. This year, another nine new
vehicles, three of which will be purely electric-powered, will be added to the Group’s electric
portfolio of eight e-cars and plug-in hybrids.
A number of innovations from the Group were presented last week at the Geneva International
Motor Show, among them the Audi e-tron, the Porsche Mission E and the I.D. VIZZION,
another member of the Volkswagen I.D. family. From 2019, there will be a new electric vehicle
“virtually every month”, Müller said: “This is how we intend to offer the largest fleet of electric
vehicles in the world, across all brands and regions, in just a few years.”
The CEO made a point of emphasizing that this did not mean Volkswagen was turning its back
on conventional drive systems. Modern diesel drives were part of the solution, not part of the
problem, he stressed – also with regard to climate change. “We are making massive investments
in the mobility of tomorrow, but without neglecting current technologies and vehicles that will
continue to play an important role for decades to come,” said Müller. “We are putting almost

EUR 20 billion into our conventional vehicle and drive portfolio in 2018, with a total of more
than EUR 90 billion scheduled over the next five years.”
A separate Committee chaired by CEO Müller is advancing digitalization in the Group, a key
issue for the future. “The future of mobility is gradually taking shape, as is the future of the
Volkswagen Group,” Müller said. The best example of this is SEDRIC, which has enabled the
Volkswagen Group to demonstrate the potential of fully autonomous driving for the first time.
SEDRIC was designed in the Group, but will soon be “leaving the Group for refinement into a
series product at one of our brands,” Müller announced.
The transformation of the entire Group that got off the ground in 2016 is becoming “more
concrete, tangible and discernible with every passing day,” said Müller. TOGETHER –
Strategy 2025 brought precisely the shake-up that Volkswagen needed. “2017 was an excellent
year for the Volkswagen Group and its brands. We’re back on the offensive– and we intend to
remain there,” the CEO stressed, adding that this was true for electric mobility in particular.
“With ‘Roadmap E’, we have sent a powerful message of our resolve,” Müller stated. The
Volkswagen Group kicked off “Roadmap E”, the most comprehensive electrification drive in the
automotive industry, last year.
The increase was primarily the result ofpositive volume-, mix- and margin-related factors as well as improved product costs. The operating return on sales before special items rose from 6.7 to 7.4 percent.
Overall, the operating profit was reduced by special items from the diesel issue of EUR –
3.2 billion in 2017 compared with EUR –6.4 billion in the previous year. These expenses in the
2017 fiscal year were mainly attributable to higher expenses for the buy-back and retrofitting
programs for 2.0 l and 3.0 l TDI vehicles in North America and to higher legal risks.
Unlike the figures for deliveries, the Group’s sales revenue and operating profit do not contain
the business with the Chinese joint ventures, since these are accounted for using the equity
method. The joint ventures in the People’s Republic generated a proportional operating profit of
EUR 4.7 billion in fiscal year 2017, compared with just under EUR 5.0 billion in the previous
year. In addition, a further joint venture was agreed with Chinese manufacturer Anhui Jianghuai
Automobile (JAC) that will develop, produce and market electric vehicles. At a future date, the
Group is also planning to export vehicles that will be manufactured in China – initially to the
Philippines and later to other South East Asian markets.
The financial result decreased to EUR 0.1 billion in 2017 from EUR 0.2 billion in the previous
year. Profit before tax rose to EUR 13.9 billion in the reporting period, exceeding the prior-year
figure by EUR 6.6 billion. Profit after tax amounted to EUR 11.6 (5.4) billion. At 16.3
(26.2) percent, the tax rate was considerably lower in 2017. This was due to the US tax reform
resolved at the end of the year, which led to a one-off positive, non-cash measurement effect of
EUR 1.0 billion.
Earnings attributable to Volkswagen AG shareholders amounted to EUR 11.4 (5.1). Witter: “The
Board of Management and the Supervisory Board are pleased to be able to propose a dividend of
EUR 3.90 per ordinary share and EUR 3.96 per preferred share to shareholders.”
Research and development costs in 2017 were dominated by new models along with the
electrification of the vehicle portfolio, a more efficient range of engines and digitalization. At
EUR 12.6 (12.8) billion, investments in property, plant and equipment in the Automobile
Division remained at the previous year’s level. The R&D ratio, total research and development
expenditure as a percentage of the Automotive Division’s sales revenue, decreased to 6.7
(7.3) percent. Capex/sales revenue was also lowered significantly to 6.4 (6.9) percent. “We
remain committed to our goal to reduce the ratio of both capex and R&D to 6 per cent by 2020 at
the latest,” underlined CFO Witter in Berlin.
Net cash flow in the Automotive Division declined by EUR 10.3 billion to EUR –6.0 billion as a
consequence of the high cash outflows from the diesel issue. Excluding these disbursements, the
net cash flow would have been around EUR 10 billion in spite of the high level of capital
expenditure for the future, Witter pointed out. “Net cash flow is a reflection of our strong
operating business and is impressive evidence of our financial strength,” he said. At
EUR 22.4 billion, net liquidity in the Automotive Division at the end of 2017 remained at a
robust level.


Source : Volkswagen Group

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