ELECTRIC BUGGY
Volkswagen invests big in electric cars,
Volkswagen AG will invest nearly $150 billion (U.S.) over the next five years, with about one-third earmarked to finance the development of electric cars, self-driving vehicles and digital services, as the German auto maker ramps up efforts to fend off new rivals in Silicon Valley.
Traditionally one of the biggest spenders in the global auto industry, Volkswagen’s new budget, announced Friday, underscores the challenges facing conventional auto makers from the technology sector, as electric vehicles are set to go mainstream and self-driving cars are on the verge of hitting the streets.
The cost of developing new technologies is pushing auto makers to cooperate with competitors. Volkswagen Chief Executive Herbert Diess said talks with Ford Motor Co. regarding an alliance on producing light trucks could be concluded by the end of 2018.
The two companies are also discussing cooperating on selfdriving vehicles, according to people familiar with the situation.
“Our two companies compliment each other in many areas,” Mr. Diess told reporters, but dismissed speculation of a merger.
“That was never a subject of our discussions. We are not thinking about taking equity,” he said.
Earlier in 2018, Volkswagen unveiled plans to build 16 electric vehicle factories worldwide, largely by converting ex- isting plants, and to acquire battery capacity to build millions of electric vehicles.
Under its new five-year plan, Volkswagen will convert the first three factories in Germany to electric vehicle production, replacing conventional vehicle manufacturing in Emden, where it now makes the Passat; Hanover, where its vans are produced; and Zwickau, which used to build the Phaeton luxury sedan.
Volkswagen is also planning to build electric cars in the U.S., but hasn’t decided yet where to do so. Mr. Diess said that a decision would be made in 2019 and that building in Chattanooga, Tenn., where the company al- ready has an plant, was a possibility, but that other locations were being considered.
Volkswagen also said it might invest in producing its own battery cells.
“We are gaining traction in developing new technology and converting our plants,” Mr. Diess said.
U.S. tech companies have been on the vanguard of these developments and Volkswagen’s efforts illustrate how conventional car makers are trying to catch up.
Tesla, which launched its first electric car in 2008, proved there was a market for premium electric vehicles, beating back rivals such as BMW AG, Mercedes-Benz and Volkswagen’s luxury car unit Audi.
Uber, the leading ride-hailing service, tapped digital technology to create a business for sharing cars instead of owning them, a trend that threatens to upend the century-old business model of conventional car makers.
For many years, traditional car makers were skeptical about self-driving cars. As they dragged their feet, Waymo, the self-driving car unit of Alphabet Inc., ran millions of miles of tests with its vehicles and has become the technology leader. Waymo said recently that it planned to launch the first commercial self-driving car services in Phoenix within the next two months.
Volkswagen has aligned itself with Aurora, a self-driving car startup that is run by Chris Urmson, the former autonomous vehicle developer at Alphabet’s Google.