Volkswagen To Increase Electric Drive Spending By €100 Million In 2016 (e-Phaeton Delayed)

2 years ago by Mark Kane 22

Volkswagen Golf GTE

Volkswagen Golf GTE

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Volkswagen e-Phaeton Delayed

Volkswagen’s strict financial position after Diesel Gate carries with it serious consequences.

CEO Matthias Müller recently announced a reduced level of spending for 2016 of €1 billion.

Some investments are on hold, delayed, reviewed or switched to other areas.

“The Volkswagen Group is aligning investment activity in its Automotive Division with the current situation. The aim is for planned investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex), to be capped at approximately EUR 12 billion next year. The average figure for the previous planning period was about EUR 13 billion per year.”

Matthias Müller, Chairman of the Board of Management of Volkswagen said:

“We are operating in uncertain and volatile times and are responding to this. We will strictly prioritize all planned investments and expenditures. As announced, anything that is not absolutely necessary will be cancelled or postponed.”

Alternative drive technologies seem to be among the “absolutely necessary” group because those technologies will get an additional €100 million in 2016. Volkswagen, Audi and Porsche will have green lights to introduce more plug-ins, but not all EVs will be able to go ahead at full speed as the electric Phaeton project announced earlier will be delayed.

“”We are not going to make the mistake of economizing on our future. For this reason we are planning to further increase spending on the development of e-mobility and digitalization”, he said. The core focus will be on rapidly developing electric drive systems for the Volkswagen Passenger Cars, Audi and Porsche brands.

Most of the capex is earmarked for new products, the continuing rollout and enhancement of the modular toolkits, and the completion of ongoing investments to expand capacity. Examples include product start-ups such as the next-generation Golf, the Audi Q5, the new Crafter plant in Poland, as well as upfront expenditures for the modular electric toolkit (MEB). Approximately 50 percent of capex will be spent on the Group’s 28 locations in Germany.

Müller also outlined the first projects as examples where investments are being spread out to a greater extent or cut back. For example, construction of the planned new design center in Wolfsburg is being put on hold, saving approximately EUR 100 million. In addition, the construction of a paint shop in Mexico will be reviewed. In the model range, the successor to the Phaeton – a pure-play electric model – is being delayed. “We will review and potentially cancel further expenditures or spread them out to a greater extent in the next few weeks, but without putting our future viability at risk”, explained Müller. He added: “Together with the works council representatives we will make every effort to keep our core workforce on board.”

The joint ventures in China are not consolidated and are therefore not included in the above figures. These companies will maintain their previously announced investment levels and are planning expenditures in the amount of approximately EUR 4.4 billion in 2016. These investments will be financed from the joint ventures’ own funds.”

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22 responses to "Volkswagen To Increase Electric Drive Spending By €100 Million In 2016 (e-Phaeton Delayed)"

  1. ffbj says:

    Well at least they have 8 fewer salaries to pay to top executives and engineers, that’s probably well into the millions in savings.

    Somehow I think they think if they are contrite enough and say they are really sorry enough times that
    forgiving,forgetting, Americans,
    at least most, will give them a pass, just like with GM, because they were really sorry, and what they did wrong, well that’s in the past. Oh brother.

    1. SJC says:

      The difference between VW and GM is VW did it blatantly. GM pretended it was no problem, but they did not set out to do it from the beginning. Intent and premeditation makes a difference.

  2. No, I refuse to forgive them. These emissions have had dire ramifications on public health. Why should I forgive them for their deceit, even if only a handful are responsible?

    1. JeffD says:

      Why should you not forgive them? Shouldn’t you forgive them in the same manner that you would want to be forgiven when you screw up? If in the end they do proper restitution or even go beyond what is expected, shouldn’t they have the opportunity to be forgiven? The only reason I would not buy the product is if it did not fit my needs or I could find something better elsewhere.

      1. Well said Jeff, we all screw up, we all have fallen short, and we all want to be forgiven. America is truly a forgiving nation, and I believe if VW makes it right they will be forgiven. There will be consequences for sure, and long lasting ones, but they won’t be shut out of this market.

        1. super390 says:

          This sounds like the people down here in Houston who didn’t care that Blue Bell Ice Cream poisoned a bunch of people due to contamination at several of its plants, but all they want to do is get their ice cream back and give prayers – not kidding – that no harm comes to the corporation. They act like the government is the bad guy for catching them and Blue Bell is the victim.

          1. Josh says:

            I live in Houston to. I chalk that up to the “homer” attitude. I would guess there is some similar dynamic with VW fans in Germany.

      2. Aaron says:

        Forgiveness ≠ not having to make things right. We can forgive VW for having poor management that made bad choices, but we expect them to make things right.

      3. ffbj says:

        If you went out and robbed someone you should make restitution and then go to jail. VW essentially robbed the customers that bought their defective vehicles.
        VW apologists are really lame imho.

        1. ggpa says:

          And extending your analogy … at some stage you get released from jail, what then?

          1. ffbj says:

            Having paid their debt to society they can rejoin it. Of course probably in menial jobs, and they will have a hard time finding a job, but hey you did the crime you gotta do the time, and it was criminal, imho.

            Corporations are people, at least in the U.S. according to the Supreme Court, (idiots), so when they commit criminal acts they should be treated like people too.

            1. Rich says:

              Agreed. 100% of all senior execs should be criminally prosecuted. Let’s see how long ‘citizens united’ remains “lawful” when that happens. Even the name ‘citizens united’ is an oxymoron.

      4. SJC says:

        Will we forgive them for millions of polluted lungs, with asthma trips to the hospital, heart attacks and strokes? This was done on purpose to make money, the heck with people’s health.

  3. pjwood1 says:

    Wasn’t the Volt retool >200mm? A billion of reclassed capex, from the 12bb, and I’d have thought differently about this being a big deal.

  4. Jim Boe says:

    VW to increase electric car spending – I wana see – VW to increase electric car range

    1. EV AZ says:

      Exactly, what does the Cross blue SUV have in range? 12 miles EV only pathetic.

      RAV4 EV
      5Kw PV
      NPNS

  5. PVH says:

    That whole dieselgate thing will certainly set back VW group behind Toyota and GM but it is probably for the best in the long run. Indeed I might be wrong but as it turns out it does not seem this will do serious financial arm (about 5% reduction on sales, European fix as yet appoved will not be expensive (about $1 billion, American fix will be expensive but it is many years that this group more or less gave up on the NA market (aiming to Asia instead)). On the contrary this might (hopefully) give internally a little more credibility to their EV programs. Main problem with VW as it now appears was/is a very conservative approach and a rather (German) top down authoritarian management style. If this scandal could at least partially cure those diseases…

  6. heisenberght says:

  7. Mister G says:

    Where’s the German engineering that was so proudly touted in TDI propaganda? German engineer a 200 mile BEV for $35,000 before tax credits.

    1. pjwood1 says:

      Piech and the engineers were proud of themselves. Fire Piezo injectors ~6 times per combustion stroke, and get better power, burn control, and efficiency. But throw some of that away, by squirting a little extra diesel to the NOx trap, so it can do its job? No way. Very Wrong:

      http://wogamax.tripod.com/webonmediacontents/Very%20Wrong.jpg.png?1449000894713

  8. Phr3d says:

    It’s pretty hard Not to wag a finger at VW – every other manufacturer accepted the complexity/expense of the NOx urea tank, but VW’s brilliant R&D didn’t need it, and No one at VW questioned that result?

    The bigger(est) question for me is what this does to diesel as a mode of mobility, I’ll guess that not a few buyers silently wonder if the Other manufacturers might have diddled their results as well, maybe not blatantly, but..

    Presuming, as I do, that VW’s interest in diesel is now in the negative numbers and Removing them as a driving force for that engine, what will happen to diesel sales in areas where people Did still buy them? Is VW’s Definitely-Not-clean-diesels common knowledge, and will sales of All diesels plunge due to that info?

    Hope IEV follows those trends in 2016, as the elimination of an entire engine-series (i.e., ‘clean diesels’)is likely to drive up PHEV sales in my limited logic.

    I still believe that a perfectly-purposed diesel would make the better engine choice for an EREV in places that diesel isn’t already ignored by customers, they are terrific at constant-speed heavy lifting and -can- be made low-polluting when you Use the required devices.

  9. Ontario Leaf says:

    Clean diesel is like clean coal, very unclean.