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VW Announces More Ambitious Electric Plans

VW Announces More Ambitious Electric Plans.

Plans For The U.S. Come Next.

Volkswagen took the opportunity to announce more details of its electric car plans when it announced its annual report for 2017.

This included expanding production of electric cars to 16 factories around the world, and it selected partners to provide batteries worth around €20 billion for projects in Europe and China. An announcement about the U.S. will follow, VW said. There’s no doubt VW is in the forefront of car manufacturers preparing for the electric revolution, but investors may be worrying that if it might be guilty of over-exuberance. No one doubts that the electric revolution is coming, but there’s no point being prepared 10 years ahead of time. VW’s plan to have 25 per cent of its fleet battery-only electric by 2025 is beginning to look a bit extravagant   

VW reported in February that in 2017, operating profit rose 16.5 per cent to €17 billion before so-called special items, as margins advanced to 7.4 per cent from 6.7 per cent. The profit target was 7.6 per cent, and VW‘s target for 2018 is between 6.5 and 7.5 per cent.

That initial report left investors downbeat about the company’s outlook for this year, as they searched for hints that assets like trucks might be floated off, which might signal the long-awaited corporate governance revolution might be on the horizon.

Bernstein Research analyst Max Warburton, after the latest report,  worried about what he called VW’s addiction to big spending, but liked the fact VW brand chief Herbert Diess was beginning to rein this in.

“But the problem is VW seems intent on taking the lead in EVs, and “mobility services” and is planning further product line expansion. We can’t ignore that fact that the main thrust of the CEO (Mueller) presentation today is just how much money VW is planning to spend,” Warburton said. 


 

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