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VW shifts funding focus to software to catch Tesla

Under the new five-year plan, VW is plowing substantially more money into digitalization including artificial intelligence and autonomous vehicles. Here the funding will be doubled to 27 billion euros from the previous sum proposed only a year ago.

While funds in this field are being hiked by 100 percent, the group’s full-electric program will only see a 6 percent increase to 35 billion euros.

In fact, the automaker has even dialed back the number of EVs to about 70 by 2030 when a year ago it had penciled as many as 75. That leaves just 50 new models yet to come, according to a company statement, as a number have already been launched.   

“Importantly the (European) Green Deal is not reflected in the figures,” the source added, explaining that the European Union’s CO2 emissions reduction target for 2030 is not yet known.

The European Commission will start the discussion by June, but an impact assessment by Brussels officials suggested the auto industry should expect a 50 percent reduction over 2021.

VW Group CEO Herbert Diess has said the shift towards a digital company capable of operating millions of “mobility devices” worldwide is more challenging then the shift to electric drives as skills are required that currently do not exist in the European industry.

During a presentation at the Handelsblatt automotive summit earlier this month, Diess illustrated this point by recalling the day in early September in which he showed the ID3 to Tesla CEO Elon Musk.

“The price point with which the car goes to market impressed him. He immediately reacted with a very aggressive cost approach to the battery,” Diess said, referring to Tesla Battery Day

VW still had a lot of ground to make up, in particular when it comes to continually improving the vehicles after their sold via improved software pushed to the vehicles over the air, Diess said.

“The new ID vehicles will receive the first updates next year, then we need to increase the pace,” he said. “By 2023 and 2024 we want to be in the position to offer (OTA updates) to the same extent as Tesla does today.”