Electrification Gains Momentum As Volkswagen Unveils $193 Billion Investment Plan

More than two thirds of the 180 billion euros ($192.6 billion) in investments VW announced on Tuesday will be directed toward "electrification and digitalization."

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With electric and battery-powered vehicle (BEV) deliveries up 26%, the German automotive giant earlier this month reported a full-year operational profit for 2022 of 22.5 billion euros, up 13% from the prior year.

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A 68% increase in China fuelled the BEV expansion, and the business also finished the historic electrification of its Chattanooga, Tennessee, factory.

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The automotive division's net cash flows fell from 8.6 billion euros in 2021 to 4.8 billion euros in 2022, a fall of 7% in overall delivery numbers to 8.3 million units.

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This was ascribed by the company to "an increase in working capital due to supply chain and logistics challenges, notably towards the end of the year," according to its annual report released on Tuesday. The company predicted that this trend would "essentially reverse" by the end of 2023.

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In order to execute the group's strategic goals, the upcoming year will be "decisive," according to CEO Oliver Blume. VW "established clear and aggressive targets and took required steps to streamline procedures" in 2022, he said.

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Arno Antlitz, CFO and COO of the VW Group, stated that despite a "difficult economic situation," the business should be able to "continue investing in electricity and digitalization" due to its strong financial position.

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On the one hand, we are still operating in a surroundings, in an economy, that is described by [semiconductor] supply which remains not sufficient," Antlitz told Trade Algo, trying to add that this global semiconductor shortage is easing. "We have bond yields increasing and the overall consumption is slightly coming down from a consumer standpoint, from a market perspective.

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"Based on that, we have a backlog of orders of about 1.8 million cars. We have a good order book, excellent products, and strong brands, so we are optimistic about 2023.

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By the end of 2022, the automotive division's net cash flow had climbed to 43 billion euros, thanks in large part to the successful IPO of premium brand Porsche, which on Monday released an ambitious long-term forecast and recorded record profitability.

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