FRANKFURT: German auto giant Volkswagen said on Thursday that it would bulk up its investment in electric vehicles and digitalisation to 89 billion euros ($101 billion) over the next five years.
The 12-brand group will dedicate 56 percent of its 159 billion euros of investment to developing the cars of the future, up from 50 percent, and estimates that "one in four cars sold in 2026 will have a battery-electric motor".
"We are in the middle of the biggest transformation in the history of Volkswagen," CEO Herbert Diess said in a press conference after a meeting of the group's supervisory board to agree the investment plan.
Under pressure to reduce the sector's role in climate change, major automakers around the world have announced targets to gradually phase out fossil fuel-powered vehicles.
In 2020, Volkswagen announced 73 billion euros of investment in the vehicles of tomorrow for the period up to 2024.
The need to raise the investment through 2025 was "mainly due to the accelerated ramp-up of e-mobility as part of the green deal" agreed by the European Union, the group said in a statement.
The heightened investment will also go into the opening of six new battery factories in partnership with other companies.
The investment in electric cars increased by 50 percent to 52 billion euros, while the sums allocated to hybrid "transition technology" went down by 30 percent to eight billion euros.
The digitalisation of its vehicles and the group's organisation will cost a further 30 billion euros.
Volkswagen said that its flagship plant in Wolfsburg, Germany, would begin producing electric vehicles earlier than first planned in 2024, on top of a plan to produce a new mass-market electric vehicle from 2026.
The group also announced a reshuffle on its board of directors with Diess taking over the group's software arm Cariad and VW brand boss Ralf Brandstaetter assuming responsibility for the Chinese market next year.