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VW embarks on $50 billion electrification plan

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VW will spend almost 44 billion euros (50 billion dollars) on the development of electric vehicles, autonomous driving and new mobility services by 2023 and will explore further areas of cooperation with the American automaker Ford.

Diez said that he hopes that by the end of the year it is planned to outline a cooperation agreement with Ford, starting to focus on commercial vehicles. He added that merging with Ford was not on the agenda, and also said that there were no plans to take a stake in the American company.
Mass production of electric vehicles will help automakers reduce costs to the same level as current diesel vehicles, said Diez at a press conference in Wolfsburg, VW's hometown.

"Very emotional vehicles, with big economies of scale, I think we will be the most profitable company in electric cars,” said Diez, answering a question in English.

The supervisory board of Europe’s largest automaker has voted for far-reaching capital spending plans to start mass production of electric cars in Europe, the most radical shift in strategy after the VW diesel fraud scandal begins in 2015.
Volkswagen will return three of its German plants for building electric cars and exploring alliances with battery partners and competing automakers.

VW plans to increase the productivity of its plants by 30 percent by 2025, having built more cars of different brands on the same production line. He wants to reduce the rate of research and development of the automaker in the automotive division of the group to six percent of revenues from 2020.

"Volkswagen must become more efficient, productive and more profitable in order to finance high costs in the future and remain competitive,” said Diss.

The unions, which control half the seats in the Volkswagen supervisory board, must sign a plan to create global production capacity for 1 million electric vehicles by 2025 amid their fear that building battery-powered cars will require fewer workers.

About 436,000 industrial jobs in Germany are tied to the construction of gasoline and diesel engines.

According to ING analysts, the work is in jeopardy, since a car with an engine with a burner has 1,400 components in the engine, exhaust system and gearbox, while the battery and engine of an electric vehicle have only 200 components.

Volkswagen executives this week set out plans to turn auto plants into Zwickau, Emden, and Hannover to build electric cars, providing workers with job guarantees until 2028.
The first electric car ID should roll off the production line in Zwickau in 2019, as the plant rises to a production capacity of 330,000 electric vehicles. Zwickau is currently building the VW Golf and Golf Estate.

The Volkswagen MEB car platform is also being considered by Ford, since the two companies are continuing search negotiations on an alliance for developing self-propelled and electric vehicles.
"Our two companies complement each other very well in terms of both products and regions. Joint development and production of a number of light commercial vehicles underlies the proposed cooperation, ”said Diss.

VW expects significant synergies from this alliance, which may allow the creation of a new next-generation Amarok pickup truck series and additional sports cars, Diez said.
Ford CEO Jim Hackett told Reuters this week that the company was open to investing in its autonomous car business by automakers and others, but warned that expanding its partnership with VW was a "delicate dance.”


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