VW built just 67,000 fully or part-electric cars last year but this is set to increase

VW betting on autonomous and electric cars for future success

Volkswagen (VW) has said it will invest billions of euros in electric cars, ride-hailing and automated driving to become a world leader in green transport by 2025.

The announcement follows the emissions scandal that the company has been embroiled in since last year which has cost it billions and damaged its reputation. 

Europe's biggest carmaker said it would fund "the biggest change process in the company's history" with an efficiency drive, including integrating components businesses that currently employ 67,000 people in 26 locations worldwide.

However, a lack of detail in the proposed programme - dubbed ‘TOGETHER - Strategy 2025’ - has left some analysts cold, with shares in the company falling as much as 4.3 per cent.

"The announcements by VW look great on paper, but no one can say for sure how demand for electric mobility will develop," said Commerzbank analyst Sascha Gommel.

"There are worthy elements among the plans, but it's probably also a marketing exercise by VW to tell the public that they have got the message to change after its scandal," said Gommel.

VW is battling to recover from the biggest business crisis in its 79-year history after admitting in September 2015 to cheating US diesel emissions tests. The German company has set aside $18bn (£13bn) to cover the cost of vehicle refits and a settlement with US authorities and analysts expect more fines and costs.

Spelling out a new strategy ahead of its annual shareholder meeting on Wednesday, the company said it planned to launch more than 30 electric vehicles over the next decade, forecasting they would account for about a quarter of group deliveries by 2025.

While VW sold almost 10 million vehicles last year - ranging from upmarket Audis and Porsches to cheaper Skodas and Seats - it built just 67,000 fully or part-electric cars.

The company also said it would build a services business encompassing areas such as ride-hailing and car-sharing that it expects to generate billions of euros in sales by 2025, as well as hiring another 1,000 software engineers to help develop its own autonomous driving and battery technologies.

Chief Executive Matthias Mueller said the transformation would require a "double-digit billion" amount of investment, funded by an efficiency drive aimed at delivering around eight billion euros in annual savings.

Some analysts said VW's move to embrace new technologies was merely catching up with rivals such as Daimler and BMW, while cost cutting would take time to boost profits.

For example, BMW recently announced its own vision for the next "two or three decades", which include plans to let drivers in UK cities share Mini cars and call on a fully autonomous Mini to pick them up "wherever they are, day or night".

BMW described its 'Every Mini Is My Mini' project as "a particular take on car-sharing" whereby each vehicle will adapt itself to the driver's "individual tastes, interests and preferences".

Adrian van Hooydonk, senior vice president of BMW Group Design, commented: "Mini looks to offer smart and bespoke mobility in cities that engages all the senses.

"And in the future, you might not actually have to own a vehicle to enjoy the benefits."

Meanwhile, the BMW car of the future would offer a ‘boost’ mode with support such as displaying the ideal driving line or warnings about oncoming vehicles being given when the driver is fully in control.

In ‘ease’ mode the steering wheel retracts and the angle of the front seats can be altered to make it easier for the driver and passenger to face each other in a "relaxed and welcoming atmosphere".

BMW Group was not specific about when such developments may be introduced to vehicles on public roads.

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