VW to Allocate Billions from EV Development Budget for Gas Engine Investments

VW Will Spend Billions of Its EV Development Budget on Gas Engines

The transition to Electric vehicles (EVs) is facing challenges, as several automakers are postponing their ambitious plans to go fully electric in the near future. For instance, Volkswagen previously anticipated that EVs would make up to 80% of its annual sales in Europe by the end of the decade. However, the lukewarm response to its ID models has led VW to rethink its strategy.

Despite allocating €180 billion ($196 billion) in 2023 mainly for next-generation EVs, Volkswagen has decided to divert one-third of this budget, approximately €60 billion ($65 billion), to the development of combustion engines. This decision was announced by Arno Antlitz, the Chief Financial Officer and Chief Operating Officer at Volkswagen Group, who stated that the company aims to “keep our combustion cars competitive.”

This move marks a significant shift from Volkswagen’s previous plan in late 2022, which aimed to sell only Electric cars in Europe starting from 2033. Speaking at a Reuters event in Munich, Antlitz emphasized that “the future is electric, but the past is not over. It is a third and it will stay a third.”

Last year, VW brand boss Thomas Schäfer referred to internal combustion engines (ICE) as “old technology” in the context of e-fuels, dismissing discussions about synthetic fuels as “unnecessary noise.” This stance is somewhat contradicted by VW Group brand Porsche, which is actively involved in producing synthetic fuel in Chile.

Other premium brands within the VW Group, such as Bugatti, Lamborghini, and Bentley, are also monitoring the evolution of sustainable fuels. Bugatti is considering designing home fuel stations that use synthetic fuel, while Lamborghini believes the combustion engine could be preserved by using alternative fuels. Bentley is exploring nearly carbon-neutral fuels and has delayed its goal to become EV-only by 2030 to 2033.

Similarly, Ford has revised its target to go entirely electric in Europe by 2030, and Aston Martin has decided to continue producing cars with combustion engines into the next decade. These adjustments reflect a broader trend among car companies reevaluating their EV strategies due to consumer reluctance to abandon ICE vehicles. At the same time, automakers face stricter emissions regulations and the competitive threat posed by China’s electric vehicle industry.