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Exclusive: Volkswagen, China spearhead $300 billion global drive to electrify cars

Reuters 

By Paul Lienert, Shirouzu and Edward Taylor

(Reuters) - Global automakers are planning a $300 billion surge in spending on over the next five to 10 years, with nearly half of the money targeted at China, accelerating the industry's transition from fossil fuels and shifting power to Asian battery and suppliers.

The unprecedented level of spending - much of it by Germany's - is driven in large measure by government policies adopted to cut carbon dioxide emissions, and will extend technological advances that have improved battery cost, range and charging time to make electric vehicles more appealing to consumers, according to an exclusive analysis of public data released by those companies.

For a graphic showing planned EV spending by country, click on https://tmsnrt.rs/2Azl09N

for decades played catch-up to German, Japanese and American automakers, which dominated Now, is positioned to lead electric vehicle development, industry executives say.

"The future of Volkswagen will be decided in the Chinese market," said Herbert Diess, of VW, which has decades-old joint ventures with two of China's largest automakers, and

Speaking earlier this week to a small group of reporters in Beijing, Diess said "will become one of the automotive powerhouses in the world."

"What we find (in China) is really the right environment to develop the next generation of cars and we find the right skills, which we only partially have in or other places," he said.

Diess added, "We have very clear policies established here in China. Policymakers and regulators are requiring" a shift to electric vehicles.

As China and other countries place more restrictions on conventional gasoline and diesel engines, auto companies have accelerated the shift to electrification. A year ago global automakers said they planned to spend $90 billion on electric vehicle development.

The $300 billion that automakers have earmarked to put electric vehicles into mass production in China, and is greater than the economies of or

Almost one-third of the industry's EV spending total, about $91 billion, is being committed by the Volkswagen Group, which is aggressively trying to distance itself from the Dieselgate scandal, which has cost it billions in penalties and legal settlements.

VW's sweeping electrification plan envisions capacity on three continents to build up to 15 million electric vehicles by 2025, including 50 pure electric and 30 hybrid electric models. Eventually, plans to offer electrified versions of all 300 models in its 12-brand global portfolio, which includes and

VW's staggering EV budget dwarfs that of its closest competitor, Germany's Daimler AG, which has committed $42 billion. In comparison, General Motors Co, the No 1 U.S. automaker, has said it plans to spend a combined $8 billion on electric and self-driving vehicles.

Roughly 45 percent of the global industry's planned EV investment and procurement spending, more than $135 billion, will occur in China, which is heavily promoting the production and sale of electric vehicles through a system of government-mandated quotas, credits and incentives.

As a result, EV spending by major Chinese automakers from SAIC to could be matched or even exceeded by multinational joint-venture partners such VW, Daimler and GM, as they dramatically expand their electric vehicle portfolios in China and ramp up battery purchases from Chinese suppliers.

analyzed investment and procurement budgets made public over the past two years by 29 of the world's top automakers, based primarily in the United States, China, Japan, Korea, India, and The figures do not reflect planned investments and purchases that have not yet been made public.

Actual spending by vehicle manufacturers on research and development, engineering, production tooling and procurement likely will be much higher. The analysis also does not include related spending by automotive suppliers, technology companies and large corporations in other industries, from and to and

"There has been a rush" to invest in electric vehicles and batteries, said Alexandre Marian, of a 2018 study that forecast total EV spending of $255 billion through 2023 by global automakers and suppliers.

Marian said the industry has increased spending budgets on electric vehicles and batteries, while seeking more alliances and partnerships to help spread the higher investment costs.

Alliances, such as those between and its Chinese partners, will be among the greatest spurs to innovation, especially in the global rollout of electric vehicles.

Diess said is "evolving from the model where we have been developing and bringing European technology into this market to a new phase where we will co-develop part of the in China for the rest of the world. I think this is a significant step change."

(Reporting by Paul in Detroit, Edward Taylor in and Shirouzu in Beijing; Editing by Steve Orlofsky)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 10 2019. 11:40 IST
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