Volkswagen said on Tuesday it would invest €122 billion in the shift towards electric vehicles over the coming years, as the battle for dominance in the EV market heats up.
The German giant said it was planning overall investments of €180 billion between 2023 and 2027, of which 68 per cent would be spent on electrification and digitisation.
The 180-billion figure is a 13 per cent increase on VW's previous multi-year investment plan.
"As early as 2025, every fifth vehicle sold worldwide is expected be one with an all-electric drive," the group said.
VW said "a major reason" for the spending increase was its push to build a series of battery factories, as well as expenses linked to securing raw materials for batteries.
"A major reason" for Volkswagen’s spending increase is its push to build a series of battery factories, as well as expenses linked to securing raw materials for batteries
Volkswagen announced on Monday it had chosen Ontario in Canada as the site for its first battery plant in North America.
The decision comes amid growing concerns that massive US green subsidies will lure away investment and put European jobs at risk.
VW said last week it would "wait and see" how the European Commission – the European Union's executive arm – responded to Washington's incentive package before moving ahead with a planned battery plant in eastern Europe.
The company is already working on setting up three battery plants in Germany, Spain and Sweden.
VW said it wanted to focus its spending efforts over the coming years on "growing its presence in the North America region".
It also wants to increase its competitiveness in key market China, where it has fallen behind US rival Tesla and local manufacturers of electric cars.
In 2022, battery-powered cars accounted for a record seven per cent of the VW group's deliveries, amounting to just over 572,000 units globally.
VW expects EVs to make up around 10 per cent of its car sales in 2023.
Even as the industry goes greener, Volkswagen said it would make "ongoing investments" in the latest generation of combustion engines. "The peak in investment is expected to be reached in 2025, after which it will continuously decline," it said.