VW Warns of Higher Costs to Develop EVs

CEO Herbert Diess says the €20 billion ($23 billion) Volkswagen AG has budgeted to electrify its entire vehicle lineup won’t be enough to meet that goal.

Diess doesn’t offer a new cost figure. But he tells employees the higher cost reflects VW’s need to catch up with progress made by its competitors.

Diess says VW must further curtail expenses and boost its profitability. He sets the minimum margin at 4%, adding that 5%-6% would enable future investments and 7%-8% would make the company “crisis-ready.”

VW isn’t alone in adjusting its EV budget and warning about the impact on bottom-line profits. Bloomberg News notes that Daimler AG has cautioned that the €10 billion it originally earmarked for electrification won’t pay for its goal of introducing 10 all-electric models by 2022.