Volkswagen Accelerates Electric Car Effort With $40 Billion Investment

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German automaker Volkswagen on Friday announced an investment of $40 billion by the end of 2022 in “electric mobility, autonomous driving, new mobility services, and digitalization.” Most of the investment is aimed at the electrification and hybridization of all the company’s vehicles. The goal is a fully electrified portfolio of vehicles by 2030.

VW is joining automakers like Volvo, General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F) and others in a major push to electrify their fleets in next 10 years or so.

In addition to the electrification of its fleet, VW is also investing at about $38 billion in a broader direct-investment program the company calls “Strategy 2025.” Today’s announcement does not include an investment of about $12 billion that the company is making with its partners in China.

Matthias Müller, VW’s CEO said:

With the planning round now approved, we are laying the foundation for making Volkswagen the world’s number one player in electric mobility by 2025. We are reinventing the car. We are making targeted investments in digitalization, autonomous driving, electric mobility and new mobility services by providing the necessary funds from our own resources. We are, however, doing so without sidelining existing technologies and vehicle projects, since this is how we will earn our money for the foreseeable future.

VW plans to remodel its Zwickau plant to be a pure-play “e-mobility” facility. The Emden plant will build all the VW Passat models beginning at the end of next year, and the Wolfsburg plant will build the VW Golf family beginning with the next generation of those vehicles.

With committed investments of this size, it remains something of an anomaly that the Trump administration is doing everything it can to encourage more mining of fossil fuels. The companies with skin in the game are clearly betting on electric cars, and opening more federal U.S. lands for drilling and mining is not going to change that.

Speaking to the issue of emissions, VW Chief Financial Officer Frank Witter explained:

[Tighter global restrictions on carbon emissions are] why we have to complete the transformation toward producing more electrically powered vehicles – combined with digitalization, connectivity and mobility services – with utmost efficiency.

In other words, this is what the market wants and we’re going to listen to the market. VW was slow to get on the electric vehicle bandwagon, but the company’s diesel emissions scandal provided solid evidence that a strategic shift away from fossil fuels and toward electric vehicles and autonomous driving technology.