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Volkswagen set to invest €20 billion in electric cars in effort to compete with Tesla

German car manufacturing colossus Volkswagen has announced that it will invest €20 billion in the development of electric vehicles in an effort to compete with US electric incumbent Tesla. The revelation ends months of speculation in relation to Volkswagen and its strategy towards ‘mass electrification'.

Management at Volkswagen disclosed that the investment of more than €20 billion will be used to develop zero-emission vehicles by 2030, and it firmly believes it will be in a position to challenge Tesla in its bid to create a new mass market.

Volkswagen remains the world's largest automaker in relation to sales, and added that it proposes to deploy 80 new electric cars across its multi-band group by 2025. In addition to this, the German automaker also declared that it wanted to offer an electric version of each of its 300 group models by 2030.

Earlier this year, a spokesperson for the German firm indicated that the organization planned on investing around €10 billion in electric vehicles. However, that investment strategy has now doubled due to the growing number of governments who have announced plans in some cases to prohibit and others to phase out the sale of both diesel and petrol cars.

India and China represent two of the fastest growing auto-markets in the world and both their respective governments are aggressively pursuing legislation and new policies which is centered on the mass adoption of electric vehicles.

Other leading global manufacturers have suggested that Volkswagen's diesel emissions scandal which rocked the industry has prompted other automakers to make a strategic shift towards zero-emission alternatives much quicker than it had probably intended on doing so. Volkswagen was initially slow to embrace electrification and self-driving technology until it admitted cheating on US emissions two years ago.

There is also growing pressure on carmakers to accelerate the development of electric and hybrid vehicles in order to help the global fight on pollution. However, Volkswagen Chief Executive Matthias Mueller defiantly told a Frankfurt car show that the company would be a global leader in the electrification of the auto industry and revealed ‘roadmap E program'. He said: "A company like Volkswagen must lead, not follow. We are setting the scene for the final breakthrough for e-mobility."

Volkswagen's I.D. model is the product that management has deployed in order to compete with Tesla's cheapest offering - which is the modestly priced $35,000 Model 3 sedan. The German automaker has also already begun the tendering process in relation to the selection of partners in China, Europe and North America in an effort to provide battery cells and related technologies estimated to be worth more than €50 billion.

Volkswagen's Chief Executive conceded that whilst it had suffered financially due to the emissions scandal in the US over the past two years, it did not need to sell off any of its assets in order to fund the investment. Mueller said, "No, not at all," he said. "Although we have suffered financially in the past two years because of the diesel issue, we are positioned well enough in financial terms to be able to shoulder these investments without problems."

VW's electric car program will be spearheaded by its new MEB modular platform developed by its namesake brand, which will underpin all mass-market electric vehicles from across the group. A Golf-style compact model with about 600 kilometers (373 miles) of driving range is due to be built in 2020.