VW targets higher returns as batteries, software boost sales

Audi sees continued demand for combustion engines in China beyond 2033, but intends to fade them out in other markets by then.

Even as EVs take center stage, Diess has repeatedly said that software and self-driving functions will bring about an even deeper transformation of the industry with cars becoming sophisticated connected devices.

VW plans to offer autonomous driving in major markets worldwide, aided in part by cooperation with Ford Motor Co. and affiliate Argo AI.

In China, VW’s largest market, the automaker has sought partnerships with local tech companies to be among the first to offer autonomous driving, mostly in private cars.

Autonomous shift

The manufacturer remains on solid footing to finance the shift. First-half operating profit rose to 11 billion euros, ahead of pre-pandemic levels, VW said Friday in a preliminary earnings release, with 10 billion euros in net cash flow.

However, fallout from the global semiconductor shortage may be more pronounced during the second half of the year.

Analysts also have warned about a slowdown in VW’s business in China and tepid early demand for the VW brand’s electric ID family of cars there.

“For now, VW’s ID product still has too many serious teething issues,” Sanford Bernstein analyst Arndt Ellinghorst said Friday in a report. The company’s internal combustion-engine business “needs to be managed down in a socially acceptable way whilst battery manufacturing and software capabilities are internalized.”