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BUSINESS

Volkswagen plans €2 billion electric car plant in Germany

German auto giant Volkswagen said on Friday it had approved a 2 billion euro investment in a new electric car plant, as it seeks to overhaul its business in the face of stiff competition from US rival Tesla.

Volkswagen plans €2 billion electric car plant in Germany
The VW logo is seen at a brand pavilion in the Wolfsburg. Photo: dpa | Swen Pförtner

Construction on the new German factory next to the group’s historic home in Wolfsburg will begin “as early as spring 2023” for a production start in 2026, VW said in a statement.

The new site will be dedicated to the production of mass-market “Trinity” vehicles, the centre point of Volkswagen’s new all-electric fleet.

The decision was an “important milestone” for the company, the head of the VW brand Ralf Brandstaetter said in a statement, as it plans its move away from traditional combustion engines.

The Volkswagen group – whose 12 brands include Audi, Porsche and Skoda – is pumping 35 billion euros into the shift to electric vehicles and aims to become the world’s largest electric carmaker by 2025.

The announcement of the $2.2 billion investment came on the same day as Volkswagen’s rival, electric car pioneer Tesla got the green light from local officials to start production at a new plant near Berlin, Tesla’s first “gigafactory” in Europe.

With Tesla’s ambitions parked on its front lawn, Volkswagen is hoping to match its US rival with the new purpose-built factory by producing new electric vehicles in the space of 10 hours.

Currently, an electric Volkswagen takes around 30 hours to be built at the group’s plant in Zwickau in eastern Germany, group CEO Herbert Diess told employees in November.

SEE ALSO: Tesla gets final approval for ‘gigafactory’ near Berlin

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TOURISM

German airline Lufthansa optimistic for 2022 as tourist demand bounces back

German national carrier Lufthansa on Thursday reported it slashed its losses in the first quarter and set its sights on a record summer for tourist traffic as demand recovers from the pandemic.

German airline Lufthansa optimistic for 2022 as tourist demand bounces back

The airline group’s net loss over the first three months of 2022 came to €584 million ($620 million), down from one billion euros in the same quarter last year.

The improved result owed in part to the pick up in air traffic as coronavirus-related restrictions were rolled back in many countries and fears over the Omicron variant ebbed.

READ ALSO: Omicron wave forces German airline Lufthansa to axe 33,000 flights

The number of passengers on Lufthansa flights “more than quadrupled” in the first quarter to 13 million, from three million in 2021, when travel restrictions in many markets were more severe.

“New bookings are increasing from week to week,” Lufthansa CEO Carsten Spohr said in a statement, with demand rising particularly strongly among leisure travellers.

“More people are expected to fly on holiday” with the group than ever before this summer, Lufthansa said in a statement.

For business travel, the recovery was slower, with the group expecting traffic to reach “around 70 percent” of its pre-coronavirus level by the end of the year.

In all, Lufthansa expected to offer “around 75 percent” of its pre-crisis capacity over the year.

The group’s cargo division had a “record result” in the first quarter, Lufthansa said, as demand for freight remain high amid turmoil in global supply chains.

The segment recorded an operating profit of €495 million, up from €315 million in the first quarter of 2021.

Europe’s largest airline group – which includes Eurowings, Austrian, Swiss and Brussels Airlines – struggled at the outbreak of the pandemic and was saved from bankruptcy by a government bailout.

In response to the pandemic, Lufthansa bosses embarked on a major job-cutting programme which has seen over 30,000 positions shed since 2020, out of 140,000 jobs globally. The company said late last year it still had plans to get rid of 3,000 more jobs.

Lufthansa expected its financial performance “further improve in the coming quarters”, chief financial officer Remco Steenbergen said.

But people flying with the airline will face higher prices for tickets. 

The group said it would have to “pass through rising costs to customers”, Steenbergen said.

“Extreme changes in the price of kerosene” as energy costs surge in the wake of the Russian invasion of Ukraine could have an unpredictable effect on the end of year result, Lufthansa said.

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