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UPDATED: 11/16/18 11:44 ET – adds details and comments

WOLFSBURG, Germany – Volkswagen Group said on Friday By 2023, it will spend € 44 billion on electric vehicles, digitization, autonomous driving and new mobility services.

The automaker also plans to increase factory productivity by 30 percent by 2025 by building more vehicles with different brands on the same production line.

This will help to reduce the investment ratio of the car manufacturer in the automotive division of the group from 2020 to six percent of sales, said the car manufacturer.

The 44-billion-euro plan is 10 billion euros more than in the planning round of last year.

The expenditures account for about one third of the five-year Volkswagen budget for capital goods such as real estate and investments. Despite the increase, the world's largest carmaker maintained its target of cutting capital spending to 6 percent of sales by 2020. To achieve this goal, VW's plants, which comprise around 120 plants worldwide, will cut costs. Last year, the rate fell to 6.4 percent.

VW is launching high-quality electric Porsche and Audi models, which are expected to go on sale next year to compete with other global automakers. Part mark from 2020.

VW said it could build up to 15 million electric cars over several years on its new MEB EV production platform.

"Volkswagen needs to become more efficient, more productive and more profitable in order to finance the high spending of the future and remain competitive," said CEO Herbert Diess at a press conference.

Since taking over the helm in April, Diess has reworked the 12-car brand to better meet future challenges, promising to curb bloated costs and increase economies of scale. A more agile environment is crucial as the industry grapples with slowing economic growth, trade barriers and the uncertainty of a post-Brexit Europe. German colleagues, Daimler AG and BMW AG, have cut their prospects while Toyota Motor Corp. and General Motors Co. reported strong results.

Diess said he hoped to have a framework agreement on Ford's cooperation by the end of the year, with a focus on commercial vehicles. He said a merger with Ford was not on the agenda and also said it was not intended to participate in the US company.

Jobs fear

Unions, which control half of the seats on Volkswagen's board, must sign the plan to create a global production capacity for 1 million electric vehicles by 2025, as they are concerned that assembling battery-powered cars will require fewer workers.

Around 436,000 industrial jobs are tied to the construction of petrol and diesel vehicles in Germany.

Workplaces are at risk, as a car with an internal combustion engine has 1,400 components in the engine, exhaust system and transmission, while the battery and the engine of an electric car have only 200 components, according to ING analysts.

Volkswagen Management has outlined plans this week to rebuild automotive plants in Zwickau, Emden and Hanover to build electric cars that will provide workers with guaranteed work until 2028.

The first ID electric car will be rolled off the production line in Zwickau in 2019, as the plant will increase to a production capacity of 330,000 electric vehicles. Zwickau is currently building the VW Golf and the Golf Estate.

"Ford remains a competitor"

Volkswagen's MEB platform for electric vehicles is also being watched by Ford as the two companies continue their exploratory talks on an alliance to develop self-propelled and electric vehicles.

"Our two companies complement each other very well, both in terms of products and regions, and joint development and production of a range of light commercial vehicles is at the heart of the planned collaboration," said Diess.

VW expects significant synergies from this alliance, potentially enabling the development of next-generation Amarok pickup trucks and more SUVs, Diess said.

Diess said any agreement with Ford would exclude business strategy, marketing and pricing. He denied speculation that the future partnership could be a prelude to cross-shareholdings or a merger.

He added, "That was never the goal of these talks. Ford remains a competitor. "

Bloomberg and Reuters contributed to this report.

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