For tech investors, considering a company like Volkswagen AG (OTC:VLKAY) as a play on technology may seem far-fetched. After all, most investors may correlate Volkswagen with diesel vehicles as opposed to anything remotely considered "green" or "high-tech." It appears the new brass at Volkswagen are looking to change this image, however, with the company recently announcing a five-year spending plan of $74 billion in electric and autonomous car technology.
The race to become a leader in the new electric vehicle (EV) space is due in part to the necessity for companies like Volkswagen to adapt or die, and in part due to regulation. The European Union has announced stricter limits on carbon emissions, and has announced fines for companies who miss these targets - substantial fines at that. In order to lower the company's average emissions per vehicle, Volkswagen has announced it will be switching three of its plants over to focus on EV mass market production, a move which should help propel the company toward the future while avoiding costly near-term penalties for investors.
The advantage companies like Volkswagen have in the EV race is not a first mover advantage - companies like Tesla Inc. (NASDAQ:TSLA) certainly have the lead in this regard. Rather, Volkswagen's massive investment will come directly from its own cash flow and earnings, funded not by capital or equity markets but by its core operating business, making the transition very likely to hold in a sustainable fashion long term.
Invest wisely, my friends.
