There is, of course, more to that story.
Just last year, Volkswagen estimated that electric cars would account for 80 per cent of annual sales in Europe by the end of the decade. The rather lukewarm reception of its own ID models is now prompting the Wolfsburg-based company to adjust its strategy. Of the €180 billion set aside in 2023, primarily for next-generation electric cars, VW will now divert a third to the development of [combustion engines](internal combustion engines News and Reviews | Motor1.com). This announcement comes from Arno Antlitz, Chief Financial Officer and Chief Operating Officer of the Volkswagen Group. The company is therefore planning to spend a good €60 billion to “keep our combustion cars competitive”. VW reverses stance on combustion engines: Billions are now being invested
Note that VW is still planning to spend twice as much on EV development. If $60B is good news for ICEs then $120B must be an exorcism of excitement for EVs. I suspect though that if the reception to the ID models was more like that of the Model 3 and then the Model Y, VW would be all in on EVs. The problem may be less the market and more the product.
In any case, this seemingly conflicting strategy indicates to me that VW is very much aware of the “Innovator’s Dilemma” and is desperately hedging its bets.
For those who might not know, the Innovator’s Dilemma describes the predicament faced by large companies having to deal with disruptive technology. These companies have a large customer base who like the existing tech and just want it improved incrementally. These companies will tend to cater to their customers, for good short/mid-term reasons. Meanwhile young upstarts are developing the disruptive tech and staying alive with sales to the early adopter crowd. Eventually the disruptive tech develops to a point where it becomes attractive to the customers of the traditional companies but by then it is too late for the old guys to catch up.