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UPDATE 3-Volkswagen looks to electric vehicles, cost cuts for profit recovery

· 03/16/2021 02:34
UPDATE 3-Volkswagen looks to electric vehicles, cost cuts for profit recovery

Targets 1 mln deliveries of electric vehicles in 2021

Aims for operating margin of 7-8% beyond 2021

Targets come a day after Volkswagen's Power Day

Adds context on margin, cost cuts

By Christoph Steitz and Jan Schwartz

- Volkswagen VOWG_p.DE is confident that cost cuts will help it raise profit margins in the coming years, the world's second-largest carmaker said on Tuesday, a day after outlining an ambitious electric mobility expansion.

"Our good performance in 2020, a year dominated by crisis, will give us momentum for accelerating our transformation," Chief Executive Herbert Diess said in a statement.

Volkswagen aims to more than double deliveries of electric vehicles to 1 million this year, it said, adding it would also apply a standardised platform model introduced for vehicle production years ago to software, batteries and charging.

Diess' comments come a day after Volkswagen unveiled plans to build half a dozen battery cell plants in Europe and expand infrastructure for charging electric vehicles globally, accelerating efforts to overtake Tesla TSLA.O. nL8N2LD3JE

Volkswagen confirmed it aimed for an operating margin of 7%-8% by 2025, adding it would likely end 2021 at the upper end of a 5%-6.5% target corridor.

Stellantis STLA.MI, the world's fourth-largest carmaker created through the merger of FCA and Peugeot maker PSA in January, is targeting an adjusted operating profit margin of 5.5%-7.5% this year. nL5N2L11SX

This will be achieved by lowering fixed costs by 2 billion euros by 2023 compared with 2020, a decline of 5%, as well as a decline of 7% in materials costs over the same period, Volkswagen said.

To get a better handle on personnel costs Volkswagen on Sunday offered early or partial retirement to older employees in a move sources said could cut up to 4,000 jobs at its plants in Germany. nL1N2LC07H

The group employs about 670,000 staff globally.

"We aim to put the ambitious transformation of the Volkswagen Group on a solid financial basis," incoming finance chief Arno Antlitz said.

($1 = 0.8382 euros)

(Reporting by Christoph Steitz and Jan Schwartz; editing by Riham Alkousaa and Emma Thomasson)

((christoph.steitz@thomsonreuters.com; +49 30 220 133 647;))