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Volkswagen is betting its future on electric cars

Volkswagen already had ambitious plans for electric cars. Now it’s really stepping on the accelerator.

The German carmaker is increasing the number of new electric models it plans to build over the next decade from 50 to 70.

The group had previously announced massive investments in electric and battery technology, signaling its intention to confront upstarts like Tesla (TSLA) that have taken the lead in the emerging market for electric cars.

The Volkswagen Group (VLKAF) said in a statement Tuesday that it now plans to build 22 million electric cars across its brands by 2028, a sharp increase from its earlier estimate of 15 million. It said it may also get into the battery manufacturing business in Europe.

There are some signs that increased investment in new technology is starting to hurt Volkswagen’s earnings.

The company said group profits hit €13.9 billion ($15.7 billion) in 2018, an increase of 0.7% from the previous year. But research and development costs rose 3.8%, and electric mobility investments dragged down profits at the core Volkswagen brand.

Carmakers around the world regard the demise of the internal combustion engine as only a matter of time, and many have set ambitious targets for sales of electrics and hybrids. Yet they are starting from a very small base.

The Volkswagen Group, which includes Audi, Porsche and Skoda, sold a record 10.8 million cars in 2018. But just 40,000 of those were electric vehicles, and only 60,000 or so were plug-in hybrids.

Many global carmakers are now seeking to share costs related to developing the cars of the future. BMW (BMWYY) and Mercedes-owner Daimler (DDAIF) have formed a strategic partnership focused on highly-automated and autonomous driving.

Ford (F) and Volkswagen announced a plan in January to build cars together. The companies also agreed to “investigate” how they can work together to develop next generation vehicles.

Last week, Volkswagen said that it was opening its Modular Electric Toolkit, or MEB, to other carmakers. The company describes the platform, which was developed specifically for electric vehicles, as the “heart” of its “electric offensive.”

The German carmaker on Tuesday tied its electric production targets to efforts to slash the CO2 footprint of its vehicle fleet by 30% by 2025. It wants 40% of the vehicles it sells to be electrics by 2030.

Two electric cars that could play a key role in taking on Tesla in the luxury market — the Audi e-tron and Porsche Taycan — will go into production this year. Volkswagen said that reservations for each of the models already total 20,000.

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