Volkswagen to spend $50 billion on electric car 'offensive'

London(CNN Business) Volkswagen has committed to spending tens of billions of dollars as part of a dramatic shift to electric and autonomous vehicles.

The Germany carmaker said Friday that it would invest €44 billion ($50 billion) by 2023 to develop electric cars, self-driving vehicles and other new technology.

Speaking at a press conference following a meeting of the company's supervisory board, CEO Herbert Diess described the company's strategy as an "electric offensive."

Diess acknowledged that increased spending on new technology could initially harm earnings growth. The investment is roughly €10 billion ($11.4 billion) above what the company set aside for new tech in last year's budget plan.

"Volkswagen must become more efficient, more productive and more profitable in order to finance the high expenditure in the future and in order to stay competitive," Diess said during the press conference.

Volkswagen's stock, which declined roughly 12% so far this year, dropped another 1.3% on Friday.

Volkswagen and Ford

Diess said that talks with US automaker Ford (F) about working together were "progressing positively."

So far the only alliance firmly in place between Ford and Volkswagen involves an agreement to work together on commercial vehicles. But Diess sees potential in more cooperation.

"We can solve the transformation of our business more easily with partnerships," he said Friday.

Automakers are spending billions of dollars as they try to develop the electric and self-driving vehicles they believe are the future.

They're also facing more competition from tech companies, including Uber and Google parent Alphabet (GOOG). Upstarts like Tesla (TSLA) have proved formidable too.

Production changes

Volkswagen said that the first model built under its new strategy, the ID, will begin rolling off the assembly lines in 2022. Diess said the car will have a range of up to 550 km (340 miles) and cost the equivalent of its current diesel Golf.

The car group, which owns the Porsche and Audi brands, said it would attempt to increase the productivity of its plants 30% by 2025. It plans to build vehicles from different brands on the same production lines as part of the effort.

It will also relocate production of the Passat from Germany to the Czech Republic.

Diess said that Volkswagen (VLKAF) was considering whether to build its own battery cells, a key component in electric vehicles.

China shift

The carmaker also announced leadership changes in China, the world's largest car market.

Diess now has direct responsibility for the China business, a move that Volkswagen said reflects "the growing importance of the Chinese market and the high pace of technological development in China."

Stephan Wöllenstein, who currently oversees the passenger car division in China, will handle business operations in the country going forward.