All 300 models in the Volkswagen Group range will come with electrification from 2030.
The announcement means that vehicles from car manufacturers such as Audi, Seat and Skoda will have all-electric or hybrid versions.
The company will spend £18 bn pounds on new electric car platforms, charging infrastructure and battery technology. This will include 80 all-new electrified models by 2025, 30 of which will be plug-in hybrids and 50 pure electric.
Matthias Müller, Chairman of the Board of Management of Volkswagen said: "We have got the message and we will deliver. This is not some vague declaration of intent. It is a strong self-commitment, which, from today, becomes the yardstick by which we measure our performance.
"The transformation in our industry is unstoppable. And we will lead that transformation."
VW also announced it is currently looking into battery technology, tackling the issue of battery range, especially as VW's fleet alone will need 150 gigawatt hours of ion batteries by 2025. To put that into context, this translates to 150 million watts worth of power.
Müller added: "For us, the transformation of transportation and the energy transition are inseparable. And creating a comprehensive charging infrastructure rapidly – in cities and on highways – will be critical to success.
"In Europe, and particularly in the automotive stronghold of Germany, much more needs to be done. Only then will customers' trust grow. And only then will electric cars come out of the niche – and achieve relevant market share in years to come.
"I'm convinced this will succeed if politicians, the energy industry and automakers work in harness."