Volkswagen on Monday said it will stop developing natural gas-fuelled cars as the German auto giant bets on electric engines in the battle to woo climate-conscious drivers.

The VW group sold just 110,000 cars powered by compressed natural gas (CNG) worldwide last year, not enough to justify further investment, VW's head of development Frank Welsch told the Handelsblatt financial daily.

Although production of existing models powered by the alternative energy won't be halted right away, "there will be no successors to these cars," Welsch said.

"It never really resonated with customers," he added.

Electric cars have taken centre stage at Volkswagen
Electric cars have taken centre stage at Volkswagen AFP / RONNY HARTMANN

The exit from CNG will allow VW to focus more strongly on zero-emissions electric vehicles, Welsch said, which the company expects to go mainstream in the coming years.

Like rival carmakers, Volkswagen is investing billions in e-cars as the auto industry shifts to cleaner engines to comply with tougher emissions regulations.

"If we are serious about the mobility shift and environmental targets, then we must focus on battery-powered electric engines. Everything else is a waste (of efforts)", Welsch told Handelsblatt.

The 12-brand VW group, which includes Porsche, Seat, Skoda and Audi, has set itself the goal of selling 32 million electric and hybrid vehicles by 2029.