VW could make EU CO2 targets by "a gram or so," says CEO

German automotive giant Volkswagen will make the new EU carbon emissions limits within just "a gram or so" even if its low-emission vehicles sales are lower than expected due to the pandemic, according to CEO Herbert Diess.

Beginning this year, EU-based automotive firms are required to lower average fleet emissions to 95g of CO2 per kilometre driven, or face hefty fines.

In an interview with FT, Diess said:  “We haven’t given up yet, but it will be very tight to achieve the fleet targets.”

“There’s still a chance to get there,” he added that if sales of electric and low-emission vehicles pick up in the last months of 2020.

The fines for missing emissions targets are high - €95 for every gram of CO2 per kilometre over the limit, multiplied by the number of vehicles newly registered in a year. The calculation could leave VW, as well as several other car manufacturers, with a bill that runs into the hundreds of millions of euros, unless, as the rules allow, the company "pools" its emissions with another carmaker.

While it does already have one pooling agreement in place with MG, which is owned by VW's Chinese joint venture partner SAIC, it may need another as the company only sells around 1,200 electric vehicles a month.

The year began promisingly for Volkswagen in terms of its ability to meet the targets however, problems with software and battery supply issues delayed the release of its first mass-market electric vehicle the ID.3 to September.

The company, which also owns Porsche, Audi and Seat, is now facing a last-minute race to cover the ground it lost during lockdowns.

Previously reliant on sales of mid-market SUVs, Volkswagen had planned to compensate for the high carbon footprint of this year's first two quarters through delivers of new EVs such as ID.3, the Porsche Taycan and the Audi e-tron. 

Despite attracting tens of thousands of pre-orders for the ID.3, the delay to its release and the coronavirus outbreak affected Volkswagen's plans. 

“The first thought was that the pandemic would help us because we would keep on producing electric vehicles and plug-in hybrids, so the mix would become better, but it turned out to remain difficult because we lost electric vehicle sales as well,” Diess told FT.

Diess rejected the idea that exceeding the EU targets would create a public relations problem for Volkswagen, which is investing €33 billion on transforming itself into the world's largest manufacturer of electric vehicles.

“It is a marathon and it will take years,” he said, adding that “It will be a bit easier next year,” when several more electric models, such as the ID.4 SUV, will go to market, “and from 2023 onwards, we shouldn’t have any problems any more," he concluded.

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