VW will need to step up EV plans due to new CO2 targets

20 December 2018

VW will need to step up EV plans due to new CO2 targets

20 December 2018

Volkswagen (VW) has become the first vehicle manufacturer to suggest it will need to step up its electric vehicle (EV) program to meet new, strict CO2 targets.

CEO Herbert Diess has said the German carmaker may have to alter its production targets and introduction dates for electric models now that the 28 member states of the EU have agreed a 37.5% reduction in CO2 by 2030, based on levels attained in 2021.

This level is considerably more than VW, or any other vehicle manufacturer was expecting, with previous indications suggesting a 30% reduction. The company had already looked to bring its planned target of mass EV production forward by two years to 2023. Diess, however, suggested that to meet the new targets, Electric vehicles would have to achieve a 40% share of the manufacturer’s sales.

‘This means that our planned restructuring program, which is needed to address this systemic change, is not yet sufficient,’ Diess commented.

VW recently rolled out a €30 billion plan to make itself a leader in EV technology in five years, on the basis that it would achieve significant cuts to CO2 levels, bringing it within the 30% target that was initially touted. That this move is now not enough to ensure the company, Europe’s biggest manufacturer, can meet the new legislation adds to concerns of some countries and associations that the 37.5% figure is ‘unrealistic’.

The tougher EU targets, Diess said in e-mailed remarks, would require further changes to its strategy. ‘Restructuring our product portfolio, possibly further reducing our combustion engine-based offering and a significant adjustment of our plant structures and additional battery cell and battery factories would be necessary,’ Diess said.

He said VW's plans needed to be reviewed in autumn 2019, in line with the carmaker's planning calendar.

German rivals BMW and Daimler declined to comment on the EU targets, referring instead to statements from industry groups.

German car association VDA said the targets were too high and criticised the lack of a clear roadmap for how the reductions would be reached.

German Economy Minister Peter Altmaier said the targets were at the limit of what was technically and economically feasible. Around 436,000 industrial jobs in Germany are tied to building petrol and diesel engine vehicles.

‘Delivering a 37.5% CO2 reduction might sound plausible, but is unrealistic based on where we stand today,’ the European Automobile Manufacturers Association (ACEA) said. ‘Industry deplores that this 2030 target is driven purely by political motives, without taking technological and socio-economic realities into account.’