Volkswagen will have to pay EU fine on CO2 targets

In contrast with other manufacturers, the VW Group will have to pay a fine of approximately €140 million for exceeding the average CO2 emission rate established for the group in 2020 by 0,5 grams. The pandemic and problems with the ID.3 launch have caused retardation resulting in the fine.

According to VW, the fine will not impact the Q4 results for 2020 because provisions were already made in the prognoses. “The pandemic in 2020 has complicated our task,” Herbert Diess, CEO of the VW Group, commented on the news.

Average CO2 emissions much lower

The average CO2 emissions of the VW Group throughout Europe (27 EU member states plus Norway and the UK) are 20% lower than the year before at 99,8 g/km. This is partly due to the pandemic but also to the steep increase in electrified vehicle sales. In 2020, some 315 000 electrified vehicles were newly registered, more than four times more than in 2019. It makes VW the leader of the electric market.

The European target for 2020 was 95 g/km, but there were still some exceptions and recalculations for last year. The average rate is, for example, adjusted to the weight of a brand’s fleet, making it possible that the specific targets for each brand can still be higher. The rules will become more severe in 2025 and 2030.

For 2020, most polluting vehicles’ 5% sales were not added to the general average, 2020 being a transition year. For 2021, all vehicles produced will be taken into account to calculate the average emission rate.

Software problems

Individually, the VW and Audi brands have respected the average emission rate, but the whole group didn’t. Those are the two brands that lead the group’s electrification (with the VW ID.3 and the Audi e-tron), but in 2021, we will see many electrified cars in the other brands within the group. “There will be no problem reaching the targets in 2021,” said Herbert Diess.

The VW Group would probably have reached its target for 2020 were it not that the launch of VW’s new electric flagship, the ID.3, has several times been postponed (and also delayed due to the pandemic). The main reason for this was software problems.

The VW Group has decided to develop and produce its own software and no longer getting it from outside suppliers. That can be a clever decision for the future, but for now, it’s causing a big headache for the VW managers.

The problems with the ID.3 software already caused some reshuffle at the VW top. First adopters/buyers of the ID.3 have been complaining about important toothing problems. But VW couldn’t afford to postpone the launch of the ID.3 any longer because of the pressure of EU rules and the market’s expectations.

Volkswagen is feverishly developing a big software update that should be implemented into the network in the first quarter of this year. Unlike in a Tesla, there will be no remotely automatic update; the adaptations are too complicated and will last for several hours, so the cars will have to go to the dealer for a day or two.