Volkswagen says it hits EU CO2 target “on its own”

Volkswagen Group has told the newspaper Financial Times that it has cut loose its external partners within its CO2 pool. After meeting the CO2 targets last year, with the help of four Chinese carmakers, the output of electric vehicles at the German car giant is now vast enough to proceed on the EV strength of its sub-brands.

“We confirm that we have switched to a closed pool and are confident of reaching EU emission targets on our own,” Volkswagen said to the Financial Times.

Previously, the group was in agreement with SAIC and Geely, which made it possible to undercut the CO2 target imposed by the European Union by 1,9% (118,5 g/km instead of 120,8 g/km).

This emission collaboration was set up in September 2020, the first year of implementation of the new barrier, in which Volkswagen missed its target and consequently paid fines.

Increase of 64%

So, the communal pool, which was expanded last year with the arrival of Nio and Xpeng, was effective. Also, Volkswagen increased its registrations of zero-emission vehicles by 64% that year in the EU (including Norway and Iceland) to 472 300 units.

Though final figures for 2022 are still to be released, EV registrations were consistently up for the entire group by 25%, as production in Zwickau has been prioritized, and the all-electric model portfolio keeps expanding.

This makes the German car giant switch entirely to its in-house output, spread over its twelve brands, to meet the CO2 targets. It signals how electrification is gaining traction and transforming car brands from within.

A fluid figure

Complying for 2022, without Chinese ‘help’, means that Volkswagen can also look forward to further improvement for the next year as the chip crisis, supply chain disruption, and the Ukrainian war still troubling EV output last year is expected to bring some relief in the near future.

Two years ago, the EU committed to a fleet average for the car brands selling in their region of 95 g/km of CO2. But in reality, the figure deviates for each car brand and is calculated individually to smoothen the peaks and soften the transition.

Otherwise, this figure would be much easier to meet for a car brand strongly dependent on city cars, like Fiat, than for a company like Mercedes, also making limousines. So as not to hamper technological investment, the target is fluid.

Carbon credit sales

To give the carmakers some further slack, they could also team up and compensate each other. This meant – and still is – big business for Tesla, an attractive partner for third-party carmakers through its zero-emission line-up. At the beginning of the year, the American EV maker saw its carbon credit sales surge by 116%.

For a decent time, this was one of the drivers behind the company’s profitability, and, as such, the legacy brands have been indirectly sponsoring the brand’s cash flow. However, more recently, Tesla saw these partnerships dissolving as well.

A further 55% reduction

As for the future, the European Union has agreed on a 55% reduction of a brand’s car fleet compared to last year’s level by 2030. This means the Volkswagen Group will have to comply with a target of 54,4 g/km CO2 by the decade’s end.

Initially, Volkswagen planned to cut its CO2 emissions, including production and energy supply, by 30% by 2030 (compared with 2018). However, earlier this year, it announced raising that target to 50%.