The Volkswagen Group believes a fine is inevitable as it anticipates failure in hitting its 2020 mandated target for CO2 emissions reductions in the EU.
This failure would come despite the carmaker’s recent pooling deal with MG Motor. The launch of the ID.3 fully electric hatchback hasn’t ensured carbon compliance either, mostly because of all the software issues it faced before its debut. Orders for the ID.3 have so far jumped north of 40,000 units, reports Autonews Europe.
“We cannot provide a clear commitment at this point that we will achieve compliance. It will be a difficult race,” said VW Group sales boss Christian Dahlheim. Meanwhile, the company’s finance chief, Frank Witter, told analysts that VW has already set aside funds to cover the likely costs of the fine.
“We have (booked) a couple hundred million in provisions to be on the safe side,” he stated.
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Witter added that a fine would represent just a “snapshot” in time because his company is “quite comfortable” regarding compliance next year and in the long term for the European market.
“Certainly it would be great to already be compliant in 2020, but we are talking a ten-year horizon at the end of the day,” he added. “If there was a small miss, it would not be great, but it would not be the end of the world.”
Since VW has already taken into account the eventuality of non-compliance for 2020 and set aside money, earnings in Q4 of this year should not be affected.
The German carmaker made pooling arrangements with MG Motor (a SAIC subsidiary) in a bid to incorporate the UK brand’s electric vehicle sales into VW’s European fleet. However, because of MG’s low sales numbers in Europe, the deal will have a limited impact on VW’s compliance, reducing its average fleet emissions by just 0.3 g/km.
