VW hit with fines for missing strict EU emissions targets

 VW hit with fines for missing strict EU emissions targets

Volkswagen, the world’s largest carmaker, will pay more than €100m in fines after narrowly missing strict EU emissions targets in 2020, despite launching its flagship electric vehicle during the year.

The group, which includes the Audi, Porsche and Seat brands, said its fleet-wide emissions in Europe stood at 99.8 grammes of CO2 per kilometre driven, roughly half a gramme short of the goal set by Brussels.

The miss is a blow for VW, which has sought to remodel itself as an electric vehicle superpower in the wake of the diesel emissions scandal, and plans to eclipse Tesla by selling 26m battery-powered cars this decade.

Domestic rivals Daimler and BMW have both confirmed they were compliant with the new rules, thanks to a late surge in demand for plug-in hybrid vehicles.

VW started the year in pole position to comply with the EU targets because of the planned rollout of the ID.3, its first mass-market electric vehicle.

But the model was plagued by software troubles, and VW ended up buying carbon credits from Chinese carmakers, including MG, Aiways and the Geely-owned electric black taxi maker LEVC, to offset the problem.

These tie-ups were not sufficient to get VW over the line, but the group said charges related to its failure to comply were already booked in previous quarters, and would not affect future profits.

VW’s chief executive Herbert Diess said the carmaker had been “thwarted by the Covid-19 pandemic” in 2020, and that the launches of electric models in the coming months would help it achieve its targets this year.

The EU rules are designed to spur the sale of electric vehicles.

Demand for battery or hybrid cars rose to a record high of 10 per cent across Europe last year, despite the pandemic, partly due to generous subsidies in several EU states.

The fines for missing the targets are €95 for every gramme of CO2 over the limit, multiplied by the number of cars sold across the bloc.

VW sold more than 3.6m cars in Europe as a whole last year, although that figure includes non-EU states. FT calculations indicate VW, therefore, faces a fine of approximately €150m.

While most carmakers in Europe managed to avoid penalties by meeting the targets, Jaguar Land Rover also admitted it fell short of its own goals, which were more lenient because it is a smaller manufacturer.

Under the rules, carmakers that are unable to meet the regulations on their own are allowed to “pool” their emissions with a cleaner rival.

Fiat Chrysler pooled with electric carmaker Tesla, while Ford, which had been hit by a delay to its hybrid vehicles needed to comply with the rules, teamed up with Volvo Cars.

Despite its failure to reach EU targets, VW managed to more than quadruple its sales of electric vehicles in Europe last year, delivering a total of 315,400 battery-powered cars, up from 72,600 the year before.

The Wolfsburg-based group is western Europe’s largest electric vehicle producer, with a market share of roughly 25 per cent.

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