According to the chief executive of German car manufacturer Volkswagen (VW), the there could be need for the car maker to further augment its strategies for mass production of electric vehicles so that it would be able to address the tougher-than-expected European targets of reduction of greenhouse emissions emitting from cars in the block.
This remark was made by the executive following the announcement by the European Union to reduce carbon emission from cars by 37.5 percent by 2030, and after reports and warnings about possible jobs cuts and harm to the German auto sector that is the largest automotive manufacturing industry in EU, because of the tough targets.
VW CEO Herbert Diess said that this new emission cut off in emission levels is more than that had been expected by VW – at 30 per cent, which would have meant that the share for electric vehicles as a part of its expected total vehicle sales in 2030 would be more than 40 per cent. VW is still reeling under the impact of the emissions cheating scandal.
“This means that our planned restructuring programme, which is needed to address this systemic change, is not yet sufficient.”
The new targets that were announced were at the limit of what was technically and economically feasible, said German Economy Minister Peter Altmaier. In Germany, about 436,000 people are employed directly to the manufacturing sector for cars and diesel powered cars.
“This is a tough stretch and is at the higher end of expectations – however, we are convinced that this will help the industry to finally accept that combustion engines and platforms need to be standardized,” Evercore ISI analysts wrote.
The strategy that the largest car maker of Europe – VW, to ensure that it is able to meet the CO2 cuts of 30 per cent by reorganising and increasing the production process to churn out more electric vehicles and for this, the company has already set out about 30 billion euros or $34 billion to be spend on the strategy over the next five years.
There would be need for further changes to its strategy to address the tougher EU targets, Diess said in e-mailed remarks.
“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 added there is need to review the plans of the group in this matter in autumn of 2019 which would be in line with the planning calendar with the company.
VW now has set a target of transforming itself into the most profitable manufacturer of battery-powered vehicles and for this purpose, the company has plans to spend almost 44 billion euros for creating and developing electric cars, autonomous driving and new mobility services by 2023.
There were no comments made by other German car makers BMW and Daimler on the renewed EU targets.
(Adapted from Reuters.com)