Electric vehicles (EVs) are receiving more attention than ever before. Do you believe this market has reached a tipping point?
We may have already passed the tipping point. We saw a significant increase in sales last year, and we are approaching parity in terms of cost of ownership competitiveness. At Volkswagen Group, we anticipate that by 2030, electric vehicles will account for roughly half of our sales globally. In Europe, the Volkswagen brand intends to reach already more than 70%. Following the EU Green Deal plans, internal combustion engines will most likely be phased (here) out by 2035. The transition is underway and moving quickly.
Some of your peers intend to transition to all-electric vehicles by 2050, while others have not committed to this goal for all of their models. What is Volkswagen's vision?
We were among the first OEMs to commit to the Paris Agreement, and we are making rapid progress in that direction. We will have a nearly 100% electrified portfolio for the Volkswagen and Audi brands by 2033-2035 in Europe. Of course, the rate of transformation will vary depending on the market (Europe are moving faster for instance, South America with local complementary strategies such as ethanol slower).
It is important to note that setting a goal for 2050 is easy, many of us will be retired at that point.
What matters is to set credible intermediate targets and really carry the transition forward ourselves, as far as possible, rather than counting on those to come.
We set a goal two years ago to reduce overall lifecycle emissions by 30% by 2030 compared to the 2018 baseline. This is a concrete action we are taking now as part of our decarbonization program for our operations.
You mentioned that different regions move at different speeds: what do frontrunners do differently to clear the way for adoption of EVs?
Adopting EVs goes hand in hand with charging infrastructure, and we have seen a faster ramp up from this perspective in densely populated regions like Europe. It also has to do with policies that enable change; in Europe, this has been a high preoccupation for many years. The US went back and forth with the changes of presidents but President Biden is clearly pushing for green energy investments and electric cars. China is doing well in terms of infrastructure but its energy mix still includes a relevant chunk of coal - you do not win if you have an EV which is powered by lignite. It is extremely important that the transformation of transport happens in tandem with the energy transition.
In terms of Volkswagen's own carbon footprint, you are targeting net-zero by 2050. Will you walk us through the major milestones you have planned to get there?
To be precise, the goal covers the entire lifecycle, from cradle-to-grave, and is certified by the Science Based Target Initiative. Our ambition level overall is for production in line with the 1.5 degrees.
We are taking a few key steps in that direction. First, we calculated the decarbonization index for our car portfolio, specifying the corresponding emissions for each lifecycle phase and deciding on mitigation measures. In terms of manufacturing, we are increasing energy efficiency, electrifying certain processes, and transitioning to renewable energy (with the exception of China, the goal is to use only clean energy by 2030 globally; in Europe, we are already at 95%). During the use phase of our vehicles, we provide green energy to our customers in several European countries via our own charging subsidiary. In addition, we are investing in green energy ourselves, supporting solar and wind farms and enabling our EV customers to achieve carbon neutrality along the way. Upstream, we already have a contractual obligation for our battery cell manufacturers to use green energy, and all our giga factories will be powered by renewables. For end of an EV’s lifecycle we have set up a recycling facility for batteries.
What are the most significant challenges you have encountered or anticipate encountering along the way?
Two major challenges stand out: first, the energy transition and sustainable transportation must go hand in hand. As we can see now, as a result of Russia's war on Ukraine and a few other events, Europe has been slow to build up renewable capacity, and this needs to change. The United States has a long way to go as well. Second challenge is gaining data about the supply chain. In the automotive industry supply chains are long and very complex. We need very specific data from our suppliers, and standards for mining and transmitting this data are still very complicated. There is still a significant need for standardization.
Bearing all this in mind, are you an optimist when it comes to reaching the targets for 2050?
I certainly am. I have worked in sustainability for more than 20 years now, and many ideas that were just appearing then have now become mainstream. We have a suite of digital solutions to remove carbon emissions, and renewables are far cheaper than fossil fuels. Of course, the transition needs to also be accepted in part driven by end users, they are the ones buying our cars and need to be on the same journey. Overall, I am confident we can make it.
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