The Volkswagen Group has put its money where its mouth is, signing on a multi-billion-dollar loan with an interest rate contingent on reducing the carbon emissions of its vehicles and factories.
German car conglomerate Volkswagen has taken out a €1.8 billion ($AU2.85 billion) loan in Europe – but the final amount it will need to pay back will depend not on market factors, but the speed at which Volkswagen sells its electric cars.
Provided by a consortium of six European banks, the interest rate attached to the three-year, $2.85 billion loan the German car giant must repay “depends on the Volkswagen Group achieving its CO2 fleet emission targets in Europe” – a first for the car maker, and likely one of the first in the industry.
The latest announcement doesn’t clarify if the targets the Group must meet are its own, or those set by the European Union, however by 2030 Volkswagen has committed to reducing all greenhouse gas emissions during manufacturing and its vehicles’ lifespans by 30 per cent (compared to 2018 levels), before the Group goes CO2 neutral in 2050.
While renewable energy will be used across all of the Group’s global factories by 2030 – in order to to reduce “absolute” CO2 emissions by 30 per cent – the sales of electric cars will also contribute, sold across all of its marques.
The Volkswagen Group plans to introduce 70 all-electric cars by 2030 across all brands, joining 60 hybrids. By the same date, the Volkswagen brand is aiming for electric vehicles to account for 70 per cent of sales in Europe – ahead of axing the last petrol and diesel cars between 2033 and 2035 – or 50 per cent of Chinese and US sales.
Globally, the Volkswagen Group aims for 50 per cent of its sales to be all-electric by 2030.
“We’re committed to our goal of systematically transforming our product portfolio toward electromobility and making Volkswagen a carbon-neutral company on the balance sheet by 2050,” Volkswagen Group chief financial officer Arno Antlitz said in a statement.
“The fact that banks are willing to link their interest rates to fleet emission targets also highlights how demanding the CO2 reduction targets for new passenger cars are,” Antlitz added on LinkedIn.