Volkswagen Eyes Electric Pivot Amid Growing Criticism

It's not often that corporate executives make confessions that could jeopardize both its corporate standing and perhaps even their jobs. Yet, last week a top Volkswagen group executive said that the group alone is responsible for around 2 percent of global carbon emissions, about the same amount that Germany emits.

It's almost one percent for cars and one percent for trucks. Germany, in comparison, accounts for nearly 2.2 percent of C02 emissions, the equivalent of 800 million tonnes, and was ranked sixth globally, according to 2017 figures from the Global Carbon Project. Herbert Diess, head of the Volkswagen group, told employees two weeks ago that the figure is 1 percent for the million cars the group has produced which are in circulation. "This percentage, we want to reduce to zero by 2050," he said at company headquarters in Wolfsburg.

Trying to restore its image

This disclosure comes as Volkswagen battles on several fronts trying to restore its image since the so-called "diesel-gate scandal" in 2015  when the storied-auto brand admitted to fitting 11 million vehicles worldwide with a device aimed at cheating pollution tests. The German automaker used a "defeat device" or software intended to pass regulatory lab tests, but in real-world driving, the emissions were several times the permissible limits.

The scandal has thus far sent a senior executive on a seven-year prison term, cost former CEO Martin Winterkorn his job and led to suspensions of several top Volkswagen executives. Now, in the face of stringent limits for C02 emissions from 2020, Volkswagen has vowed to introduce 70 electric models by 2028. Volkswagen, however, still can't seem to shake off its scandal tarnished reputation, even as it has cost the company more than $30 billion in fines, penalties, restitution and settlement of lawsuits since September 2015. Related: Building The World's Largest Solar Storage System

The U.S. Securities and Exchange Commission two weeks ago said it was suing Volkswagen and its former chief executive, accusing them of defrauding investors by making "deceptive" claims about the environmental impact of its cars. The regulator said that from 2007 until 2015, Volkswagen carried out a "massive fraud" when selling securities and half a million cars it described as clean diesel when executives knew about the extent of the cheating, the SEC alleges. The cars emitted 40 times more harmful nitrogen oxides than allowed under U.S. rules.

"The investors did not know that Volkswagen was lying to consumers to fool them into buying its 'clean diesel' cars and lying to government authorities in order to sell cars in the U.S. that did not comply with U.S. emission standards," the SEC claims. Volkswagen, countered, saying the SEC complaint is "legally and factually flawed" and the company will "contest it vigorously." It accused the Commission of "piling on to try to extract more from the company" more than two years after settlements with the U.S. Justice Department.

"The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time," Volkswagen spokesman Christopher Hauss said in an emailed statement.

The German auto industry is late in shifting towards electric cars, the Wirtschaftswoche report added. The Volkswagen group, which includes 12 brands, plans to sell 22 million electric cars in the next 10 years to escape heavy European fines and drastically reduce the carbon footprint of its factories.

By Tim Daiss for Oilprice.com

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