Group Management Report

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Economic activities of the Volkswagen Group

In its Group strategy NEW AUTO – Mobility for Generations to come, the Volkswagen Group is driving its transformation towards becoming one of the world’s leading providers of sustainable mobility. We pay particular attention here to the use of resources and the emissions of our product portfolio, as well as those of our sites and plants.

The Volkswagen Group’s activities in its vehicle-related business with passenger cars, light commercial vehicles, trucks, buses and motorcycles cover the development, production and sale of vehicles and extend to our financial services and other vehicle-related products and services. Activities in these areas are suited under the EU taxonomy to making a substantial contribution to the environmental objective of climate change mitigation by increasing clean or climate-neutral mobility.

The Volkswagen Group’s activities in the Power Engineering Business Area comprise the development, design, production, sale and servicing of machinery and equipment. These activities also fall under the environmental objective of climate change mitigation.

The analysis of the economic activities in the context of the EU taxonomy has not revealed any activities that contribute specifically to the environmental objective of climate change adaptation.

The table below sets out the allocation of our activities in the vehicle-related business and in Power Engineering to the economic activities listed in the EU taxonomy under the environmental objective of climate change mitigation. Changes may be made to the economic activities in future as the rules around the EU taxonomy dynamically evolve.

Economic activity in accordance with the EU taxonomy

 

Description of economic activity

 

Allocation in the Volkswagen Group

 

 

 

 

 

Environmental objective: mitigating climate change

3. Manufacturing

3.2 Manufacture of equipment for the production and use of hydrogen

 

Manufacture of equipment for the production and use of hydrogen.

 

Power Engineering

3.3 Manufacture of low-carbon technologies for transport

 

Manufacture, repair, maintenance, retrofitting, repurposing and upgrade of low-carbon vehicles, rolling stock and vessels.

 

Vehicle-related business

3.6 Manufacture of other low-carbon technologies

 

Manufacture of technologies aimed at substantial greenhouse gas emission reductions in other sectors of the economy, where those technologies are not covered by other economic activities in the manufacturing sector.

 

Power Engineering

9. Professional, scientific and technical activities

9.1 Close to market research, development and innovation

 

Research, applied research and experimental development of solutions, processes, technologies, business models and other products dedicated to the reduction, avoidance or removal of greenhouse gas emissions for which the ability to reduce, remove or avoid greenhouse gas emissions in the target economic activities has at least been demonstrated in a relevant environment, corresponding to at least Technology Readiness Level 6.

 

Power Engineering

Economic activities in vehicle-related business

Economic activity 3.3 Manufacture of low-carbon technologies for transport

We allocate all activities in our vehicle-related business associated with the development, production, sale (including financial services), operation and servicing of vehicles to this economic activity. This includes all passenger cars, light commercial vehicles, trucks, buses and motorcycles manufactured by us, irrespective of their powertrain technology, and also includes genuine parts.

In our vehicle-related business, we have detailed the vehicles manufactured by us by model and powertrain technology and analyzed the CO2 emissions associated with them in accordance with the WLTP. In this way, we have identified those vehicles among all of our taxonomy-eligible vehicles that meet the screening criteria and with which the substantial contribution to climate change mitigation is measured. These include all of the Volkswagen Group’s all-electric vehicles. Until December 31, 2025, they also include passenger cars and light commercial vehicles with CO2 emissions of less than 50 g/km. This encompasses the majority of our plug-in hybrids. Buses meeting the EURO VI standard (Stage E) are also included until December 31, 2022.

At this stage, other activities that are directly associated with the primary vehicle-related business and that in our view should also be allocated to this economic activity have not yet been included or have been interpreted as not yet being taxonomy-eligible. This is because, as the rules of the EU taxonomy currently stand, it is still unclear where to record them in accordance with the EU taxonomy. These activities particularly include the sale of engines and powertrains, as well as parts deliveries, the sale of non-Group products and production under license by third parties. Hedging transactions and individual activities that we present primarily under Other sales revenue in the consolidated financial statements do not conform to the descriptions of economic activities in the EU taxonomy, and we have therefore initially classified them as not being taxonomy-eligible.

Economic activities in Power Engineering

In the Power Engineering Business Area, we have analyzed our activities with respect to their classification under the EU taxonomy and, with the exception of the heavy fuel oil engine new building business and individual components for the extraction and processing of fossil fuels, have identified them as taxonomy-eligible.

Economic activity 3.2 Manufacture of equipment for the production and use of hydrogen

Our activities relating to the manufacture of equipment for the production and use of hydrogen that meet the screening criteria and make a substantial contribution to the climate change objective are taxonomy-eligible. One example is the use of green hydrogen. At Volkswagen, these include the power-to-X technology for the production of low-carbon or carbon-neutral synthetic fuels, as well as components for the storage of hydrogen.

Economic activity 3.6 Manufacture of other low-carbon technologies

The description of this economic activity means that only those technologies manufactured for the purpose of reducing greenhouse gas emissions substantially in other sectors of the economy are taxonomy-eligible. At Volkswagen, this comprises all new-build activities that enable the use of gas and climate-neutral synthetic fuels (e.g. manufacturing of gas and dual-fuel engines), all industrial solutions for energy storage and sector coupling (e.g. heat pumps) and all solutions for carbon capture, storage and usage; it also includes subsea compression (subsea compression close to the wellhead for the extraction of natural gas). These activities are rounded off by the service and after-sales business, comprising the upgrading and modernization of existing equipment. For example, we retrofit existing maritime fleets with technology that makes it possible to reduce CO2 emissions.

Economic activity 9.1 Close to market research, development and innovation

The description of this economic activity includes applied research in technologies for the reduction or avoidance of greenhouse gas emissions. We allocate our licensing business to this economic activity. This business provides our development services in the form of production documents, based on which our licensees are authorized to manufacture corresponding gas and/or dual-fuel engines.

For economic activity 3.2 Manufacture of equipment for the production and use of hydrogen, we meet the screening criteria that are a requirement for the substantial contribution to the climate change mitigation objective. Given that the new reporting obligations and the requirements specified therein have only very recently been introduced, it was not yet possible to provide corresponding proof of economic activities covered by 3.6 Manufacture of other low-carbon technologies and 9.1 Close to market research, development and innovation.

Plug-in hybrid
Performance levels of hybrid vehicles. Plug-in hybrid electric vehicles (PHEVs) have a larger battery with a correspondingly higher capacity that can be charged via the combustion engine, the brake system, or an electrical outlet. This increases the range of the vehicle.