Effects of climate change
Against the backdrop of climate change and the resulting stricter emissions regulations, the transformation of the automotive industry towards e-mobility and further digitalization continues to make progress. In its NEW AUTO strategy, the Volkswagen Group has again stepped up the pace of its transformation towards e-mobility.
In the preparation of the consolidated financial statements, the Board of Management took into account the potential effects of climate changes and future regulatory requirements, and especially the corresponding transformation towards e-mobility. Potential effects, especially on noncurrent assets, provisions for emissions levies and future cash flows were, as far as possible, incorporated as part of the significant estimates and assumptions included in the consolidated financial statements. The effects of the transformation towards e-mobility are taken into account in compiling the medium-term planning and therefore in the calculation of future cash flows for determining recoverable amounts in impairment tests of goodwill and intangible assets with indefinite useful lives, especially when planning future vehicle models and in the context of investments in development costs and production facilities. In addition, Volkswagen regularly assesses whether these developments give rise to the need for ad hoc impairment tests or for adjustments to the useful lives of other noncurrent non-financial assets. With reference to increasingly stringent emissions regulations, it is ensured that the various international regulations are taken into account and that any obligations are recognized appropriately. This did not result in any material effects on the consolidated financial statements. The increase in development costs in the areas of e-mobility and digitalization have, however, led to a corresponding increase in internally generated intangible assets. For more information, please refer to the “Accounting policies” section.
For a detailed presentation of how sustainability is taken into account within the Group strategy, in the management of the Group and in Group planning, please refer to the sections entitled “Goals and Strategies” and “Sustainable Value Enhancement” in the group management report.