VW CEO: European subsidies for diesel should end


Matthias Muller

Matthias Muller

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One of the most powerful automotive CEOs in the industry at a company that once found monumental success in diesel-powered cars has delivered a commandment to European governments from atop his throne in Wolfsburg.

Thou shalt not subsidize diesel.

That commandment, from VW CEO Mattias Müller, is about as predictable as one might expect from an executive working for a company amid reinvention after it cost itself and shareholders some $20 billion for gaming diesel emissions regulations.

DON'T MISS: Global carbon emissions to rise after staying flat for three years: report

According to Germany's Handelsblatt (via The Detroit News), Herr Müller believes government subsidies for diesel fuel—which includes a fuel tax 18 cents below that of gasoline and other mechanisms that distorted the European vehicle market—should end.

Instead, those incentives should be gradually shifted toward greener transportation technologies, he suggested.

Aside from the overall environmental improvement of subsidizing low- and zero-emission transportation alternatives, a shift in incentives could greatly benefit one party in particular: VW.

Volkswagen ID Buzz Concept

Volkswagen ID Buzz Concept

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The German automaker and its two national compatriots—Daimler and BMW—have all relied on diesel sales in Europe to drive profits as governments subsidized the fuel, making it the favored choice of car buyers on the continent.

Those automakers' reliance on diesel sales also meant their development focus remained on fossil fuels to the detriment of further research and development of alternative fuel options, such as electricity.

Shifting the subsidies and incentives could give VW, Daimler, and BMW another leg up in the race to electrify their model lineups in Europe and around the world.

READ MORE: Volkswagen ID Crozz electric SUV to launch in US in 2020

In the wake of Dieselgate, another trend has emerged that'll likely force the hands of governments to assist in further EV adoption: diesel sales are declining at a much faster rate than the growth of electric adoption in most European countries, but in Germany in particular.

Additionally, many jurisdictions are contemplating and planning for fossil-fuel vehicle bans in 2025 and 2040 to eliminate carbon dioxide emissions completely from transportation systems.

Volkswagen ID Crozz concept

Volkswagen ID Crozz concept

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In the U.S., VW plans to launch its ID Crozz electric SUV in 2020, the first of a wave of electric vehicles from the brand for North American buyers.

It will be joined by the ID Buzz electric Microbus in 2022.

They are the first of 15 separate battery-electric models VW Group intends to build and sell globally by 2025.

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