VW expands CO2 pool to include more Chinese car brands

Already in September 2020, Volkswagen established a CO2 pool with the Chinese manufacturer SAIC: In addition to the group brands such as Audi, Skoda, and Seat, the models from MG Motor that are approved in the EU, Norway, and Iceland also join the pool. At the beginning of 2021, Aiways, the Geely subsidiary London Electric Vehicle Company (LEVC), and the Aachen-based electric car manufacturer Next.e.Go joined the CO2 pool as well – with the aim of reducing the CO2 fleet value of the pool. With the latest new additions, the pool now comprises 16 members.

However, the accession of the new Chinese brands for 2021 and 2022 should not this time be related to a discrepancy with the planned CO2 targets. Schmidt Automotive Research reports, citing a statement from the Volkswagen Group, that they remain confident of achieving the CO2 targets for 2021 in the so-called EU+2 (with Norway and Iceland) "even without the new partners." Analyst Matthias Schmidt speculates that the new additions could be related to the semiconductor shortage: As this also caused production shortfalls at the ID plant in Zwickau, VW lacks new registrations for the CO2-neutral electric cars in the pool. As a result, Schmidt jokingly talks about a kind of "prophylactic Chinese insurance medicine."

While Nio and Xpeng have only recently started with electric vehicles in Europe and primarily in Norway – Lynk&Co has a completely different model: Here, hybrids and plug-in hybrids are mainly offered by subscription, and there's also the possibility of sharing. The SAIC subsidiary MG Motors, which is now taking off across Europe, has already been able to contribute significantly to the CO2 pool. This brings us to the former MG home market, the UK: Schmidt Automotive Research adds that the Volkswagen Group teamed up with Ford to meet the separate UK CO2 targets. This is because the Brits are imposing independent CO2 fleet targets for the first time in 2021, after the EU transition phase ended at the turn of 2020/21. According to Schmidt Automotive Research, this became public based on EU documents.

What does this mean?

Fundamentally, CO2 pooling is already a loophole that allows CO2 exceeders to "clean" their balances. Annoying for VW is that despite the CO2-neutral handover of the ID models, they still seem to need this because not as many electric cars can be produced as hoped due to the chip shortage. It will be interesting to see how long pooling will continue to be maintained and needed.