Effects of climate change
Against the backdrop of climate change and the resulting tightening of emissions regulations, the transformation of the automotive industry towards e-mobility and further digitalization continues to move forwards. The Volkswagen Group has firmly embedded the transformation toward e-mobility in its Group strategy.
In the preparation of the consolidated financial statements, the Board of Management took into account the potential effects of climate change and future regulatory requirements, and especially the corresponding transformation towards e-mobility. Potential effects, especially on non-current assets, provisions for emissions levies and future cash flows were, as far as possible, incorporated into the significant estimates and assumptions included in the consolidated financial statements.
As part of its electrification campaign, the Volkswagen Group aims to offer its customers worldwide an increasing choice of battery-electric models by 2030, ranging from volume modules to premium vehicles. The effects of the transformation towards e-mobility and the planned increase in the share of all-electric vehicles planned in this context are taken into account in the medium-term planning and therefore in the calculation of future cash flows used to determine recoverable amounts in impairment tests of goodwill and intangible assets with indefinite useful lives, especially when planning future vehicle models, development costs and production facilities. An amount in the low triple-digit-billion euro range has been earmarked for this purpose in the medium-term planning. 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 non-current non-financial assets. No material effects on the useful lives of capitalized development costs or property, plant and equipment were identified, given the periods under consideration for the regulatory requirements and due to the parallel production of battery-electric vehicles and vehicles with combustion engines in the coming years. 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. In this context, an amount in the mid-three-digit-million euro range was added to provisions in the fiscal year. 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”, as well as the “Environmental Information” section in the “Sustainability report” chapter of the group management report.