Electric cars to become 'hallmark' of VW's portfolio

Volkswagen's emissions test cheating scandal could cost it much more than the $18 billion earmarked so far and it might have to sell assets to foot the bill, the German carmaker said on Thursday.

The chief executive of Volkswagen said on Thursday (April 28) that he personally apologised to President Barack Obama this week for cheating on vehicle emissions tests, speaking up for its American workforce as the German carmaker negotiates penalties with United States officials.

Matthias Mueller, chief executive officer of Volkswagen AG, reacts during a news conference to announce the company's fourth quarter earnings at the automaker's headquarters in Wolfsburg, Germany, on Thursday, April 28, 2016.

"I used the opportunity to personally apologise to him for our behaviour", Mr Mueller said during a news conference in Wolfsburg on Thursday.

"The Volkswagen group is robust enough to withstand this financial burden", Chief Executive Matthias Müller.

The cash being held back would first be transformed into preference shares and only then paid out in full in 2018 if the price of the shares on the stock exchange had risen by at least 25 percent by the end of the three-year period, VW explained.

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Overall, the company subtracted 16.2 billion euros from last year's profits to cover the expenses of the scandal.

While the shift to an electrified portfolio is a sign of progress for the German auto maker, Mueller noted that, for the immediate future, redemptive efforts to fix rigged vehicles would be the "most important task until the very last vehicle has been put in order".

VW Group incurred an operating loss of 4.1 billion euros (4.65 billion dollars) previous year, while the overall earnings before tax in 2015 came to a negative 1.3 euros. The request follows a USA class-action lawsuit alleging some of its cars violated emissions standards, which the company has said is "baseless". This will be done through an independent company that Volkswagen will set up as soon as it can.

Muller also reiterated one of Volkswagen's newest talking points: the company's emerging focus on electric vehicles. The company has admitted using engine software that disable d emissions controls when vehicles were not being tested.

Europe's biggest carmaker said that although it had made provisions for 2015, uncertainty about the ultimate cost of legal risks and criminal and administrative proceedings could mean that further financial liabilities would emerge.

"Although unit sales declined by around 2%, revenue saw a 5% increase, growing to €213.3 billion".

Source: Electric cars to become 'hallmark' of VW's portfolio