VW CEO proposes phasing out diesel subsidies to focus on electric vehicles

Volkswagen, which was at the center of the ‘Dieselgate’ scandal that exposed diesel engines as not being as clean as some automakers led regulators to believe, is now suggesting a phase-out of the huge diesel subsidies offered in Europe.

In Europe, several countries offer subsidies on diesel fuel over gasoline.

For example, in Germany, one of the most important markets for diesel engines, diesel is roughly 18 cents less per liter (68 cents per gallon) than on gasoline.

During an interview with Handelsblatt this weekend, Volkswagen CEO Matthias Müller said that those incentives should be gradually shifted toward electric cars:

“I’ve become convinced that we should question the sense and purpose of the diesel subsidies. If the switch to environmentally friendly e-cars is to succeed, diesel combustion engines can’t continue to be subsidized the way they have been forever.”

Though Müller added that the proposal would be a solution to avoid a ban on diesel and petrol vehicles, which several European countries are now considering. Norway, France, England, India, Germany, China and Scotland have all announced plans to ban the sale of gasoline vehicles in the upcoming decades, along with the state of California.

Electrek’s Take

What I find interesting is that, since VW took the bulk of the backlash from the public and the media, they seem more eager to distance themselves from diesel and push for electric powertrains than other companies also involved in the scandal.

The scandal raised awareness over the high levels of pollution being emitted by diesel vehicles, but several other automakers, like Daimler and BMW, said that they still see diesel has an important part of their strategy to reach their fleet emission targets.

I certainly agree with Müller that any type of diesel subsidy should be shifted to electric vehicles. Almost everyone in the industry agrees that the future is electric and therefore, it makes sense to incentivize that technology – especially since it has a greater positive impact right now than any other solution.

But I’d have to disagree about using that to avoid a ban.

Let’s face it, those “bans” (which some of them are reported as “bans” but they are actually only goals) are not really aggressive. But they do serve as a way to force automakers to put a timeline in place for the transition to electric vehicles.

In other words, they need to start thinking about a plan to change their entire production capacity to electric vehicles – something that most of them don’t have currently. They are still talking about roughly 25% capacity dedicated to EVs in 2025, which I think is too slow.

What do you think? Let us know in the comment section below.