Key performance indicators in accordance with the EU Taxonomy regulation

The EU Taxonomy defines sales revenue, capital expenditure and operating expenditure as the key performance indicators that must be reported on. We explain these below. The tables required by the EU Taxonomy are included at the end of the section.

The financial figures relevant for the Volkswagen Group are taken from the IFRS consolidated financial statements for fiscal year 2022. As we differentiate between economic activities, we have avoided double counting. Where possible, the figures have been directly allocated to an economic activity. In our vehicle-related business, for example, we compiled the financial figures based on the vehicle model and powertrain technology. This applies both to the vehicles themselves and to the corresponding financial services and other services and activities. Only where this was not possible for capital expenditure and operating expenditure were allocation formulas used based on the planned vehicle volumes. In the Power Engineering Business Area, we used allocation formulas based on planned sales revenue. This data and planning form part of the medium-term financial planning for the next five years on which the Board of Management and Supervisory Board have passed a resolution.

Sales revenue

The definition of turnover in the EU Taxonomy corresponds to sales revenue as reported in the IFRS consolidated financial statements. This amounted to €279.2 billion in fiscal year 2022 (see also note on “Sales revenue” in the notes to the consolidated financial statements).

Of this total, €254.5 billion, or 91.1% of Group sales, was attributable to economic activity 3.3 Manufacture of low-carbon technologies for transport, and was classified as taxonomy-eligible. This includes sales revenue after sales allowances from the sale of new and used vehicles, including motorcycles, from genuine parts, from the rental and lease business, and from interest and similar income, as well as sales revenue directly related to the vehicles, such as workshop and other services.

Of the taxonomy-eligible sales revenue, €26.1 billion meet the screening criteria used to measure the substantial contribution to climate change mitigation. This includes all of our all-electric vehicles, the majority of the plug-in hybrids, and the buses meeting the EURO VI standard (Stage E). In 2022, there were 596 thousand such vehicles, 6.5% more than in the previous year. Their share of the relevant sales volume – excluding the vehicles from the Chinese joint ventures – rose to 11.1 (10.1) %. Passenger cars and light commercial vehicles made up the bulk at 594 thousand vehicles; trucks and buses recorded a nine-fold increase year-on-year. Sales of all-electric vehicles were up significantly.

Taking into account the DNSH criteria and minimum safeguards, €26.1 (21.1) billion of the sales revenue generated from our vehicle-related business, equating to 9.4 (8.5) % of consolidated sales revenue, was taxonomy-aligned. Of this amount, €19.6 billion, or 7.0% of consolidated sales revenue, was attributable to our all-electric models (BEVs). In 2022, compliance with the DNSH criteria was also demonstrated for truck and bus sites.

In the Power Engineering Business Area, the majority of our taxonomy-eligible sales revenue was attributable to economic activity 3.6 Manufacture of other low-carbon technologies (€2.5 billion). A further €35 million was contributed by economic activity 9.1 Close to market research, development and innovation. Our activities that fall under economic activity 3.2 Manufacture of equipment for the production and use of hydrogen generated taxonomy-aligned sales revenue of €18 (5) million, taking into account the DNSH criteria and minimum safeguards. The increase in taxonomy-aligned sales revenue is attributable to the expansion of business and above all to the initial consolidation of H-TEC SYSTEMS GmbH.

Of the Volkswagen Group’s total sales revenue in fiscal year 2022,

• €257.0 (227.8) billion, or 92.1 (91.0) %, was taxonomy-eligible sales revenue and
• €26.1 (21.2) billion, or 9.4 (8.5) %, was taxonomy-aligned sales revenue.

Capital expenditure

Capital expenditure for the purposes of the EU Taxonomy refers to the following items in the IFRS consolidated financial statements: additions to intangible assets, additions to property, plant and equipment, and additions to lease assets and investment property. These are reported in the notes to the 2022 consolidated financial statements in the notes on “Intangible assets”, “Property, plant and equipment” and “Lease assets and investment property”. Additions from business combinations, each of which is reported under “Changes in consolidated Group”, are also included. By contrast, additions to goodwill are not included in the calculation.

In fiscal year 2022, additions in the Volkswagen Group as defined above amounted to

• €11.7 billion from intangible assets,
• €12.9 billion from property, plant and equipment and
• €24.1 billion from lease assets (mainly vehicle leasing business) and investment property.

Other additions to be included resulted from changes in the consolidated Group, amounting to €0.4 billion in fiscal year 2022. Total capital expenditure to be included in accordance with the EU Taxonomy therefore came to €49.1 billion.

All capital expenditure attributable to our vehicle-related business is associated with economic activity 3.3 Manufacture of low-carbon technologies for transport. Taxonomy-eligible capital expenditure for the vehicle-related business amounted to €48.8 billion, or 99.4% of the Group’s capital expenditure.

To determine the substantial contribution in the vehicle-related business, we compiled the financial figures based on the vehicle model and powertrain technology in the same way as for sales revenue. Where possible, capital expenditure was directly attributed to vehicles. It was included if the vehicles in question make a substantial contribution to the climate change mitigation objective. Any capital expenditure directly attributable to vehicles that do not meet the screening criteria was not included. Capital expenditure that was not clearly attributable to a particular vehicle was taken into account on a proportionate basis using allocation formulas. In our vehicle-related business, we developed allocation formulas based on planned vehicle volumes for the Group companies. In the sales companies, for example, we used allocation formulas related either to individual vehicle brands or to all vehicle brands, depending on the primary business activity, while site-based allocation formulas were used for production companies. This means that capital expenditure was counted in full via the allocation formulas for sites that according to our medium-term planning will only produce vehicles meeting the screening criteria for the substantial contribution in the next five years. In contrast, capital expenditure on sites that only produce vehicles not meeting the screening criteria was not counted under the allocation formula. Calculated in this way, capital expenditure relating to vehicles that meet the screening criteria for the substantial contribution amounted to €16.9 billion.

Taking into account the DNSH criteria and minimum safeguards, capital expenditure of €16.9 (14.2) billion was taxonomy-aligned. This represented 34.5 (26.2) % of the Group’s total capital expenditure. Of this figure, €5.8 billion was attributable to intangible assets, €5.7 billion to property, plant and equipment and €5.4 billion to lease assets and investment property. The figure includes additions to capitalized development costs of €4.4 billion and additions to property, plant and equipment of €5.4 billion for our all-electric vehicles (BEVs). The increase in taxonomy-aligned capital expenditure – both the absolute value and the proportion – is attributable to the growing number of environmentally sustainable vehicle projects under the EU Taxonomy.

In the reporting period, we refinanced taxonomy-aligned capital expenditure from fiscal year 2021 based on the Green Finance Framework updated in October 2022 by issuing green bonds in the amount of €2.5 billion. Only capital expenditure in connection with all-electric vehicles was included here.

Also in 2022, Scania issued a green bond totaling SEK3.0 billion to finance research and development activities relating to battery-electric vehicles. €178 million of this total was used in the year under review already, of which €98 million was attributable to taxonomy-aligned capital expenditure. Adjusted for this figure, taxonomy-aligned capital expenditure attributable to the vehicle-related business accounted for 34.3% of total capital expenditure in accordance with the EU Taxonomy.

€27 million of the taxonomy-eligible capital expenditure in the Power Engineering Business Area is attributable to economic activity 3.2 Manufacture of equipment for the production and use of hydrogen and €60 million is attributable to economic activity 3.6 Manufacture of other low-carbon technologies. For the latter, operating expenditure was broken down based on planned sales revenue.

Taxonomy-aligned capital expenditure for the manufacture of equipment for the production and use of hydrogen was disclosed for the first time in the amount of €27 million, almost two thirds of which was attributable to intangible assets and around one third to property, plant and equipment. The expenditure relates predominantly to the initial consolidation of H-TEC SYSTEMS GmbH.

Of the Volkswagen Group’s total capital expenditure in fiscal year 2022,

• €48.9 (53.6) billion, or 99.6 (99.2) %, was taxonomy-eligible capital expenditure and
• €16.9 (14.2) billion, or 34.5 (26.2) %, was taxonomy-aligned capital expenditure.

Operating expenditure

The operating expenditure reported by us for the purposes of the EU Taxonomy comprises non-capitalized research and development costs, which can be taken from the note on “Intangible assets”. We also include the expenditure for short-term leases recognized in our consolidated financial statements, which can be found in the note on “IFRS 16 (Leases)”, and expenditure for maintenance and repairs.

The allocation of operating expenditure to the economic activities followed the same logic as that described for capital expenditure.

All operating expenditure attributable to the vehicle-related business is associated with economic activity 3.3 Manufacture of low-carbon technologies for transport and has been classified as taxonomy-eligible.

Where possible, non-capitalized research and development costs were directly attributed to vehicles. They were included if the vehicles in question make a substantial contribution to the climate change mitigation objective. We did not include any non-capitalized research and development costs directly attributable to vehicles that do not meet the screening criteria. Non-capitalized research and development costs that were not clearly attributable to a particular vehicle were taken into account on a proportionate basis using allocation formulas. For these and other operating expenses, allocation formulas were used, similarly to capital expenditure. Of the taxonomy-aligned operating expenditure of €4.9 (3.3) billion, 85.8% was attributable to non-capitalized research and development costs. The increase in taxonomy-aligned operating expenditure – both the absolute value and the proportion – is attributable to the growing number of environmentally sustainable vehicle projects under the EU Taxonomy.

Including the share of the bond issued by Scania attributable to taxonomy-aligned operating expenditure, the share of taxonomy-aligned operating expenditure declined from 42.7 (32.7) % to 42.0% of total operating expenditure in accordance with the EU Taxonomy.

€4 million of the taxonomy-eligible operating expenditure in the Power Engineering Business Area is attributable to economic activity 3.2 Manufacture of equipment for the production and use of hydrogen and €199 million is attributable to economic activity 3.6 Manufacture of other low-carbon technologies. For the latter, operating expenditure was broken down based on planned sales revenue.

Taxonomy-aligned operating expenditure for the manufacture of equipment for the production and use of hydrogen was disclosed for the first time in the amount of €4 million, which was attributable to non-capitalized research and development costs and related predominantly to the initial consolidation of H-TEC SYSTEMS GmbH.

CAPEX PLAN UNDER THE EU TAXONOMY

The EU Taxonomy requires the reporting to state the extent to which taxonomy-aligned capital and operating expenditures a) relate to assets or processes associated with environmentally sustainable economic activities or b) are part of a plan to expand taxonomy-aligned economic activities or to allow taxonomy-eligible economic activities to become taxonomy-aligned (CapEx plan). A CapEx plan under the EU Taxonomy shows the total capital expense, i.e. the sum of capital and operating expenditures expected to be incurred in the reporting period and during the five-year medium-term planning to expand taxonomy-aligned economic activities or allow taxonomy-eligible economic activities to become taxonomy-aligned.

For the vehicle-related business, the CapEx plan drawn up under the EU Taxonomy relates to economic activity 3.3 Manufacture of low-carbon technologies for transport within the climate change mitigation environmental objective.

Additions from lease assets (mainly vehicle leasing business) are based on existing environmentally sustainable activities and have therefore not been included in the CapEx plan. We allocated additions from intangible assets and property, plant and equipment as well as non-capitalized research and development costs to the CapEx plan if they allow taxonomy-eligible economic activities to become taxonomy-aligned or lead to the expansion of taxonomy-aligned economic activities. For this we compared the average taxonomy-aligned production volume from the medium-term planning with the taxonomy-aligned vehicles from the reporting period and allocated the taxonomy-aligned capital expenditure according to this ratio whereby we considered the share exceeding the current taxonomy-aligned production volume.

As a result, €9 billion of the taxonomy-aligned capital expenditure and €3 billion of the taxonomy-aligned operating expenditure in the reporting period is attributable to the CapEx plan under the EU Taxonomy. The total capital expense from the CapEx plan under the EU Taxonomy that is expected to be incurred in the reporting period and during the five-year medium-term planning amounts to €100 billion.

In the Power Engineering Business Area, the CapEx plan under the EU Taxonomy relates to economic activity 3.2 Manufacture of equipment for the production and use of hydrogen listed in the climate change mitigation environmental objective. Based on the ratio of sales revenue in the reporting period to the average sales revenue envisaged in the medium-term planning, we allocated €26 million of the taxonomy-aligned capital expenditure and €4 million of the taxonomy-aligned operating expenditure to the CapEx plan. The total capital expense from this CapEx plan under the EU Taxonomy that is expected to be incurred in the reporting period and during the medium-term planning amounts to approximately €300 million.

TABULAR PRESENTATION IN ACCORDANCE WITH THE EU TAXONOMY