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 2023. As we differentiate between economic activities, we have avoided double counting. Where possible, the figures within an economic activity have been allocated directly. 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 the sales revenue reported in the IFRS consolidated financial statements. This amounted to €322.3 billion in fiscal year 2023 (see also note on “Sales revenue” in the notes to the consolidated financial statements; the prior-year figures were adjusted – see disclosures on IFRS 17).

Of this total, €294.0 billion, or 91.2% 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.

Economic activity 3.18 Manufacture of automotive and mobility components accounted for taxonomy-eligible sales revenue of €165 million or 0.1% of Group sales. This includes the sale of all-electric vehicle motors and powertrains to third parties.

Of the taxonomy-eligible sales revenue from economic activity 3.3 Manufacture of low-carbon technologies for transport, €36.6 billion met the screening criteria used to measure the substantial contribution to climate change mitigation. This includes all of our all-electric vehicles and a large proportion of our plug-in hybrids. In 2023, there were 799 thousand such vehicles, around one third more than in the previous year. Their share of the relevant sales volume – excluding the vehicles from the Chinese joint ventures – rose to 12.7 (11.1)%. Passenger cars and light commercial vehicles made up the bulk at 797 thousand vehicles; trucks and buses were down compared with the previous year, when buses that met the requirements of the Euro-6 E standard were still counted. Sales of all-electric vehicles (BEV) increased very sharply compared with the prior year. In addition, the taxonomy-eligible sales revenue from economic activity 3.18 Manufacture of automotive and mobility components met the screening criteria used to measure the substantial contribution to climate change mitigation.

Taking into account the DNSH criteria and minimum safeguards, €36.5 (26.1) billion of the sales revenue generated from our vehicle-related business, equating to 11.3 (9.4)% of consolidated sales revenue, was taxonomy-aligned. Of this figure, €165 million related to economic activity 3.18 Manufacture of automotive and mobility components, which is being reported for the first time, while €27.8 billion or 8.6% of consolidated sales revenue was attributable to our BEV models.

In the Power Engineering Business Area, our activities that fall under economic activity 3.2 Manufacture of equipment for the production and use of hydrogen generated completely taxonomy-aligned sales revenue of €28 million (previous year: €18 million). The increase in taxonomy-aligned sales revenue is attributable to the expansion of the business. Most of our taxonomy-eligible sales revenue in the Power Engineering Business Area was attributable to economic activity 3.6 Manufacture of other low-carbon technologies (€3.1 billion), €68 million of which is taxonomy-aligned. In the reporting year, the complex evidential requirements were fulfilled for a portion of the activities for the first time. A further €58 million was contributed to taxonomy-eligible sales revenue by economic activity 9.1 Close to market research, development and innovation.

Of the Volkswagen Group’s total sales revenue in fiscal year 2023,

• €297.4 (256.9) billion, or 92.3 (92.0)%, was taxonomy-eligible sales revenue and
• €36.6 (26.1) billion, or 11.4 (9.4)%, 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 2023 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 2023, additions in the Volkswagen Group as defined above amounted to

• €12.3 billion from intangible assets,
• €14.8 billion from property, plant and equipment and
• €33.0 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 €1.4 billion in fiscal year 2023. Total capital expenditure to be included in accordance with the EU Taxonomy therefore came to €61.5 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 €61.1 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 brands or to all 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 produce only 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 €20.1 billion.

Taking into account the DNSH criteria and minimum safeguards, capital expenditure of €20.0 (16.9) billion was taxonomy-aligned. This represented 32.6 (34.5) % of the Group’s total capital expenditure. Of this figure, €5.9 billion was attributable to intangible assets, €6.3 billion to property, plant and equipment and €7.9 billion to lease assets and investment property. The figure includes additions to capitalized development costs of €4.9 billion and additions to property, plant and equipment of €6.1 billion for our all-electric vehicles (BEV). The increase in taxonomy-aligned capital expenditure of €3.1 billion 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 years 2021 and 2022 based on the Green Finance Framework updated in October 2022 by issuing green bonds in the amount of €3.5 billion. Only capital expenditure in connection with all-electric vehicles was included here.

In 2022, Scania issued a green bond totaling SEK 3.0 billion to finance research and development activities relating to all-electric vehicles. The remaining €91 million was used in the reporting period; of this amount, €46 million was attributable to taxonomy-aligned capital expenditure. Adjusted for this figure, taxonomy-aligned capital expenditure attributable to the vehicle-related business accounted for 32.5 (34.3)% of total capital expenditure in accordance with the EU Taxonomy.

€37 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 €85 million is attributable to economic activity 3.6 Manufacture of other low-carbon technologies. For the latter, capital 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 in the amount of €37 million, half of which was attributable to intangible assets and half to property, plant and equipment. Capital expenditure amounting to €24 million for the manufacture of other low-carbon technologies was disclosed as taxonomy-aligned, more than 90% of this was attributable to property, plant and equipment.

Of the Volkswagen Group’s total capital expenditure in fiscal year 2023,

• €61.3 (48.9) billion, or 99.6 (99.6)%, was taxonomy-eligible capital expenditure and
• €20.1 (16.9) billion, or 32.7 (34.5)%, was taxonomy-aligned capital expenditure.

Operating expenditure

The operating expenditure reported by us for the purposes of the EU Taxonomy comprises both non-capitalized research and development costs, which can be taken from the note on “Intangible assets”, and the expenditure for short-term leases recognized in our consolidated financial statements, which can be found in the note on “IFRS 16 (Leases)”, as well as 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 €5.7 (4.9) billion, around 85% was attributable to non-capitalized research and development costs. The absolute value of the increase in taxonomy-aligned operating expenditure 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 43.2 (42.7)% to 42.9 (42.0)% of total operating expenditure in accordance with the EU Taxonomy.

€9 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 €219 million is attributable to economic activity 3.6 Manufacture of other low-carbon technologies. For the latter, operating expenditure that could not be directly allocated 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 in the amount of €9 (4) million and was attributable to non-capitalized research and development costs. €61 million of the operating expenditure was disclosed for the manufacture of other low-carbon technologies, nearly two-thirds of which was attributable to non-capitalized research and development costs. Operating expenditure that could not be directly allocated was broken down on the basis of the planned taxonomy-aligned sales revenue.

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 in order 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 also took into account the share exceeding the current taxonomy-aligned production volume.

As a result, €8 (9) billion of the taxonomy-aligned capital expenditure and €3 (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 €90 (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, and economic activity 3.6 Manufacture of other low-carbon technologies, both of which are listed in the climate change mitigation environmental objective.

In respect of the manufacture of equipment for the production and use of hydrogen, we allocated €36 (26) million of the taxonomy-aligned capital expenditure and €8 (4) million of the taxonomy-aligned operating expenditure to the CapEx plan based on the ratio of sales revenue in the reporting period to the average sales revenue envisaged in the medium-term planning. 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 €455 (300) million.

In respect of the manufacture of other low-carbon technologies, we allocated €23 million of the taxonomy-aligned capital expenditure and €37 million of the taxonomy-aligned operating expenditure to the CapEx plan based on the ratio of sales revenue in the reporting period to the average sales revenue envisaged in the medium- term planning. 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 €380 million.

TABULAR PRESENTATION IN ACCORDANCE WITH THE EU TAXONOMY