Good morning, everyone, and a warm welcome to our first-quarter 2026 results call of Volkswagen Group. Thanks for dialing in.

This is, as usual, a joint call for both the media as well as investors and analysts, moderated by Rolf Woller, our Head of Treasury and Investor Relations, and myself, Pietro Zollino, Head of Corporate Communications. With us today are Oliver Blume, our CEO of the Volkswagen Group, and Arno Antlitz, CFO and COO of Volkswagen Group.

You should have received the press release, the interim financial report, and all other related materials which were published already this morning. If you do not have them, you can find all documents on our group website.

In case of any issue, give us a call or drop us an email. Now let me hand over to Rolf, who will give you a brief run-through of the next, let's say, 1 and 1/2 hours.

Thank you.

Thank you, Pietro. Good morning to everyone from a very sunny day in Wolfsburg.

Thank you for joining us today. Let's have a look at our agenda.

Olli will start with the financial highlights of the first quarter and will then present our transformation plan towards the Volkswagen Group target picture 2030. Arno will go on with the key developments of the first quarter, and after that, we will take a closer look at the financial results and the full-year outlook 2026.

Following the presentation, we will first host the Q&A session with Olli and Arno for the investor and analyst community, moderated by myself. After the session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro.

Since today's call includes forward-looking statements, the safe harbor language and other cautionary statements on the slide will govern today's presentation. I encourage you to read the disclaimer carefully as all forward-looking statements are qualified by this language.

In the interest of time, I will not read it to you. With that, I hand it over to Olli.

Olli, please go ahead.

Thank you, Rolf. Thank you, Pietro.

Good morning, ladies and gentlemen, also a warm welcome. Let me start with the highlights year-to-date.

Our model momentum in Europe continues. Importantly, the first two of a series of new vehicles of the electric urban car family have been launched to the market: the CUPRA Raval and yesterday the ID.

Polo, and books are now open for customer orders. In China, we are switching to delivery mode with our in China, for China strategy.

The Beijing Auto Show marked an impressive start of our model offensive with locally developed NEVs geared to Chinese customers' taste and highly competitive in terms of technologies and costs. In the US, Volkswagen Chattanooga assembly plant will shift to higher-volume models, such as the second generation of the Atlas, which will be in the showrooms from fall.

While the electrical ID.4 still is available in the US, we decided to end local production on the ID.4 from April 2026. The Rivian Volkswagen Technology joint venture successfully completed winter testing of the first vehicles equipped with the newly developed software-defined vehicle architecture.

Lastly, we continued the implementation of our active portfolio management. TRATON reduced the holding in Sinotruk, recording a cash inflow of €0.2 billion in the first quarter.

A second step followed in April in the magnitude of €400 million. In addition, Porsche has closed an agreement to sell its stake in Bugatti Rimac Group.

Closing of the transaction is contingent on regulatory approvals. Looking at the financial highlights: Deliveries to customers were down 4% in Q1, mainly due to the declines in US and China.

Nevertheless, we kept our global market share stable. Our order book situation in Europe remains very encouraging.

It shows that our new vehicles are resonating well with customers. Revenues in the first quarter were down 2% in line with the unit sales decline, excluding China joint venture volumes.

Automotive net cash flow was strong at around €2 billion. This shows that the working capital measures implemented last year by Arno and the teams are delivering lasting results.

Net liquidity was almost on par with year-end 2025 despite the redemption of €1.75 billion hybrid bond in February. Group operating profit stood at €2.5 billion.

Against the backdrop of increased geopolitical tension and declining vehicle markets, as well as, again, significant special effects, the achieved return on sales of 3.3% is a solid result. We must also be clear: Our current business model in the changed environment is not generating sufficient returns.

Even before special effects, our margin is at 4.3% only. US tariffs are not included in the special effects.

This is clearly too low to finance future investments, pay attractive dividends, and strengthen our financial position at the same time. We must and will continue to reduce complexity, focus investments on what wins customers, and continue execution across the group while navigating industrial transformation, geopolitical uncertainty, and stagnant revenue prospects in our industry, especially in Europe.

The need for action was clearly recognized in 2023. A comprehensive realignment was therefore kicked off and communicated in June of that year in a Capital Markets Day.

Since then, a comprehensive action plan has been put into implementation across the key success factors: products, regions, software, and cost programs. We have already made great progress.

These achievements helped offset significant earnings headwinds and enabled us to regain the competitive flexibility and freedom to act that we need. At the same time, from 2025 onwards, headwinds intensified further, driven by geopolitics, tariffs, and accelerated competition, particularly in China and Europe, against a backdrop of generally high uncertainty.

This environment makes it clear that we need to step up our transformation plan. The progress we have made in recent years gives us momentum and the confidence to take the next steps now.

This is why the executive board agreed on a substantial step-up and acceleration of our transformation plan. The result is the Volkswagen Group target picture 2030.

It focuses on distinct levers. The most relevant are laid out on the chart: reducing complexity in products, technology, and modular platforms while putting our customers at center stage; aligning our production footprint to market realities; exploiting growth priorities in the regions; streamlining the portfolio; and improving execution through operational excellence, leadership, and lean governance.

First, product portfolio: We must reduce complexity and consequently drive synergies across the group. We will achieve this by significantly cutting the number of models from current about 150 and reducing the number of variants.

We will focus on these projects that make a tangible difference for our customers. Second, technology roadmap: We will streamline our technological toolbox and implement a much more focused approach with a targeted number of modular platforms, electric-electronic architectures, ADAS stacks, and infotainment systems.

Our tech stacks, RVT and CEA, for the Western and Eastern Hemisphere serve as a blueprint. Third, production network: We must adapt our production network to market realities.

Based on a low- or no-growth environment, this requires realigning our global technical capacity to approximately 9 million units per year, consistently focus on customer demand in each region. This will lower our breakeven point to a level that gives us the necessary flexibility in such a dynamic environment.

Fourth, regional growth: We must foster regional growth opportunities. We steer centrally, but drive the business in the regions with more independence and decision-making power.

North America and the Global South offer significant growth opportunities for Volkswagen Group. Fifth, operational excellence: We already bundled cross-functional responsibilities for development, procurement, production, sales, and quality at CL level.

This will allow us to increase the speed in decision-making, exploit synergies across the group, improve efficiency and quality while keeping entrepreneurship at brand level. Sixth, portfolio management: Our ambition must be to significantly streamline our portfolio, consistently aligned with the principles of the best-owner approach.

Arno will provide an update of our progress year-to-date. Seventh, leadership and culture: We will foster an even stronger performance culture.

The changes we have implemented since the Capital Markets Day in June 2023 demonstrate fewer hierarchy levels and effective lean management structures with clear responsibility and targeted, integrated incentive system are two key drive to change. We will build on this.

Eighth, group governance: Clear decision-making structures, streamlined processes, and greater accountability at all levels will make our company more effective and help us remain competitive in the long term. Today marks the start of our journey to bring the Volkswagen Group target picture 2030 to reality.

The good news is, thanks to all efforts implemented already since 2023, we have a very solid basis to start from. We have all the talent we need.

We get strong support from our stakeholders. We have it in our own hands, and the team has the skills, will and the spirit to excel.

The strong progress achieved with our performance programs to date makes us confident that we can now take into the next level. We will drive this step in transformation decisively and will deliver on our margin and cash ambitions in 2030 by implementing our transformation plan.

As you have seen it from us since June 2023, we will take you on that journey through clear priorities, measurable milestones, and regular updates on our progress. With that, I would like to hand over to Arno.

Thank you, Oliver, and a warm welcome also from my side. In 2026, geopolitical tensions have risen, and the competitive environment intensified even further.

Against this backdrop, we made further progress. Order intake in Europe and the order book improved.

Our cars are resonating well with our customers. Implementation of our in China, for China strategy continues with full speed.

We reduced group-wide overhead costs by almost €1 billion in a quarter, and we achieved a net cash flow of €2 billion, which is quite substantial for a first quarter, taking into account that we had to refill the product pipelines. Despite this progress, the operating margin even before special effects stands at 4.3% only, reflecting the current challenges of the industry and the weak spots of our current business model.

Ladies and gentlemen, we bring attractive new vehicles to our customers, making technological progress and consistently delivering on our cost programs. Nevertheless, our financial figures make clear that these efforts are not yet sufficient to generate an adequate return and ensure a robust path into the future.

Since we launched Volkswagen Zukunft program 1 and 1/2 years ago, the operating environment has deteriorated significantly. US tariffs have been introduced and are weighing on our earnings by €4 billion annually.

Pricing and competitive pressure in China has intensified further, particularly for our premium brands, Audi and Porsche, and Chinese competitors are increasingly exporting this pressure to Europe. In addition, geopolitical tensions such as the conflict in the Middle East are worsening the global economic outlook.

Against this backdrop, incremental cost measures will not be enough. We must fundamentally reshape our business model through structural, lasting improvements.

This includes a step-up in cost competitiveness of our products, reduced overhead costs, improved efficiency in our plants, and higher speed both technologically-wise and in terms of decision-making. Achieving this is not possible within our current setup.

To create the conditions for long-term success, we must drastically reduce complexity in terms of size, our product portfolio, number of platforms and technology stacks we run, in terms of the number of entities and layers, and the way we steer the group. We need to put the customer at the center and structurally strengthen the core of our business.

These are the priorities we will execute over the coming months. Let's now turn to the operational and financial developments of the quarter, starting with deliveries to customers.

In the first 3 months of the year, deliveries to customers amounted to 2.05 million vehicles, some 4% below the prior-year period. Deliveries differed by region.

North America declined by 13%, mainly due to US tariffs, which became effective in April 2025. In China, deliveries to customers declined by 15%, slightly less than the overall weak market.

Declines in both China and North America could be partially offset by increases in South America and Europe. South America recorded growth of 7%, and in Europe, our strong momentum continued in the first quarter with deliveries up 5% year-on-year.

The order situation in Europe continues to be strong, thanks to the enhanced model lineup and further product momentum. In the first 3 months of the year, order intake increased by 3% to 1.1 million vehicles, driven by increases across all brands.

As a result, the total order book in Europe grew by 15% compared to year-end 2025 to about 1.1 million vehicles. It corresponds to an order reach of more than 3 months.

Global deliveries of battery electric vehicles were down 8% year-to-date to 200,000 units on lower demand in China and the US. Our BEV share stood at 10%, some 40 basis points below the prior-year level.

BEV deliveries in Europe saw robust demand and increased by 12%. The corresponding BEV share expanded year-on-year to 18.1%.

Škoda Elroq continued to ramp up extremely successfully with around 30,000 vehicles delivered in the first quarter, underlining strong customer demand in the fast-growing compact BEV battery electric vehicle segment. With that, let's move on to the financial and the operating performance of the Volkswagen Group in the first quarter.

Vehicle sales came in at 2 million units, down 7% year-on-year, or by 2% excluding the China JVs. Group sales revenue declined by 2% to €75.7 billion.

The lower vehicle sales were partially compensated by strong growth in the financial services business. Operating result came in 14% lower year-on-year at €2.5 billion, corresponding to a margin of 3.3%.

Our continued product offensive across all brands as well as stringent cost work continue to pay off in our earnings. The results decline is mainly due to special effects amounting to €800 million, or about 100 basis points margin, specifically at brand Volkswagen and at TRATON.

€0.5 billion have been booked related to the announced end of the production of the ID.4 in Chattanooga. Around €0.3 billion were incurred by restructuring measures at TRATON as well as, to a smaller extent, Brand Group Core.

In addition, TRATON booked an impairment related to the stop of an individual battery project. Excluding the effects, the Q1 operating margin would have amounted to 4.3%, corresponding to the lower half of our full-year outlook range.

Net cash flow in the automotive division came in rather strong and totaled €2 billion in Q1 2026 compared to -€800 million in the prior-year quarter. Gross cash flow improved by €2.2 billion year-on-year, mainly due to the operating performance before special items and about €1.1 billion lower tax payments in the quarter.

Investments in capex and R&D were largely unchanged. In the absence of further M&A, we recorded a cash inflow of €0.2 billion related to the sale of a stake in Sinotruk by TRATON.

Working capital movements at -€0.9 billion were a slight headwind in the first quarter, but on a similar level as in Q1 last year. This development clearly confirms the sustainability of working capital measures implemented, particularly in the second half of last year.

Automotive net liquidity came in at €34.2 billion at the end of March, almost on par with the year-end 2025 number and on a solid level. Net cash flow of €2 billion more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of €1.75 billion.

Moving on to the performance of the divisions: Passenger Cars recorded an operating result of €0.3 billion in the first 3 months of 2026, 43% above prior-year period. The margin amounted to 4.1%, up by 1 per c 1.3 percentage points.

Commercial Vehicles saw a decline to €40 million, corresponding to an operating margin of only 0.4%, to a vast majority driven by special effects. The Financial Services division came in almost on par with last year's level with an operating result of €1 billion.

Coming to the EBIT bridge: Volume/price/mix had a slightly negative impact of €0.2 billion. Positive pricing partially compensated for negative mix effects.

Exchange rate movements posed a tailwind of €0.4 billion. Product costs were largely flat year-on-year.

Last but not least, fixed costs and others had a positive effect of €0.8 billion, with overhead cost reduction being the biggest contributor. This is also visible when taking a more detailed look at the overhead cost development.

In the first 3 months of the year, overhead costs in the automotive division have been reduced by €0.9 billion. Accordingly, the overhead cost ratio improved by 70 basis points, which is quite significant.

This overhead cost reduction was largely driven by the consequent implementation of restructuring measures. In the first 3 months of 2026, Volkswagen AG reduced the number of active employees both in the indirect and direct area at its German sites by another around 1,000.

Overall, since the end of 2023, headcount was reduced by approximately 15,000. In addition, Audi, Porsche, and CARIAD are pushing ahead with their respective programs.

As a result, headcount in Germany on group level have been reduced by a total of 3,000 in the first 3 months, or 18,000 in a bit more than 2 years' time. Group-wide restructuring resulted in a reduction of 29,000 headcount since 2023.

Let's now turn to the development of the brand groups, platforms, and the financial services business. Within the Passenger Cars segment, Brand Group Core recorded sales revenue almost on par with last year's Q1.

Operating result came in at €1.5 billion, €1.5 billion, 38% higher than in the prior-year period, despite the significant effect related to the end of the ID.4 production in the US of €0.5 billion. The margin stands at 4.4%, and I will provide some more detail on Brand Group Core in a minute.

Brand Group Progressive saw sales decline by 6%, while sales revenue were flat. EBIT increased by 10% to €0.6 billion compared to a prior-year quarter that has been impacted by costs related to US emissions regulation and restructuring charges.

Porsche automotive business delivered an operating result of €0.5 billion, corresponding to a margin of 7%. This was driven by a significant improvement in mix from higher volumes of 911, offsetting volume headwinds in China and the US.

Let's have a look at the brands of the Brand Group Core. The operating result was largely driven by Škoda and the component business.

Volkswagen Passenger Cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the cost related to the ID.4 production stop in the US as well as significant headwinds from US tariffs. Škoda continued their impressive earnings trajectory and improved operating margin by 80 basis points to a remarkable value of 8.3%.

Excluding the non-operational effect, the financial performance of Volkswagen Brand and Brand Group Core are decent. Before effects of €0.5 billion from the ID.4 production stop at Chattanooga, Volkswagen reported a margin of 3.3%.

This is slightly below the margin target of 4% that the brand has set itself for the full year 2026 and a reminder that we must continue to rigorously implement the measures agreed under Volkswagen Zukunft agreement and intensify speed and magnitude of the restructuring programs. Backed by increasing volumes, CARIAD recorded sales revenue of €0.4 billion, up 64% year-on-year.

Operating loss was reduced to -€0.4 billion, benefiting from the implementation of restructuring measures and higher volumes. PowerCo kept operating result stable level despite the ongoing ramp-up of cell production at the Salzgitter plant and intensifying construction works at the Valencia and St.

Thomas plant. TRATON recorded a slow start to the year, driven by lower unit sales, in particular in South America and North America.

Sales in Europe were up, and order trends in the region remain promising. Mainly as a result of lower volumes, sales revenue declined by 5% to €9.8 billion.

Operating result came in at €40 million, significantly below the prior-year quarter. Lower volumes, US tariff costs, foreign currency effects, and special effects mainly related to the adjustment to the electromobility projects, the sale of Springfield site, and the EU truck case negatively impacted results.

Our Financial Services business delivered a solid performance in the period under review, supported by improved contract volume, specifically in Europe. The credit loss ratio continues to be on a solid level.

Operating result at €1 billion was almost on par with the prior-year level. Investment spend for capex and R&D in the automotive division was slightly lower in the quarter by €0.2 billion to €7.5 billion in the first 3 months of the year.

The invest ratio stood at 11.3%, largely unchanged year-over-year. We remain fully committed to sustainably reducing investment spend in the years to come.

Moving on to the performance of our China joint ventures: In an overall weak market and continued high competitive pressure, specifically in premium, unit sales were 90% lower year-on-year at 0.5 million vehicles. At the same time, Volkswagen Group China is launching its unprecedented model offensive, which is burdening results now, and we expect contributions from Q3 onwards.

As a result and as expected, the proportionate operating result of our joint ventures in China came in at €83 million in the first quarter of 2026. We confirm the bandwidth for proportionate operating result for the full year and continue to expect an operational and financial turnaround in fiscal year 2027.

This brings me to the full-year outlook, which be confirmed today. Continue to expect the operating return on sales in a bandwidth between 4% and 5.5%.

Building on the strong start to the year, we continue to expect automotive net cash flow to the range between €3 billion and €6 billion. Ladies and gentlemen, six strategic fields will determine the success of our strategy: the ramp-up of electric vehicles, software, China, North America, robust operating margins in a low-growth environment, capital efficiency and cash conversion, and a lean governance and reduced complexity.

For most of these action fields, we have developed comprehensive plans that now must be implemented consistently and with strict discipline. At the same time, the economic environment has changed significantly.

Since the launch of the Volkswagen Zukunft program, which was designed to achieve a sustainable margin for Volkswagen Brand, the world has changed dramatically. In this environment, it's not enough to just incrementally increase cost measures.

We need to fundamentally change our business model with a step-up of structural and lasting improvements in terms of cost competitiveness of our products, in terms of overhead cost reduction and efficiency improvements in our plants, and in terms of speed. To be able to achieve this, we must significantly reduce complexity of our business model.

These are the priorities we will address with determination over the coming months. Thank you very much, and with that, I hand back to Rolf.

Thank you, Olli. Thank you, Arno, for the concise presentation.

Before we move to the Q&A, let me give you some instructions. You should be dialed in into the conference call in order to raise a question.

Will not work if you dialed in via webcast. If you want to raise a question, you must press star one and after that, another one.

To withdraw the question, you do the same procedure. Let me briefly highlight the next events, yeah, where you can follow us.

We will continue on June 10th with our ESG conference. There will be the annual shareholders' meeting on June 18th, and then the H1 call on July 24th.

With that, I would like to move on to the Q&A session and see here the first question coming from Tim Rokossa from Deutsche Bank. Tim, please go ahead with your question.

Target program, very interesting to see that, much needed with the Chinese OEM coming to Europe, tariffs, etc. It's also good to learn about here first and not the media.

Now, obviously, we want to know what all of this will cost you. We want to know what it brings you, and I suspect you're not yet ready to say that.

Let me ask in a different way: Do you expect a material net EBIT improvement from this program from the levels that you eyes right now, or is just merely enough to counter the headwinds that we're seeing in the market? Given it says, again, reduce the number of variants, and I've heard this many, many times over the 18 years I cover you guys now from VW, can you give examples for how much you see on that side being possible?

On the capacity side, is it fair to assume that most of this comes out of Europe? Secondly, Arno, for you, just thinking about seasonality of cash and earnings here, free cash flow is obviously quite strong.

It's helped by taxes, but also the underlying number is quite strong. Two questions: Should we expect normal seasonality in Q2 from what you can tell right now, i.e., that it should be stronger underlying on earnings and in terms of cash to Q1?

Since you didn't upgrade your free cash flow target now, is that just a sign of what's going on in the world with all the uncertainty, or is there any cash outs that you already foresee today that prevent you from actually printing possibly a higher than previously guided for figure? Thank you.

Tim. Good morning, and let me start with your first question in terms of improvement in terms of EBIT.

As Arno mentioned, we keep our expectation year-to-year on a profit margin between 4% and 5.5%. With this, we expect a net EBIT improvement.

All this despite of all the headwinds we are faced geopolitically, the regulations, the market, and the expenditures and transformation. This we are able because of all the work we have done during the last years.

Year-to-year, we expect a better EBIT. Then in terms of models, variants, and then capacities: With the program we have launched, we want to reduce our models and variants with a double-digit percentage and also the options.

There the idea is more to bundle offers and so making it easier at the end also for our customers and more transparent to order a car. In terms of capacities: We come from an invested production footprint from over 12 million units.

We already reduced 1 million in China in several plants and also linked to component plants, then 1 million in Europe. There, for example, we closed Brussels, Russia, Dresden now turning to a technology and innovation campus.

Then Osnabrück is on the way. In Volkswagen and Audi, we adapted technological capacities, 1 plus 1.

We are on 10 million, and we think that 9 million will be reasonable percentage of the last 5 years has been on this level. Last week, we announced another 500,000 in China.

We are aiming now for reducing capacity in Germany, Europe with another 500,000 to come to 9 9 million. We will bring down our cost level to this 9 9 million and aiming for more profitability.

Tim. Thanks for your question, and I would like to add on what Oliver just said, no?

Look, we laid out our strategic margin target of 8% to 10% some months ago. Now, obviously, this transformation program we just lay out is the way in steps to achieve this margin target at the end of this decade, no?

We now fill the gaps from where we currently trade or where our current margin target is, what the headwinds are, and still be able to come up to the 8% to 10%. In terms of cash flow, yeah, we are quite pleased with the strong cash flow in Q1, giving the seasonality of our business.

Normally in Q1, we fill up the order bank. To be very transparent, it's about €1 billion coming from the operative business before special effects, a €1 billion slightly less coming from tax payment versus last year.

Last but not least, we were very disciplined on M&A, which is another €1 billion. You have to take into account that there's seasonality.

As we were successful in the winter test, where we make good progress in our JV with Rivian. As you also know, subject to the successful winter test, we will invest in another €1 billion in about €1 billion in Rivian, which will see an outflow in the second quarter.

All in all, we are really confident, and we said that last year on the conference calls for last year, that the working capital measures are really well in place. The whole company is focused on cash flow.

For years and years, we focused on EBIT. Now we really see a cultural change in the company.

People are fighting for cash flow and net liquidity, for better working capital. This is really now implemented in everybody's minds and gives us a confidence that we will achieve the €3 billion to €6 billion this year.

Obviously, it's much too early to change the guidance, but the building blocks are clear. Stringent cost work, I would like to remember you, overhead cost reduction of almost €1 billion in one quarter, which is significant, much more disciplined M&A, and disciplined R&D and capex combined should by far compensate for potential headwinds we see from the market.

Thank you very much, guys.

Thank you, Tim. We will continue with Patrick Hummel from UBS.

Patrick, please go ahead.

Thank you, Rolf. Good morning, everybody.

I would just like to follow up, Olli, please, regarding your comments about the cost and capacity alignment. I think the point Tim brought up was also about whether you can get ahead of the wave, to say, or you remain reactive to safeguard margins rather than driving a margin recovery.

Can I ask a bit more precisely what kind of timeline we have to expect here for the exercise to cut the capacity by another million? I guess the focus here is on that half million that's yet to come in Europe.

Are we talking about the next 1 to 2 years, so that we will already see a significant positive bottom-line impact in 2027, '28, or is it really back-end loaded towards the end of the decade? My second question, Arno, goes to you.

I'd just like to get a quick update on the sensitivities to the Middle East situation. We're now 2 months into that crisis, and so far, it seems the demand impact is very limited.

Can you just remind us for the coming quarters what your biggest potential pain points would be? Is it just a softening of global SAR?

Is it maybe an acceleration of the commodity inflation the second half, as we've heard from some of your competitors, just to get a better feel about the risks related to the Middle East situation? Thank you.

Patrick, in terms of cost reduction, as the implemented programs we are running are providing already results. For example, the overhead reduction Arno mentioned.

On the other side, what we will strengthen right now is we call it operational excellence. is even more cost work in terms of engineering, purchasing, production, sales, and then quality, for example.

This is a program what has already started, will provide results already this year and even more in the period up to 2030. The other part, adapting capacities: In China, the 1.5 are already done.

In Germany, we announced the 1 million, which is on a good way. We will complete up to 2028.

For example, the adaption we have done already in Audi in Neckarsulm and in Ingolstadt and the adaptions we are doing at Volkswagen. A further 500,000 will be in the program by 2020 2030.

Now that depends a bit what we do have in the production lines right now, what opportunities we have to switch. Most importantly is the reduction of our plant costs.

That's the main target. Last year, we were able to reduce our plant costs of over 20%.

That's ongoing and even more. There's no argument not being able working on the same cost level like competitors in Europe.

There, especially our plants in Eastern and Western Europe are helping.

Patrick, I would like to give you some labor perhaps a little bit more on the details on fuel and on other costs. We expect €20 million to €30 million a month for transportation.

We have planned about 50,000 to 100,000 cars in the region, which is less than 1% of our volume, but which now try to find alternative ways to deliver the cars to the customers, specifically for the premium brands. I think Porsche found good ways there.

On the raw material side, we are hedged most of it. Of course, you never hedge 100%, but we have some good hedgings.

Also on the order intake, I just said that the order intake is also slightly increased. What we cannot rule out second-round effects, both in terms of global demand and raw material cost.

Of course, this is a risk. We cannot rule out that, but this is another motivation to increase our efforts on the cost side, on the cash flow side to compensate for that.

This is where we stand currently.

Thank you both.

Thank you, Patrick. We will continue now with Mike Tyndall from HSBC.

Mike, please go ahead.

Hello. Not sure if you can hear me.

Still showing muted.

We can.

You can hear me? Excellent.

Mike from HSBC. Just a couple of questions, if I can.

I'm trying to get my head around the 9 million capacity, which is broadly where we are in current sales. We've got growth in North America and the Global South, and if I'm not wrong, growth in China.

Is there an implication here that potentially Europe gets smaller from a volume perspective, or am I just trying to jiggle the numbers around too much? Then the other question is, your components business did a 9% margin in Q1.

Compared to other suppliers, that's a very rich margin. I know that one part feeds into the other, but where are you in terms of benchmarking what you're paying the components business versus third parties?

Is there scope there to actually squeeze more cost out of that? Curious to know why that margin is so high when Brand Group Core is potentially lower than it should really be.

Thanks.

Mike, let me start with your first question, and then I hand over to Arno with the component question. To make it very clear, the 9 million capacity is what we have seen in an average during the last 5 years.

Our product planning is ambitious, and also our sales planning is ambitious. What we are doing here is, on the one hand side, to adapt our cost structure for 9 million cars in terms of a risk scenario: What could happen if?

On the other side, we are working on a more ambitious sales planning. This leads us to bring down our breakeven situation and making our financial situation more and more robust.

That's behind this planning. When, at the end, all the new products and there, we are very confident because of the feedback we are getting right now for all the new products coming to the market right now, it would be better that will be in positive effect in terms of our margin situation and EBIT at the end.

Got it. Mike, and for your second question: First and foremost, the component business, the majority of the component business is also part of the Volkswagen AG.

Just to remind you, in the Volkswagen AG, we have the component business in Kassel, which is doing gearboxes, Salzgitter engine plants, and Braunschweig steering and axle components. All the cost efforts we see so far, for example, I said since 2023, 15,000 reductions in the Volkswagen AG is always also happening in the component business because they have three big plants there, also the improvement in overhead costs.

What you can see now here is we haven't basically changed the pricing logic between the brand groups and the brands and the component business. We kept, basically, the logic of the prices stable.

What you see now is, basically, we measure the improvement of the Volkswagen turnaround of the Volkswagen Zukunft project in that it's working in the component business. Nevertheless, we need more contributions also from our component business.

The competition is coming to Europe, and our component business, for example, is also producing electric engines, producing batteries for the material. We need also to significantly step up the improvements there in order to be competitive for our cars versus competition.

Okay. That sounds great.

Thank you.

Thank you, Mike. We will continue with Tom Narayan from RBC.

Tom, please go ahead.

Hi, thanks. Tom Narayan, RBC.

The first one, Arno, on the '26 guidance: I noticed there wasn't any booking for the benefit on the IEEPA, the Supreme Court ruling in the US. Other competitors have booked pretty large benefits there in Q1.

I was just curious why you guys didn't book that. Then, I know you have a lot of hedging, but the other OEMs are noticing pretty big H2 headwinds.

Is it that you're not expecting those H2 headwinds? That's the first question on guidance.

Then, Olli, on the Chinese partnerships: Is there any potential for the US? I know it's a politically maybe sensitive topic, but what do you see as a possibility of Chinese relationships in the US?

Thanks. Tom.

I start with the second question in terms of I assume you're referring to the EBIT bridge, right, that it's, basically, a positive. That's a little bit counterintuitive.

It shows that we have some very good hedgings there in place. I would say, and it's also versus last year, no?

The EBIT bridge is the effect versus last year. Last year, I think it was negative first quarter by -300 something, also -400.

It's, basically, a reversal of some of the effects. We don't expect that the positive effects throughout the year to stay here.

We have to face realities, no? The major currencies are weak.

We have a lot of exports in dollar region and others. Since we are hedged, we don't expect a significant headwind in that topic in terms of EBIT bridge, but for the operative business, it's obviously a headwind.

As hedges don't last forever, and the next hedges will be more expensive. Yes, it's a headwind.

It's, I would say, a temporary effect positive, but it shouldn't turn significant negative throughout the year. In terms of IEEPA, nothing is booked in Q1 results.

It's too early to say to what extent we will book a benefit in the remainder of the year. We will come back to you with or to all of you with that topic potentially in Q2.

Tom,

coming to your second question in terms of Chinese partnerships: Volkswagen Group is there in a very positive situation as a global automotive player, having a strong footprint in China, but also in the Western world, where we can benefit from innovation speed and then processes. We decided to go for two ecosystems.

One is China, also with our partnerships there, for example, with XPENG and then Horizon Robotics. We can see already the first results with our first zonal architecture, the CEA, we presented at the end of last year, and the first cars are entering into the market right now.

This is a blueprint in terms of architecture also for our Rivian joint venture. In the Western world, we have a distance of around 1 1 and a half year comparing with our Chinese activities.

This brings us in the situation to have a clear comparison in terms of speed and content, what we have achieved in China. We are very happy about the progress I mentioned with our Rivian joint venture.

Coming back to the two ecosystems, what we are doing in China right now will helps us also for the Southern Hemisphere. We can localize our local platforms from China, the China Main Platform, bringing this to a Global Main Platform, for example, for South America.

We have huge export opportunities now from China, being on a competitive technological level, but also cost-competitive with the Chinese competitors. This helps us to enter Southeast Asia, for example, Middle East, India, but at the end, also Africa.

In the Western Hemisphere, this footprint from China helps us, too, to speed up and build the right offer for the Western world, where we are restricted because of regulations to use Chinese software. Therefore, we have made a clear differentiation in between the two worlds.

Now we have the flexibility and having the right products for the right region to fulfill the customer expectations, but also the right cost structure.

Understood. Thank you.

Thank you, Tom. We move on to the next question, which comes from José Asumendi from JPMorgan.

Jose, please go ahead.

Thank you, Rolf. Good morning, Olli and Arno.

A couple of questions. Olli, can you speak a bit about your tech stack that you have in China?

Thank you very much for the Capital Markets Day you recently did. I'd like to understand a bit better which parts of that tech stack and know-how that you're building in China you can actually bring back to Europe or maybe which suppliers you think you can even collaborate closer in Europe to improve the cost competitiveness and bring that tech stack into European businesses?

Clearly, the products you're launching in China are some of them clearly superior to what you're offering in Europe. Also interested, please, in hearing if you will be open to open up your production sites, your capacity in Europe to your partners SAIC or FAW.

Second question, Arno, can you talk a bit about the margin progression on your progressive brand? Do you think there's a chance to see a sequential margin improvement in Q2 versus Q1 in the light of the improved earnings in the first quarter?

Thank you.

Jose, on the one hand side, we can benefit from the innovation speed and from China, which we can transfer also the process knowledge, but especially the cost work we have done, what we presented last week was a cost reduction of 40% to 50%, depending on the platform. All these measures, and that's a great opportunity, we can implement right now on our Western platforms, which has already been kicked off.

On the other side, all activities we are doing there, also with our component business, Arno talked before, and suppliers in terms of hardware, we can benefit in terms of sourcing, because knowing the right partners there and the best solutions, that's an opportunity. In software, we will be more restrictive because developing a own software for the Western world, but innovations and speed and processes helps a lot.

Overall, and having been in China last week, the media feedback was great. We got the by far biggest media feedback and reach of all companies, including the Chinese companies there in China.

That has shown the great response and how well our products are received in the market. In terms of capacities, we always look for intelligent solutions.

As you have seen in terms of Dresden or we are now in good negotiations for Osnabrück, for example, with defense companies, that's one approach. The other approach, we also will check if there are opportunities for our Chinese cars in Europe or for opening this for partnering, maybe with our partners we do have in China.

We haven't taken a decision, but the solution field is flexible. This is always a clever solution to reduce capacities in terms of changing this to a different owner, like defense company, or sharing capacities with other business opportunities.

The second option at the end, and that's the worst one and the most costly one, is to close a plant. We will go on this topic very, very openly.

Jose, in terms of margin, we expect and we need a step-up in margin, no? Our guidance is 4% to 5.5%.

We currently reported a 3.3%, and we want to achieve reported margin within that guideline. We have also some promising results.

Look at brand Volkswagen, no? Yes, they are more closer to zero currently, but if you take into account the write-off for the ID.4 in US, they are at 3.5% currently running.

We have a typical seasonality in our business that Q3 and sorry, Q2 and specifically Q4 are normally stronger than the first quarter. It's also a good chance for Audi.

Audi, no, have a refreshed portfolio. They are currently trading at 4.2%.

They expect 6% to 8% with a lot of product momentum coming, specifically S and RS models, which are really doing very well in order intake. Last but not least, we really drive forward the restructuring measures throughout the whole group.

You saw the fixed-cost improvement first quarter, €1 billion, and obviously, we want to continue that. That should just give also a more tailwind.

We have to a little bit cautious, no? We will ramp up the BEVs in the second half of the year, which are margin-dilutive.

Yes, there might be some economic headwinds from the conflict in the Middle East. All in all, taking this into account, we still are fully underway to achieve our guidance of 4% to 5.5%, no, and confirm the guidance.

Super. Thank you.

Thank you, Jose. We will continue with Horst Schneider from Bank of America.

Horst, please go ahead.

Yes, thank you, and good morning, team. Good morning, Olli.

Good morning, Arno. The first question that I have that relates to the impact on consumer demand coming from the higher oil price.

Since you are one of the largest carmakers of the world, clearly the market share monster in Europe, I think you can maybe best answer this question. It's not just about Q1 average, it's more about latest trends that you have seen since the oil price spiked.

What shift do you see in terms of demand shift from ICE to BEV, downtrading in segments, differences premium versus mass, and also between diesel and gasoline? That's question block number one.

The number two is a little bit following up to that what also Jose has asked on if you are prepared to share plants with Chinese OEMs. This seems to become kind of industry trend, we heard that also Stellantis wants to do that.

It seems that several carmakers are thinking about that. I just want to get then your view on the European outlook more in general.

Isn't that a bad sign for Europe because, in a way, the industry is opening up the market to the Chinese competition, opening up to a wolf in sheep's clothing potentially? Is the outlook from here that Europe can just get worse, that competition is heating up, and that the incumbents lose more market share?

Thank you.

Horst, we had just two days ago a discussion Rolf, what is your department called? VW...

The economics.

Economic

[department?] .

He and his team,

they showed us all the risks and they did some really great scenarios on how long the conflict lasts, what does mean for fuel prices in different scenarios. Yes, there might be a headwind coming up in terms of overall market demand.

What you ask, and Standard & Poor's and others, they will include that in their total market guidance. What we currently see within us, we don't see these effects right now.

We have strong order book. Yes, the March was a little bit weaker, but still strong.

What we specifically saw, January, February, we saw a little bit more pressure on the residual values of the BEVs, and that turned in March, which is really positive. In total, we see more, I would say, demand for BEVs or interest in BEVs, let's me put it that way, although ICE and BEV order intake both increased.

This is where we currently stand. Of course, we cannot rule out that there are headwinds.

We prepare for them on the cost side. We are cautious on capacity, what Oliver said.

We don't want to end up with being on the inventory side above ideal stock. We carefully monitor that, but we don't see major effects so far in Europe, Horst.

Arno, just quick follow-up: When you talk about rising BEV demand, I wonder if that is in the end then positive or negative for Volkswagen? You potentially save rebates that you don't have to provide anymore, but you also lose profitable ICE cars.

What's the net equation? Is that positive or negative if BEV demand is increasing?

No, it's a great question. Currently, we are on the balance.

That means we have a margin dilution on the BEV side, but we still expect full year to book €400 to €500 million on burden because we don't achieve our CO2 targets. More demand means more margin dilution, on the other hand, less burden on the CO2 regulation.

Net-net, if we were to significantly increase our BEV share, that would be a margin dilution going forward, which is what we always said. Structurally, we must distinguish between three, I would say, technology platforms.

One is the MEB platform, for example, in our volume brand. We run currently ID.3, ID.4.

Now with the arrival of the ID.2 family comes in MEB+, which has an LFP battery, cell-to-pack, next generation for electric trains. There, the margin dilution effect is still there, but it's smaller, no?

The ID.2 Cross is much closer to the T-Roc. We have to take into account.

Until we implement our next-generation SSP platform, the margin dilution effect will continue. Smaller than today, but it will continue.

Thank you. Horst,

good morning. Let me come to your second question: situation in Europe.

We expect tougher competition in the next years, especially from the Chinese car manufacturers, but we see ourselves well-prepared. We have a great product momentum.

Order intake is increasing both on ICE and BEVs. We are by far market leader for both.

The new products we kicked off 3 years ago are now entering into the market, the Polo and the Raval, just one example, but others also in the BEV segment. Arno mentioned also the product momentum at Audi with S and RS models.

First, we are counting on our own strengths while keeping with our cost initiatives to have at the end more profit with our products. Second approach is what we will check is what own China products could fit for the European market, especially in segments where we are not present right now.

That depends, at the end, on tariffs, on logistic costs, and so on if we see opportunities there, because we are now in a positive situation, having own Chinese products, which are very attractive to the customers. Third approach is, at the end, for capacities, to check if we could share capacities with Chinese partners.

Saying this very clear, first approach is what we are doing right now in Osnabrück is being in contact with the defense industry. That's also very intelligent to solve overcapacities with this manner.

On the other side, to protect or bringing more or equal competitiveness in Europe, we have a clear position in terms of Made in Europe. Companies who make business here in Europe should have an European footprint.

Therefore, we are in contact also with the European Commission. The Made in Europe initiatives making progress.

I think this will bring the market situation and the competition in Europe to a more fair trade situation. That's also important because we are faced in other regions of the world this restrictions.

This is more a European interest policy. It's not protection, but I think we need it.

The companies who are investing in Europe can benefit.

Great. Also as a German citizen, I keep the fingers crossed for you that you master all these challenges.

All the best.

Thank you, Horst. We continue with Michael Punzet from DZ Bank.

Michael, please go ahead.

Yes, Michael Punzet, good morning. I have one question regarding a report of the Handelsblatt from last week, mentioning that you have to increase your net liquidity.

Far, you gave us a target of roughly 10% of revenues. Can you give us any indication for the new target and maybe also the topics which you need to increase net liquidity and if this have any impact on upcoming dividend payments?

Michael. Look, I give you a little bit of color.

Overall, we want to make sure that in the transformation, we have a really strong balance sheet. Rating is really important for us.

This is not the only reason, but another reason why we have focused on improving our result, on improving our net cash flow. Net liquidity, we said always at least 10% of revenue.

If you look into the industry, others have a even stronger balance sheet. Going forward, it is clear that we want to improve our operating result and the cash conversion rate and being more disciplined and on R&D and thus driving also our cash conversion rate.

Although it's too early to discuss it, but let's assume we achieve that. We are rather confident, very confident that we achieve that.

Then is the question what are potential ways to use that cash flow? One net cash flow is obviously, let's strengthen our net liquidity position and our balance sheet.

Another possibility is let our shareholder participate on a much stronger Volkswagen. Third, we have also hybrid bonds.

We look into potentials there. This is why we said 10% of revenue is the minimum.

We want to keep. With a stronger Volkswagen going forward in uncertain world, we potentially also want to increase that.

Thank you. Maybe a short follow-up: You mentioned the sale of Bugatti Rimac.

Will this have also no impact on your industrial net cash and all this stuff or you have a different accounting compared with Porsche?

No, no. That will also strengthen our balance sheet because Porsche is fully consolidated in the group.

No, yesterday Porsche said that the book gain and also the cash inflow from that deal will not have any impact on the automotive division. Is that the same as at group level?

A positive effect on the net cash flow at Porsche will be, since we are fully consolidated, also a positive net cash flow on group level.

Okay.

Thank you, Michael. We continue with Christian Frenes from Goldman Sachs.

Christian, please go ahead.

Goldman Sachs. Most of my questions have been answered.

Just I'd have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter.

Could we look into that a little bit more, specifically within EU pricing given emerging Chinese OEMs' localization efforts? You mentioned, I think, the minimum pricing discussions between the EU and China.

How do you expect pricing to evolve throughout the rest of the year in this year? What impact do you think the minimum pricing discussions will have on that?

Then secondly, just also sticking with pricing, looking at China: Thanks for your Capital Markets Day event, and we just had the Beijing Motor Show where we saw a lot of the impressive products you have coming and also your strategy and targets. Could you comment a little bit about your expectations for China pricing, again, for the remainder of the year this year?

Thank you.

Thanks for your question. Obviously, we cannot make the public discussions on what prices we plan and what we expect.

What we can say and what we prepare for: The competition is clearly increasing, no? Chinese competitors are bringing their cars to Europe, and they're also, basically, exporting the competitive pressure to Europe.

What we see in our EBIT bridge, we saw pretty strong movement based on our really good product substance and our portfolio. You saw pricing was even slightly positive in the first quarter with €0.2 billion.

Of course, we have to take into account the negative mix, basically, from the ramp-up of the BEVs. In total, we expect more pressure, but this is also why we compensate on the cost side in order to be prepared on the cost level, no?

We have great products, we have good technology, and we have to have the competitive cost base. This is what we work on.

Maybe to to China: We have seen during the last 2 years an average decline of 15% of of pricing, and we don't expect that the pricing level will come back where it has been years years ago. Margin improvement will come only over tough cost work, yeah?

This process has already been kicked off. We have shown you an cost improvement of 40% to 50%, depending on our platforms in in China, and we will continue to do so, yeah?

The same what we are doing there is our task in in Europe to being more competitive in terms of pricing while having the opportunity improving margin. Then

maybe as a quick follow-up: Not much is being said about your supply chain or Middle East, and that's in line with the rest of the industry, I would add. When would you expect to have more clarity on 2027 regarding these issues?

Thank you.

Today, our supply chain is not affected, and also in terms of raw materials, for example, all way we have hedging. What would it mean for '27 is too early to predict.

That depends on the conflict. We don't know what will happen, but for 2026, you can be for sure that we won't be affected in terms of cost.

Thank you.

Thank you, Christian. Brings us to the next question, which comes from Frank Biller from LBBW.

Frank, please go ahead.

Yes, hello. Frank Biller from LBBW.

Thanks for taking my question. It's about a possible divestments, thinking about Everllence stake or a floating of TRATON.

Are you also thinking of a divesture of maybe Ducati or Lamborghini IPO?

No, also we were very transparent about our plans for Everllence, and we are pretty confident that this is a really very good process and it's progressing well. In TRATON, we always said we don't rule out the next step.

We want to increase the free float. We made the first step.

Also TRATON made some steps, for example, in terms of Sinotruk. These are the topics we decided on so far.

We look in various alternatives for PowerCo. We open our capital structure there.

Frank, please have understanding for that we can only talk about topics like this once we have decided on.

There is a clear intention that's part of our program for the next steps of transformation to re-order our investment portfolio. That's very clear to reduce complexity.

That's, for example, why we kicked off last year the Bugatti deal at Porsche. That's one example.

Many others we are working currently. We won't go into details and speculations in terms of Ducati and Lamborghini, no?

The activities are placed, and we have clear priorities what we will tackle first and then step by step. Overall, reducing complexity is our goal.

It's a good point, no? We always talk about Ducati and Lamborghini, these brands.

We have 1,500 entities that we have in our books, fully consolidated and not fully consolidated. We need to reduce that complexity.

We have so many layers, we have a lot of entities, and we need to reduce that complexity in order to achieve the cost savings that we need to achieve in order to be competitive,

no? Thank you.

Thank you, Frank. We move on to Stephen Wilmot from Bernstein.

Stephen, please go ahead.

Yes, good morning. In the Handelsblatt article last week, there was also talk about reducing factory costs, which I think were said to be about €4,000, €4,500 at the moment, and you want to reduce that to €3,000 in Europe.

Could you comment on what the situation looks when you compare plants across Europe and how that also then compares to the situation in China and in other locations, just give us some kind of rough feel for that? Thank you.

That hasn't been an interview in Handelsblatt, but talking about the figures, that's the direction we want to go to, yeah? We are very confident that we have turned to the right direction right now.

Now the first results, having reduced our plant costs in Germany over 20% last year. That's massive, no?

We haven't achieved this over the last 10 or 20 years, and this in 1 year, 20%. That's not the end.

Today, we can say that our plants in Eastern and in Western Europe are competitive to all the others are acting in Europe. Therefore, we decided, for example, to bundle our urban car family in Spain and the ID.1 to come in Portugal on a very competitive plant level.

In Germany, we still have work ahead, but also very clear measures to reduce. A plant cost level per car of around €3,000 is a feasible level comparing to the competition.

In China, the level of plant costs is even lower, that's clear, because of labor costs and energy and everything around. This you can't compare with Europe, no?

For us, it's important to compare our situation in the different regions of the world. There, we can confirm, in Europe, already Western and Eastern on competitive level.

In Germany, still work to do. On China, completely on a competitive level.

Where we have also strong footprint in South America, we are working on a competitive level, yeah? That's what we have to do, and the 3,000, which was written there, is an average like a goal to go to.

We just got a question, a follow-up question on my remark on the number of entities and layers. I must confirm we're 100% convinced that we are the best owner of Lamborghini.

Lamborghini is a integral part of Brand Group Progressive. There's a lot of synergies between the three brands there.

Hopefully, you didn't kind of got it wrong. We clearly stick to the current setup in the Brand Group Progressive, including Lamborghini, right now.

Thank you, Arno, for that clarification. We have Henning Cosman from Barclays, actually, who has difficulties with asking the question, he wrote me an email.

Two questions: One is, I think, Olli, can you update us on US localization? Is there a chance that localization would take Scout into considerations?

If we would localize, would that be compensated within the €160 billion investment budget for 2026 to 2030, in the current planning round? The second question is for Arno: update on Everllence.

There are obviously shortlisted PE names if we would like to comment on that. Capital allocation from proceeds of the potential sale of Everllence, if this is still true that this is in line with our current dividend policy, and if the potential proceeds are included in the cash flow forecast.

Let me start with the first question in terms of US localization. With the Scout plant, we have great opportunities, making good progress.

We are in line with our milestones. The capacity also provides opportunities for other brands of Volkswagen Group.

We are not at the point today to communicate what are the concrete plans. In terms of more capacities in the US, we are still in contact with different states.

At the end, this depends in terms also support we are getting there. There, stick to my position: We can't do both, paying high tariffs on the one hand side and on the other side, heavily invest in new capacities.

There are some states interested in our investment, but at the end, the balance in between support and investment is important. We plan step-by-step.

First now ramping up the Scout capacities, maybe using them for other brands of Volkswagen Group, and then thinking to the next step. Our goal is clear: to improve the local footprint in the US, having the US as a opportunity market for the future.

Regarding Everllence, just to say this is a great company with strong position in the market, convincing strategy, and in consequence, the interest is very strong. I obviously cannot comment on specific steps of the process.

What we said, we want to sell the majority. The process is well underway.

The potential process are not included in the cash flow. This is what we always made very clear.

Please also have understanding that we decide on the dividend towards the end of the year, taking all the factors into account. This is then decided on by the group board and management and supervisory board.

This is too early to comment on now specificities on the dividend. Thank you, Arno, and Henning, I hope this has answered all your questions.

Coming to the last, best for last, it would be Harald from Citi. Harald, please go ahead.

Let me bring you up on stage, and now we should hear Harald.

Rolf, can you hear me okay?

Yes, yes. Now we can.

Perfect. Slightly difficult question again, and everyone like the short-term ones.

Interesting conversation in relation to Horst question earlier with regard to IEEPA. The market's largely ignored that.

By the way, just wanted to congratulate you on the incredible work you're doing in what is, I think, the most challenging cycle that I have seen in this industry, and as I've been around probably as long as most of you. With relation to policy and IEEPA specifically: First question, how do you see the IEEPA impacting on the potential fleet sales for Chinese OEMs?

How restrictive do you think the IEEPA Made in Europe policy might be? I suspect you're closer to that than we are, and I'd love to understand that better because I think there is some potential here.

Then secondly, same question, but with relation to other policy: You're seeing some German government now looking to subsidize industrial electricity, you've seen the EU protecting the steel industry much more carefully. I always want to hope and I'm always disappointed, but to what degree should we hope that the EU or European governments will actually start to try to finally, finally start to help this industry?

Hope you understand where my question is coming from.

In terms of the Made in Europe policy from the European Commission, that hadn't been already fixed completely, but it is a European interest policy, which we support. This starts with a European production footprint, but then also to have different levels for components.

Therefore, this has to be carefully balanced. I also agree that, at the end, the different regions should be comparable, what we see in other regions should happen in Europe.

Then you have a fair competition, yeah? This has to be worked out: hardware components, focusing also on battery cells, battery systems, but at the end, also in electric-electronics, what could be included.

We feel ourselves very prepared in Europe as a European player, and we expect there fair or better conditions in terms of trade, comparing with the competition. Energy is a important point, and there, I think it should be important to focus also on the most important industries.

For example, the battery industry right now in Germany, for example, is excluded from the energy regulations. That's, for me, a wrong decision.

They have to expand the energy regulations also for battery plants, because the battery industry is a crucial one for Germany and Europe, and this has to be supported. Battery manufacturing or production is high-energy intensive, and therefore, I think they have to adapt the regulations.

That's only one one example. At the end, energy counts for all, also for the charging infrastructure.

That's what we see in other regions of the world, where the energy is on a very low level. The customer is calculating and switching to battery electric vehicles, and there we still have something to do, especially in Germany.

Okay. Thank you.

Thank you, Harald. Thank you all, actually, for a very lively discussion.

A lot to ask and a lot to debate. Clearly, you see that Volkswagen is moving ahead.

This concludes the Q&A session for the investor and analyst call for today. If anything was left unanswered, yeah, please contact the IR team here in Wolfsburg.

They're really happy that you're keeping them employed. After a short break of about 5 minutes, we will then continue with the media Q&A at about, I would say, 10:40, 10:42, something like that.

Thank you.

I think we can continue. Welcome back.

We will now begin the Q&A sessions for members of the media. As a reminder, to ask a question, you will need to press star one and one, star 11 on your telephone.

It's different than we had it in the previous calls. Wait for your name to be announced, please.

If you want to withdraw your question, it's the same procedure: Please press star one and one. The first question comes from Frank Johannsen from dpa.

Please, Frank. I think we have an issue here.

Then maybe we will start with Christina Amann. Christina, you want to start, please?

Unfortunately, we can't hear you. Seems to be technical issues.

Irgendwas stimmt nicht. Hallo?

Okay.

Hallo? Ja, jetzt kann ich Sie hören.

Jetzt. Now it works.

There was something.

Perfect.

Okay. I got a few questions.

The first thing, Mr. Blume, you talked about German or English?

I think English because we have maybe some English-speaking guests as well.

Okay. You have talked about chances talking to Chinese companies producing cars in European Volkswagen plants.

Do you have any details what kind of companies you're talking about, what kind of plants you're talking about? Is there anything going on already or is that rather an option for the future?

Would that be your existing partners like FAW, SAIC, or XPENG, or would that be completely different companies? The second question is, have you already asked for refunds on the IEEPA tariffs and others which are deemed illegal in the US now?

Do you expect anything? Do you expect the negative reaction from Trump?

A third question is regarding the capacity numbers in Europe. You said 500,000 should go.

Would that be mostly brand Volkswagen, would that be other brands, what about Porsche? Do you have any figures on how many jobs would need to be cut already?

On what oil price is your outlook based? Is there a risk to the outlook if the oil price is staying where it is right now?

Thank you.

Good morning. Then I will take the first and the third question, and maybe Arno can answer the refunds and the oil pricing.

Chinese companies in Europe: We have clear priorities in adapting capacities, and for example, in Osnabrück, we are in constructive talks with defense industry. That's first approach, because there's a big need, and I think this could also a great support from Volkswagen to our interest in Germany and for the NATO to support with our knowledge of automation and the qualification of our people, first of all.

Then we haven't kicked off any thinking about Chinese products or partners to work in Europe. If we would do it in our activities of adapting capacities, we would start with our own products from Hebei province, Volkswagen products.

Then a second step could be Volkswagen products from our joint venture partners we're working together. That's the priorities, but we haven't kicked off because, at the end, we need the free capacities.

Today, the plants in Germany are saturated with products, and at the end, this is part of the transformation plan we would have. In terms globally, and to say once again the steps we have taken: We come from a invested footprint of over 12 million units.

Then we have already reduced 1 million in China, 1 million in Europe. The next 500,000 are agreed in China.

Coming to a level of 9 million, which I explained before in the investors call, we are working now to check where we do have the opportunities, that's Germany and Europe. Overall, we have the production cost per car to come to an average level of 3,000, which is competitive in Europe.

That's our primary goal, and then we are coming with flexible approaches to achieve this. This 9 million level is not what we are expecting in the market.

Our plans in the market are more ambitious in terms of sales. That's more to bring us in a better situation, and on the other side, bringing down our breakeven level.

That is the intention. Then handing over to Arno.

The remaining two questions very quick. In terms of refund of tariffs, the auto tariffs are still in place.

They are not changed, and there are some minor refund possibilities, for example, for parts, not vehicles. Obviously, if we have the chance to get refund, we have to fight for that.

It's more like a small double-digit million in magnitude, no? This compares to the €4 to €5 billion headwind, just to give you an idea.

In terms of oil price outlook, I talked on that already in the investor call. Our direct headwind is about €20 to €30 million for fuel per month.

In terms of demand, we see still a strong demand in the first quarter both for ICE and BEV vehicles. We cannot rule out that the total demand overall will be weak.

There might be some headwinds depending on how long the closure of the Strait of Hormuz will continue. We prepare for a potential more headwind going on, but so far, we don't see a impact on order intake in Europe.

Thanks, both. Frank, we believe in second chances.

Frank from dpa, you want to try again?

Hear me now?

Yes, perfect. Go ahead.

Perfect. Okay.

Actually, two follow-up questions to the last question from the colleague. The first one: If you want to reduce 500,000 additionally in Europe, does that mean primarily in Germany or is it not still decided?

Will that work without closure of plants in Germany or Europe, especially, of course, in Germany? The second question, facing Osnabrück, the Osnabrücker Zeitung newspaper today reported that you are in advanced talks with Rheinmetall or Dynamit Nobel, which is part of Rheinmetall, about the production facilities in Osnabrück in the plant.

The newspaper says there is already a letter of intent which is signed. Can you confirm that?

Can you tell any details what's planned there? Yes, thank you.

We have announced that we want to come to a feasible production footprint of 9 million cars. That's what we have sold per average during the last 5 years.

Our ambition in terms of sales is higher, but we think to be on the safe side and improving our breakeven situation, that would be the feasible one. Talking about Osnabrück: As I mentioned already, our talks are advanced already.

We do not comment the partners we are dealing with. Overall, I think we feel ourselves as a experienced company in terms of automation with very qualified people, also in the responsibility for the goals of the German government for their country protection.

This, from our part, is also to provide to stabilize democratization in Germany. Therefore, I think it's a win-win situation at the end to adapt plant capacities and, on the other side, support the goals of the German government and European governments in terms of NATO.

I hope this answers the question. Next in line would be Lazar Backovic from Handelsblatt.

Lazar, please, line is yours.

Herr Blume and thank you, Arno Antlitz. You mentioned your plant costs during the investor call and repeated it here, your goal is to reach €3,000 in Europe.

You are conducting reviews at your German plants. Can you tell us where you stand in the first quarter of 2026 and whether you met your cost targets there at your key plants?

That will be the first question. The second would also be on Chinese vehicles and Chinese VW models which could possibly built in Europe.

Technically, they are based on a different platform, on the CMP, will this platform be localized for Europe? Can you comment on that?

Mr. Backovic.

We have a clear goal where we want to achieve. We make progress in the German plants by 20%, which is significant last year, but we have still a long way to go to be cost competitive.

Obviously, we have to pull all the levers: productivity, and this is also why we discuss the topic of capacity, no? The Chinese are coming to Europe, building also factories which are highly efficient, and we cannot compete with underutilized plants.

Improving the utilization is a key lever to make our German plants competitive, and this is why we continue to work also on improving the utilization.

In terms of Chinese platforms, I talked before only about options. Today, it's too early to decide if we want to localize a Chinese platform in Germany, but our priority would be, first of all, if we would do it, to take one of our own platforms first, because this year, we are ramping up the CMP platform, and the ramp-up for the CMP is planned for 2027 in China.

This work has to be done first, and then we could think about options in Europe, and on the other side, also to check which products could be the right ones. We are getting right now the feedback and response from the market for our first new products in China, and there are many more to come.

Then, at the end, we will decide, depending on the success we have in China, which model would fit in Europe, especially in segments where we are not present with our current portfolio in Europe. Step-by-step, but it's too early, and we haven't kicked off the process, and we haven't taken a decision.

A short follow-up because it wasn't the question. The first quarter of 2026, you did meet your cost targets in the plants or not?

Or can you not comment on that? No,

we are on track to improve, no? We have still a target gap last year, and then we make progress.

It's too early to give you an indication for 2026.

Okay.

Being very, very clear, the progress we are doing, yeah, and I'm personally from production, we have never seen a program and progress what we have seen last year, yeah? Over 20% is massive, and we haven't seen this 10 or 20 years before.

There was, more or less, in terms of production cost, a compensation of inflation with our productivity work, and this 20% is also compared to the competition a massive progress, being very clear on this. We are continuing on this path, and we know how to do it.

Thank you, Oliver.

Thank you, Arno. Thanks, Lazar.

I can see Bloomberg is next in line. Monica, good to have you on the call.

Can you, please, take the mic?

Good morning. Can you hear me all right?

Very good.

Wonderful. Thanks so much.

I guess I would just expand on some of the questions surrounding Chinese partnerships and how those could potentially be leveraged in European plants. Mr.

Blume, have you discussed the possibility of Chinese partnerships with labor leaders? I'm wondering how they have reacted to this option.

How far along would these talks be? I guess on the labor side, are there certain red lines or concrete conditions of such a partnership?

Then my second question would focus mostly on what's happening in the Middle East. I know the fallout so far has been limited, specifically when it comes to deliveries in the region, but we know that the conflict has raised energy and shipping costs in the short term, and GM was already saying that it's seeing higher costs across the board from aluminum and steel

to Did you finish your question? Hello?

Can you hear me?

I think she has disconnected, maybe we wait a couple of seconds, and then we maybe start answering the part that we got.

Can we get a signal if you're able to hear us?

Monica, I think you would have to reconnect. Then I think we take the next call, and then give her a chance when she's back on the call to get an answer.

The next one would be Sebastien Ash from Financial Times. Sebastien, please.

Hi there. Hope you can hear me.

I actually would have liked to follow on from Monica's questions, but I would ask the same thing when it comes to the Middle East, when it comes to potential for rising material costs in particular. What have you seen in the first quarter, and how do you expect that to develop over the course of the year?

Is there any potential that we can see this have an impact on the price of vehicles at the end? Then, I think the other element that I would touch on in terms of plant utilization and talks with Chinese companies or producing your own Chinese vehicles in European factories is that we heard again in the investor call that you're a supporter of local content rules, the Industrial Accelerator Act.

How would that work together with Chinese production in your factories? Do you see that as complementary or is there any friction between those two positions?

Thank you.

May I start, and Monica also touched this question, and I hope she's connected again. To be very clear, today, we haven't got a concrete plan to share capacities with a Chinese partner, and there are no activities.

We are talking about only options, and these options are with clear priorities. The first priority would be to think about a own Volkswagen product we have designed, engineered, and we are producing in China to make a localization here in Europe.

We have to ramp up the new products in China. As you have mentioned, the huge momentum we are bringing now to the market has to be executed, yeah?

For this year and the next year, we have a lot of work to bring all this to life. We are talking about 20 new models this year and, overall, 30 new models by the end of 2027.

Step-by-step and being very clear on this: no activities right now to partner in Europe in terms of capacities. We will do it for the next steps in terms when we have decided where we want to reduce capacities, then we are thinking about the options we do have.

There, defense could be a part, but also own products from China. Step after step, but the positive way of thinking is that now we, as a global player, have the opportunities to benefit what we are doing in China in terms of innovation, in terms of processes, and at the end, also in terms of products.

We could have the opportunity not only for the Global South, which is our first priority from China to Asia-Pacific, Middle East, India, South America, and Africa, and Europe is a maybe step for the upcoming years, but not decided.

Since it's a lot of interest there, I will give a little bit more details on Middle East. First and foremost, direct effect on our cost, for example, shipping and transport, it's about €20 to €30 million burden a month.

This is what we currently see due to the higher cost of fuel. On raw material cost and others, we have quite some good hedging in 2026.

There we expect a lower burden, but obviously, hedging, it doesn't last forever. We expect there some rising costs.

We don't see so far second-round effects, but obviously, we cannot rule out that some of the materials we buy, some of our materials our suppliers buy, plastics, chemicals, others, become more expensive. In terms of demand, we have about 50,000 to 100,000 sales in the region.

Obviously, there's a risk. It's less than 1%, but it's, nevertheless, important for our premium brands.

Demand overall, as said, we cannot rule out there's a headwind. The overall market in the first 3 3 months is down about 4% total market, mainly due to China.

We cannot rule out that the outlook of the year will worsen if the conflict and the closure of the Hormuz stays. This is what we prepare for on the cost side.

We have to prepare for these kind of disruptions and make Volkswagen more robust.

Thank you very much. I can see Monica, you're back on the call.

I believe your first question has been answered about Chinese partnerships. The second one, we didn't get,

but fortunately brought

up. You want to start with the second one?

No, I think it's been tackled already by my colleague. I just wanted to raise my hand to say I'm back, and I appreciate you waiting and then answering the question.

No problem. Good.

Then I would say next one could be Christian Müßgens from FAZ. Christian, can you hear us?

Hallo? Ja.

Hallo. Please go ahead.

Entschuldigung. Danke, meine

Fragen wurden beantwortet. Ich hätte mich sonst gemeldet.

Vielen Dank. Because I saw you on the list.

Good. That's fine.

That's a good sign if we answered all the questions already. Seems to be the right ones.

Then the next in line would be Lutz Meier from Capital.

Hello? Hello.

Hello.

Thank you for taking my question. I'm referring to something Arno Antlitz mentioned earlier in the analysts' call.

He said that you are calculated with a burden of €400 to €500 million for CO2 costs in Europe, and you have to calculate against the margin dilution of the models. I'd like to know, the €400 to €500 million, is that per year in this three-year period, which is running currently?

The second is, maybe you can elaborate a bit how you calculate this trade-off. To which amount of BEV models you have to sell to lower this potential burden?

Maybe also to what extent still the BEV margins are below the ICE margins, because Arno Antlitz mentioned they are pretty much higher now, but it's still not the same level, if I got it right. Thank you very much.

A little bit more precise on that. We expect a miss of the CO2 targets also on the three-year period at '25, '26, '27.

One reason is we expect a very positive feedback and ramp-up of the ID.2 family, and then later on ID.1, also very promising car, but they come late '26 and '27. We expect a miss of 300 and 400 to 500 million CO2 cost per year.

Basically, almost €1.5 billion over the three-year period. The obvious question for you is, why don't you just sell more electric cars?

We must really expect the fact that we have to sell more electric cars than the natural demand in Europe is. We have to help these cars with prices that puts us into a situation that the margin is much lower than in combustion engine cars.

We make a trade-off between money we lose due to the CO2 fine and money we lose due to the margin dilution of the BEVs. This is our responsibility, and this is currently where we stand.

The obvious solution is improve the margin of the BEVs. This is what we heavily work on.

The first generation like the ID.3, they have really a very weak margin. Next generation, we call it MEB+, has a much better contribution margin.

They get an LFP battery, the great cars were introduced so far. Just yesterday, we saw the ID.

Polo. If you compare, for example, the ID.2 Cross, with the T-Cross, which is an combustion engine car, the margin is much, much closer, 70% to 80% already, but still not on the same level.

We expect the fully comparable margin only with our future platform SSP. This is why we concentrate on developing that.

Until the time when this platform arrives, we have to make sound trade-offs between BEV volumes and CO2 fines.

I can see one more question. Rachel, you're waiting as well, Rachel from Thomson Reuters.

Yes.

Good morning. Thanks for taking my question.

Good morning.

I wanted to ask, you said improving utilization is a key lever, Mr. Antlitz.

I wanted to ask what this means for the Zwickau plant. Are you planning similar defense partnerships there like in Osnabrück, or can you share any other plans for Zwickau?

Then I wanted to ask if you can give any specifics on streamlining the product platforms. Are there any models that you have that will be discontinued, any brands that will be affected in particular, or synergies, any detail there, if you can, please?

Rachel, Oliver speaking, and let me start with some defense. We want to close the solution for the Osnabrück plant, and this will give us a bit of feeling how does it work up to now.

It's very constructive and with a positive perspective what we could do there. At the end, we know about the need of the defense industry.

They are being very clear, Volkswagen won't go at the end for weapons, that's clear. We are providing our experience of serial production, automation, and so on, which is very useful for the defense industry.

Our knowledge is more on military transport or safety systems. Then for the next step, and there in Zwickau, we have made decisions for the upcoming years.

With our agreement, we closed at the end of '24. We are going for recycling in Zwickau.

We have done a reduction of the capacity technically, and the same for other German plants. Then we will enter into the next steps in terms of solution finding, no?

No decisions are taken, but defense is interesting, and we will have the first experience there. In terms of products, we have the clear intention to reduce the number of our products worldwide, double-digit percentage, and also to reduce the options by reducing complexity and also reducing our capital investment on this and making our structures cleaner, and also providing for our customers a clearer profile with our products.

We have already started this process, and the products which will come to the market right now, for example, the Polo or the CUPRA Raval, have already benefit from this activities, and we will continue to do so. Today, we won't announce any concrete thinkings.

We have concepts already, and then step-by-step, we will announce where we want to go. Clear goal, overall, is complexity reduction, cost reduction, investment reduction, and being more focused, and at the end, having more and better products customer sides for the different regions of the world.

Thank you all for your excellent questions. I think this concludes the Q&A session, and we are now also at the end of our call.

If anything was left unanswered, as Rolf also mentioned during the investors and analyst call, please contact us in Wolfsburg here. Drop us a note, call us.

I can only wish you all a pleasant week and stay safe, and looking forward to hear you next time. Thanks.