By on December 11, 2017

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Despite Volkswagen being the premiere brand for “clean diesel” technology just a few short years ago, it’s now pressing aggressively into electrification. In fact, the company that admitted to widespread cheating on emissions tests following its pricey 2015 scandal is currently trying to convince the world to ditch diesel subsidies. Go green like us, the company wants everyone to hear.

Matthias Müller, CEO of Volkswagen Group, stated in a recent interview that the German government should stop subsidizing diesel entirely.

While a perspicacious position on the part of VW, it also serves as a reminder that German automakers benefited heavily from Europe’s once-popular diesel tax programs. However, with most of the world souring on the fuel, the automaker sees an opportunity to hurt its competition and help itself as it hurries to bring EVs to market. 

“We should question the logic and purpose of diesel subsidies,” Müller expressed to German newspaper Handelsblatt. “The money can be invested more sensibly to promote more environmentally friendly technologies.”

His proposal makes sense. Volkswagen has a lot to gain if it can promote the electrification of Europe, especially since it’s on the brink of abandoning diesel technology altogether. However, Europe isn’t too keen on the fuel right now, either. Several nations have proposed internal combustion bans over the next few decades, while numerous large cities want to outlaw older diesel-burning vehicles from entering city centers within a few years (something Müller also claims to be in favor of).

However, as popular as Müller’s words are likely to be with some environmentalist groups, The New York Times reported that others were less enthused about their source. “The government is being urged to phase out diesel subsidies by none other than the biggest diesel fraudster,” Tobias Austrup, a transportation expert for Greenpeace, said in a statement.

Ironically, axing subsidies now would only help the post-diesel Volkswagen. Neither BMW or Daimler are quite as ready to bet the farm on electrification. Meanwhile, VW has put nearly everything it has behind the technology after being caught cheating on diesel emissions tests. It has poured court-mandated funds into enhancing the United States’ charging network, invested heavily into the European grid, and developed its own MEB platform for use on various electric models expected within a few years.

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44 Comments on “Volkswagen, of All Companies, Calls for an End to Diesel Subsidies...”


  • avatar
    stingray65

    Diesel doesn’t get any subsidies to speak of. Some Euro countries charge purchase and/or annual licensing taxes based on CO2 emissions, which diesels tend to do better on because they use less fuel, but increasingly this is being offset by taxes on Nox that diesel does poorly on. Some countries also put smaller fuel taxes on diesel fuel than gasoline, but this is mainly because the fuel is used by heavy trucks that supply the nation’s industry and retail sectors. No diesel anywhere gets anything close to the $5000 to $100,000 in purchase and operating subsidies that electric vehicles currently get in various markets around the world.

    • 0 avatar
      DenverMike

      While it’s not exactly putting a gun to their heads, simply having to pay a ridiculously high amount at the pump favors diesels dramatically, even if it’s not a “subsidy” subsidy.

      • 0 avatar
        Big Al from Oz

        Nah, how can this affect diesel sales, like the chicken tax has no affect on pickup imports.

        DiM you take the cake for the ironic illogics of thought.

        • 0 avatar
          DenverMike

          @BAFO – Maybe you actually believe EU car buyers gravitate towards diesels in everyday passenger cars *naturally* because of all its “wonderful benefits”, having absolutely nothing to do with the up to 30% increased mpg, keeping in mind insane EU fuel prices (and how’s your partner Robbie R doin’?) and the rest of the (flat) world has gone complete crazy (including VW) insinuating EU policy makers have routinely favoured the use of diesel, with and without diesel subsidies, to the detriment of EU citizen’s health, but OK.

    • 0 avatar
      mcs

      @stingray: Since those EV subsidies are mostly going to the wealthy, doesn’t it mean the money is going to “trickle-down” to the poor? Sounds like a good thing to me. What have you got against poor people?

      • 0 avatar
        stingray65

        MCS: yes trickle down will happen unless the wealthy bury their EV subsidy saving in their backyards. With today’s huge government deficits in most countries around the world, however, the question is whether governments should be borrowing money to subsidize rich people’s purchase of electric vehicles. Poor people benefit most from rapid economic growth, and big government deficits and government distortions of free markets almost always reduce growth.

        • 0 avatar
          SCE to AUX

          EV subsidies are intended to encourage a substitute purchase of a clean vehicle vs a dirty one. The air doesn’t discern the income of the driver.

          In the US, I’ll give you that a purer form of the EV subsidy wouldn’t be a tax discount, but a rebate or a discount. This is how it was when I got my former Leaf in 2012; Nissan simply discounted the price by $7500 and I made no declaration on my taxes. Income was never a question.

          While EVs are typically called “rich people’s toys”, one thing omitted from the discussion is that poor people don’t actually purchase new cars anyway. So offering EV discounts to poor people is somewhat moot.

    • 0 avatar
      Big Al from Oz

      stingray65,
      I totally agree with your comment. Its no different to any market. Any government can regulate, control and favour any product. Look at t he US vehicle makeup. Gasoline powered pickups are a stand out example of government control of a market via a hefty import penalty and different FE standards and to top it off 75% are used as cars (don’t get me wrong, if you want one have one).

      The fact is diesel is already highly taxed in the EU compared to the US or Australia. Even with our cheaper (compared to the EU) diesel its generally more expensive than petrol.

      With that in mind diesel light vehicles in Australia have a surprisingly good market, especiall pickups and SUVs. I suppose these vehicles need the torque.

      • 0 avatar
        stingray65

        Big Al: In a free market diesel would likely be 12% more expensive than gasoline because it contains about 12% more energy per gallon, but governments don’t like free markets so they use taxes to help people make the “correct” decisions. Since diesel is used by trucks, taxing it heavily means that transport costs get higher for all goods and services delivered by trucks (e.g. most of them) which hurts the economy, so diesel is sometimes taxed less for that reason. Since gasoline is rarely used for anything except private automotive transport, they can tax the crap out of it knowing that the inelastic demands will mean people will continue to buy it and tax revenues will stay high, and at the same time the government can say the high tax is to protect the environment.

        • 0 avatar
          brandloyalty

          Why do you speak of government as though it is an entirely separate entity from the population, some sort of malevolent corporation?

          How do you reconcile your complaints that governments happily reap gas taxes and also subsidize electric cars?

          • 0 avatar
            stingray65

            Big government leads to slow economic growth, crony capitalism and general corruption, and loss of personal freedom, so why does government keep growing in a democracy? Because 50+% of the population (e.g. the takers) likes to get free stuff paid for by the 25% of the population that are actually productive and pay taxes (e.g. the makers).

            Government is very good at taxing things with inelastic demand, because they need reliable sources of funding to support the takers, which is why gasoline, tobacco, and booze are so heavily taxed. They would be very unhappy if the high taxes led people to stop driving, smoking, and drinking. EV subsidies are purely an example of crony capitalism – campaign contributions in exchange for subsidies and regulatory support.

          • 0 avatar
            brandloyalty

            That’s pretty polished prose. I wish I knew who pays you to post their boilerplate.

      • 0 avatar
        brandloyalty

        “Gasoline powered pickups are a stand out example of government control of a market via a hefty import penalty and different FE standards and to top it off 75% are used as cars”

        Weren’t pickups also subsidized by a tax deduction for payments for vehicles over a certain weight?

  • avatar
    Scoutdude

    Is anyone surprised? I’m sure not, they know they can’t sell diesels due to their cheating reputation so they don’t want to give those former VW diesel faithful a reason to shop elsewhere for their diesel fix.

    It is the equivalent of taking your ball and going home when others don’t want to play the game how you want to play, or in this case how they can play.

    Of course they diesel subsidy was stupid from the beginning. They spun it as green with lower emissions, yet didn’t really tell you that while the vehicles had lower CO2 emissions everything else, particularly the harmful to humans emissions were higher, much much higher when they started the folly.

    • 0 avatar
      Big Al from Oz

      I agree with the diesel cheating comment you made. I don’t believe diesel has any form of subsidisation in any EU country.

      Diesel highly taxed, just not as much as gasoline.

      Maybe Matt could of chose more apt wording.

      • 0 avatar
        DenverMike

        @BAFO – Simply allowing diesels to go completely emissions exempt, with totally unfiltered exhaust (until recently, but with corrupt testing) *alone* is enough to completely stack the deck in favour of diesels.

        It’s just one more reason to own a diesel in the EU on top of the subsidies and other advantages.

        While EU officials come just short of admitting they F’d up Royally, no doubt for liability reasons, the man made ecological AND health disaster will continue for decades to come, AND with hell to pay.

        Never mind the millions of cars to crush and replace.

        Nice goin’ I’d say! The EU makes CAFE out to be a dream scenario. But no, the EU set out to do things their own way when when simply following CAFE made too much sense.

        But the EU insane auto industry protectionism, zigging everywhere US regs zag, reared its ugly head, doing more harm/damage to EU citizens, plus an early painful DEATH they CAN look forward to, while isolating the EU market with the highest tariffs and most technical barriers the world has ever seen (except for Australia’s), and of course the sh!ttiest cars of any first world market.

        Again, hell to pay.

      • 0 avatar
        Scoutdude

        Taxing Diesel at a much lower rate, as they did for years is a form of subsidy.

        While exempting the from emissions regulations or requiring much less stringent regulations than gasoline is not a direct subsidy, it was a way to give them an advantage in the market place.

        • 0 avatar
          Big Al from Oz

          Scoutdude,
          It was more a technical barrier on gasoline via emissions and protection via lower diesel tax.

          Pickups (trucks) have an emissions advantage (technical barrier advantage) via FE in the US. This is not much different in promoting larger vehicles versus (as in the EU) diesel powered vehicles.

          I do eead here on TTAC about the demise of the car (sedans), maybe a more equal playing field is needed, ie, pickups face identical regulations as cars and remove the chicken tax.

          • 0 avatar
            Scoutdude

            No pickup trucks don’t have an emissions advantage via FE. The standards are written in grams per mile. So the pickups are actually at a disadvantage due to their lower fuel economy.

        • 0 avatar
          Big Al from Oz

          Scoutdude,
          I do know in France diesel was around 90% the cost of gasoline.

          The EU being the EU made lots of biodiesel with canola, same idea as US corn. This also plays a roll in the EU’s need of diesel.

          Once industries are created and supported artificially (even EVs) the problems they cause economically and ecologically is sometimes not foreseen. I bet corn farming is fncking the environment, but the jobs …… really the votes.

          • 0 avatar
            DenverMike

            @BAFO – Nice of you to try to devert a debate you’re losing, but since you did there’s one huge difference you’re missing. Sedans in the US are being killed off by CUVs and similar, not pickups. Yes there is a chicken tax “protecting” US pickups “in theory”, mostly those by Toyota, Nissan and Honda obviously, but of course you conveniently forgot the EU has a “chicken tax” of its very own, denying EU consumers “very real” US pickups for the past 50+ years, not the subpar Chinese and Indian brands of pickups the US has good chance of missing out on, thankfully.

            But there’s a very good reason the Mahindras, Fotons, Ssangyongs and similar pickups are allowed to thrive in Australia (they don’t!). There’s absolute zero consumer protection, lemon laws etc, inplace Down Undah, same as Africa and others.

            So chicken tax or no, we aren’t missing a darn thing. You’ve yet to come up with a good (or bad) example.

    • 0 avatar
      brandloyalty

      According to what I can determine, they didn’t know about the particulates and the car makers were pressuring governments to subsidize diesels.

  • avatar
    brn

    Could VW be any more blatantly self serving?

  • avatar
    golden2husky

    It is a bit premature to say that electrification is unequivocally green. Where that electricity comes from makes a big difference. Also, I believe that diesel is a byproduct of refining gasoline. Can truckers, trains, and stationary sources use all the fuel that is produced?

    Presently, 10% of the US electrical production is from wind/solar. While that sounds a bit high to me, the numbers were printed by EDF, a highly respected environmental group that always chooses to partner with industry as a first choice before resorting to traditional methods (they never act like the knuckleheads at Greenpeace – an oxymoron if I ever heard it). Now that the US has decided to look to 1955 for inspiration that number might not grow much in the near future. If your electric car is powered by coal fired power plants, it is an automatic fail. You would be better off with a gas powered car from a total emission point of view, not to mention convenience.

    • 0 avatar

      “Also, I believe that diesel is a byproduct of refining gasoline”

      Diesel is one of the fractional distillates you get when you refine crude oil. So each barrel of oil yields x% of Diesel and y% of gasoline (among other stuff) depending on where you got it from.

      Using Diesel or even coal for electricity generation isn’t necessarily catastrophic. In the fine-tuned environment of a power station the efficiently and pollution could be controlled a lot more precisely than in a 10 year old bro-dozer or grandma’s country kitchen.

      • 0 avatar
        stingray65

        The big use of diesel in electricity generation is in places that have unreliable electrical grids, often because they rely too much on unreliable renewables (see South Australia), which means that individual households and businesses have diesel generators that typically have zero emission controls. Thus renewables can actually increase total emissions because they cause greater use of the dirtiest fossil fuel sources as frequently needed backups.

        • 0 avatar
          brandloyalty

          Then the solution to cleaning up emissions is obvious: burn coal wherever possible!

          • 0 avatar
            stingray65

            Coal is the most widely used “backup” fuel for the intermittency problem of renewables, since coal based plants are easiest to spool up when the wind dies or sun goes down. South Australia had a big problem because their natural gas plants couldn’t store a large supply of gas for when the plants needed to spool up during a long period of slack winds, and hence had huge black-outs. Thus renewables actually encourage greater use of coal and diesel, which negates all or most of the environmental benefits.

          • 0 avatar
            brandloyalty

            So demand for energy in Australia is increasing so rapidly that the need for thermal generation to smooth output from renewables is so great that the net generation from thermal generation is actually increasing? Sounds like Australia might want to look at investing in some efficiency improvements.

          • 0 avatar
            Big Al from Oz

            brandloyalty,
            I would love to see nuclear energy used in Australia.

            SA found out the hard way in relation to green energy. The problem now is the rest of the country is paying the price by subsidising jobs etc because power in SA is the Worlds most expensive.

          • 0 avatar
            brandloyalty

            @bafo: “I would love to see nuclear energy used in Australia.

            SA found out the hard way in relation to green energy. The problem now is the rest of the country is paying the price by subsidising jobs etc because power in SA is the Worlds most expensive.”

            Australia will become too hot to inhabit. No sense spending billions on nuclear plants. Save the money for buying land somewhere cooler and for moving expenses.

            How much do they pay for electricity in SA? Which I assume means South Africa.

            Because this chart has very different information:
            http://www.worldatlas.com/articles/electricity-rates-around-the-world.html

  • avatar
    Wheatridger

    What else does anyone expect VW to say or do now? They’ve bet the farm on diesel for two decades. Besides the direct costs of the TDI scandal, they’ve lost valuable time when they were not pursuing hybrids and electrification. Should their dig in their heels now and insist that “Clean Diesel- someday” is the answer? They’d catch flak for that here, too- because it would be stupid, but mostly because this site is infested with sworn VW-haters who never miss an opportunity.

    If they ever get their wish and VW goes the way of SAAB and De Soto, then they’ll complain how we don’t get good dual-shift gearboxes in compact and midsize cars anymore, and there’s no performance hatchback left. Who was it made those?

    • 0 avatar
      Tele Vision

      ‘Dual-clutch’. And I love VW cars. Gasoline-powered ones, that is.

    • 0 avatar
      Felix Hoenikker

      Diesel engines for cars only made economic sense before the free ride on emissions was stopped by most governments in the first world. The problem is that the complex exhaust clean up is just too expensive relative to gasoline engines. It works for large trucks because the costs can be passed on to the customers. VW cheated because they realized that was the only way to sell an affordable diesel in cars and meet emission standards. Without the cheat software, VW could not meet emission targets at the costs that customers were willing to pay.

  • avatar
    Big Al from Oz

    Some of the comments think everyone in the EU drive diesels, many do.

    These people should look at the quanity of distillates that is burnt from the Rust Belt, the NE and SE Canada for vehicles, commercial and domestic heating.

    It would be interesting to see per capita consumption. Personally I would think the US/Canada would lead in distillate consumption.

    Some food for thought.

  • avatar
    dima

    In some countries in Europe Diesel cost less. However in Switzerland I pay less for gas then for diesel. Diesel cost as much as high grade gas.

  • avatar
    brandloyalty

    The comments to this article contain a vast amount of misinformation. Yet it takes very little effort to research the topic instead of just spouting one’s notions.

    This is the best article I found about the story behind diesel engines in Europe:

    http://www.vox.com/platform/amp/2015/10/15/9541789/volkswagen-europe-diesel-pollution

    For example, why Europe switched fron gas to diesel engines to begin with. That diesels were encouraged by more than cheaper fuel: there were lower sales taxes on purchases of diesel cars. So diesels were subsidized. Why European car makers chose to go down the diesel road. Etc. The happy fact for sooty brains is that it can be blamed on the ecotards.

  • avatar
    tomLU86

    Thank you Stingray for your excellent, brief, explanation on unintended consequences.

    There are not free lunches. You want more mobility, more connectivity, more room for your stuff at home and in your vehicle, you’re gonna generate more waste.

    • 0 avatar
      stingray65

      Thank you Tom, and you are absolutely correct. The only way to reduce energy use is to somehow make people poorer, because richer people consume more and consumption always leads to more energy use. Cars, appliances, etc. are 50+% more energy efficient today than 50 years ago, but because we are wealthier we own more cars and appliances, drive more, live in larger houses, go on jet powered vacations, live longer, etc. which in most cases more than offsets the energy efficiency gains. In fact, these energy efficiency gains lead to more consumption because it is so cheap to drive or turn up the home A/C, etc. The widespread adoption of (mostly) Free Market reforms around the world has led to the greatest reduction in human poverty in the history of the world, which we should be celebrating and doing everything to continue, but such growth is seen as negative by many environmentalists.

      • 0 avatar
        brandloyalty

        So describe how much stuff a person needs to own to be happy.

        Beyond having sufficient means for a comfortable life, consumption does not ensure improved quality of life. Lots of people who don’t own luxury yachts have perfectly satisfactory lives. Do some research on Bhutan and their national quality of life.

        • 0 avatar
          stingray65

          So who should decide how much stuff I need to be happy? You, Obama, Sanders, Trump, Kim Jong Un? Of course if history is any guide, these “smart” people mandating the happiness to stuff equation for society will almost certainly decide that they need substantially more stuff than the rest of us to make them happy – after all it is a big job with a lot of stress that only several big castles, yachts, and private jets will help alleviate their burden.

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