VW says combustion car phase-out must be met

A senior Volkswagen executive said on Wednesday that the EU's plan to phase out combustion engine cars in just over 12 years is challenging, but an even more daunting obstacle will be making enough batteries to power the electric cars needed as a result.

The EU countries clinched deals on proposed laws to combat climate change early on Wednesday, including one requiring new cars sold in the EU to emit zero CO 2 by the year 2035.

It would make it impossible to sell internal-combustion engine cars.

The European Commission proposed the package last summer, which aimed at slashing planet-warming emissions this decade, but the deal overnight makes it likely that the proposal will become EU law.

VW Chief Financial Officer Arno Antlitz told Reuters in an interview at the Reuters Automotive Europe conference on Wednesday.

The challenge is not ramping up the car plants. The battery supply chain is the most challenging topic. VW is planning to stop selling combustion engine cars in the region by the target, but some carmakers are behind in the race to develop EVs such as Toyota, which may not meet the target. The Japanese carmaker wouldn't say anything on Wednesday.

Major carmakers have been trying to secure battery cell supplies, but finding enough battery raw materials may be a bigger problem.

Failure to obtain adequate supplies of lithium, nickel, manganese or cobalt could slow the shift to electric vehicles EVs, which could make vehicles more expensive and threaten carmakers' profit margins.

Carlos Tavares, Stellantis CEO, said last month that he expects a shortage of EV batteries to hit the auto industry in 2024 -- 2025, as manufacturers try to ramp up electric vehicle sales while still building new battery factories.

After more than 16 hours of negotiations, the agreement in Luxembourg came to an end, with Italy, Slovakia and other states wanting the phase-out to be delayed to 2040.

Countries backed a compromise that kept the target of 2035 and asked Brussels to assess whether hybrid vehicles could meet the goal in 2026.

The proposal was designed so that as long as it means that the car has no carbon dioxide emissions, any type of car technology such as hybrids or cars running on sustainable fuels could comply with it.

The Commission's 2026 review would look at what technological advances have been made in hybrid cars to see if they can meet the 2035 goal.