Volkswagen AG ($VOW3)

Good morning, and thank you for standing by. Welcome to the Volkswagen Group Q1 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, [indiscernible] Head of Corporate Communication.

Good morning, everyone, and warm welcome to 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 Soolino], Head of Corporate Communications. With us today are Oliver Blumer, our CEO of the Volkswagen Group; and Arno Antlitz, CFO and COO of Volkswagen Group. You should have received the press release, the interim finance report and all other related materials which are 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 e-mail. Now let me hand over to Rolf, who will give you a brief run-through of the next say on one and half hour.

Thank you, Pietro. Good morning to everyone from a very sunny day in [indiscernible] and thank you for joining us today. Let's have a look at our agenda. Oli 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 Oli and Arno for the investor and analyst community, moderated by myself. And after this 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 have language and other cautionary statements on this slide will govern today's presentation. I encourage you to read the display carefully as all forward-looking statements are qualified by this language. In the interest of time, I will not read it to you. And with that, I hand it over to Oli. Oli, 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 2 of a series of new vehicles of the electric urban car family have been launched to the market. The [indiscernible] and yesterday, the ID Polo and books are now open for customer orders. In China, we are switching to a delivery mode with our In China for China strategy, The Beijing Auto Show marked an implete start of our model offensive with locally developed NAVs geared to Chinese customers taste and highly competitive in terms of technologies and costs. . In the U.S. [indiscernible] 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 IDP still is available in the U.S. We decided to end local production on the IDI from April 2026. The Rivian Pusan technology joint venture successfully completed winter testing of the first vehicles equipped with a newly developed software-defined vehicle architecture. Lastly, we continued the implementation of our active portfolio management. Traton reduced the holding in Sinotruck, recording a cash inflow of EUR 0.2 billion in the first quarter, a second step followed in April and the magnitude of EUR 400 million. In addition, Porter has closed an agreement to sell its stake in Bugati Remarts Group, closing of the transaction is contingent on regulatory approvals. Looking at the financial highlights. Deliveries to customers were down 4% in quarter 1, mainly due to the declines in U.S. and China. Nevertheless, we kept our global market share stable. Our order book situation in Europe remains very encouraging. It shows that our new rebuilds 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 EUR 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 EUR 1.75 billion hybrid bond in February. Group operating profit stood at EUR 2.5 billion against the backdrop of increased geopolitical tension and declining [indiscernible] markets as well as, again, significant special effects the achieved return on sales of 3.3% is a solid result. But we must also be clear, our current business model and the changed environment is not generating sufficient returns. Even before special effects, our margin is at 4.3% only. U.S. tariffs are not included in the specialty 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 continued execution across the group while navigating industrial transformation, geopolitical uncertainty and stagnant revenue prospects in our industry, especially in Europe. The lead 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 be confident 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 levels. The most relevant are laid out on the chart, reducing complexity in products, technology and value 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 government. 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 variance. We will focus on these projects that make it tangible different for our customers. Second, technology road map. We will streamline our technological toolbox and implement a much more focused approach with a targeted number of modular platforms, electric electronic architectures, ADA stacks and infotainment systems. Our tech stacks, RVT and [indiscernible] 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 focused 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 faster 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 CEO level. This will allow us to increase the speed in decision-making exploit synergies across the group, improve efficiency and quality, while keeping entrepreneurship and 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 2 key drivers to change. We will build on this. Eighth, group governance, redecision 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 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 will antipartoAXle. 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. And as you have seen, it's 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.

Yes. Thank you, Oliver, and welcome also from my side. In 2026, geopolitical tensions have risen and the competitive environment intensified even further. Again, the spectrum we made further progress. Order intake in Europe and the order book improved our cars are resonating well with our customers. Implementation of our China for China strategy continues with full speed. We reduced group overhead costs by almost EUR 1 billion in a quarter, and we achieved a net cash flow of EUR 2 billion, which is quite substantial for the first quarter, taking into account that we had to refill the product pipelines. Despite this progress, the operating margin, even before special effects standed 4.3% only reflecting the current changes 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 made 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 SZukru program 1.5 years ago, the operating environment has deteriorated significantly. U.S. tariffs have been introduced and are weighing on our earnings by EUR 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 and lasting improvements. This includes a step-up in cost competitiveness of our products, reduced overhead cost, improve 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, a 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 U.S. tariffs, which became effective in April 2025. In China delivers to customers declined 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. North 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. And as a result, the total order book in Europe grew by 15% compared to year-end 2025 to about 1.1 million vehicles. This 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 U.S. Our BV shares stood at 10%, some 40 basis points below the prior year level. BV deliveries in Europe saw robust demand and increased by 12%, the corresponding BV share expanded year-on-year to 18.1%. [indiscernible] continues to ramp up extremely successfully with around 30,000 vehicles delivered in the first quarter underlining strong customer demand in the fast-growing compact better 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 EUR 2 million, down 7% year-on-year or by 2%, excluding the China JV Group sales revenue declined by 2% to EUR 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 EUR 2.5 billion, corresponding to a margin of 3.3%. Our continued product offensive across all brands as well as Singen costs will continue to pay off in our earnings. The results declined mainly due to special effects amounting to EUR 800 million or about 100 basis points margin, specifically at brand Volkswagen and at Traton. EUR 0.5 billion has been booked related to the announced end of the production of the [indiscernible] Chazenuga, around EUR 0.3 billion incurred by restructuring measures at trade as well as to a smaller content for smaller extend brand group core in-addition-topairment 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 EUR 2 billion in Q1 2026 compared to minus EUR 800 million in the prior year quarter. Gross cash flow improved by EUR 2.2 billion year-on-year, mainly due to the operating performance before special items and about EUR 1.1 billion lower tax payments in the quarter. Investments in CapEx and R&D were largely unchanged. And in the absence of further M&A, we recorded a cash inflow of EUR 0.2 billion related to the sale of a stake in Sinotruck by Trade. Working capital movements at minus EUR 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 in particularly in the second half of last year. Automotive net liquidity came in at EUR 4.2 billion at the end of March, almost on par with the year-end 2025 number and on a state level. Net cash flow, EUR 2 billion, more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of EUR 1.75 billion. Moving on to the performance of the division's passenger cars recorded an operating result of EUR 0.3 billion in the first 3 months of 2026, 43% above prior year period. The margin amounted to 4.1%, up by 1.3 percentage points. Commercial Vehicles saw a decline to EUR 40 million, corresponding to an operating margin of 0.4% to 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 EUR 1 billion. Coming to the EBIT bridge, volume price mix had a slightly negative impact of EUR 0.2 billion. Positive pricing partially compensated for negative mix effects. Same rate movement post a tailwind of $0.4 billion, popwer costs were largely flat year-on-year. And [indiscernible] lease fixed costs and others had a positive effect of EUR 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 has been reduced by EUR 0.9 billion. Calling the lower 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 head count was reduced by approximately 15,000. In addition, our departing carriers are pushing ahead with their prospective programs. As a result, head count 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 and group-wide restructuring resulted in a reduction of 29,000 head count since 2023. Let's now turn to the development of the brand groups platforms and the financial services business. Within the passenger car segment, Brand Group Core recorded sales revenue almost on par with last year's Q1 operating result came in at EUR 0.5 billion, EUR 1.5 billion, 38% higher than in the prior year period despite the significant effect related to the end of the IDI production in U.S. of EUR 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 declined by 6%, while sales revenue was flat. EBIT increased by 10% to EUR 0.6 billion compared to a prior year quarter that has been impacted by costs related to U.S. emission regulation and restructuring charges. Porsche Automotive business delivered an operating result of EUR 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 U.S. As if I look at the brands of the Brand Group Core, the operating result was largely driven by SKODA and the component business. on passenger cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the costs related to the ID production stop in the U.S. as well as significant headwinds from U.S. tariffs. SKODA continued their impressive earnings trajectory has improved operating margin by 80 basis points to remarkable value of 8.3%. Excluding the nonoperational effects, the financial performance of Volkswagen brand and Brand Group Core are decent -- before effect of EUR 0.5 billion from the IDFC reported 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 on Volkswagen Tuko agreement and intensified speed and magnitude of the restructuring programs. Backed by increasing volumes carried recorded sales revenue of EUR 0.4 billion, up 64% year-on-year Operating loss was reduced to minus EUR 0.4 billion, benefiting from the implementation of restructuring measures and higher volumes. Powercor at operating results at a stable level despite the ongoing ramp-up of cell production at the Sakia plant and intensionconstruction works at the Valencian St. Thomas plant. Trading 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 volume, sales revenue declined by 5% to EUR 9.8 billion. Operating result came in at EUR 40 million, significantly below the prior year quarter. Low volumes U.S. tariff costs, foreign currency effects and special effects mainly related to the adjustments of the electric mobility projects the sale of string field 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 EUR 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 EUR 0.2 billion to EUR 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 9% lower year-on-year at 0.5 million vehicles. At the same time, Volkswagen Group China is launching its unprecedented model of handsets, 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 EUR 83 million in the first quarter of 2026. We confirm the bandwidth for proportionate or results 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 we confirm today. We continue to expect the operating return on sales in the bands between 4% and 5.5%. And Building on a strong start to the year. We continue to expect automotive net cash flow to the range between EUR 3 billion and EUR 6 billion. Ladies and gentlemen, 6 strategic fields will determine the success of our strategy. The ramp-up of electric vehicles, software, China and North America, robust operating margins in a low growth environment, capital efficiency and cash conversion and the yield governance and reduce complexity. For most of these action experience, we have developed comprehensive plans that now must be implemented consistently and with discipline, at the same time, the economic environment has changed significantly. Since the launch of the Volkswagen Tuko program, which has -- this 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 out of structural and lasting improvements. In terms of cost competitiveness of our product, in terms of overhead cost reduction, and efficiency improvements in our plants and in terms of speed. To be able to teach 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, Oli. Thank you, Arno for the [indiscernible] presentation. Before we move to the Q&A, let me give you some instructions. [Operator Instructions] Let me briefly highlight the next events where you can follow us. We will continue on June 10 with our ESG conference. There will be the Annual Shareholders Meeting on June 18 and then the H1 call on July 24. And with that, I would like to move on to the Q&A session.

And see here the first question coming from Tim Pasafrom 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 tariff CPC and it's also good to learn about here for us about 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. So let me ask it a different way. Do you expect a material net EBITDA improvement from this program from the levels that you are right now is just really enough to counter the headwinds that we're seeing in the market. And given that at again, a reduced 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 to how much you see on that side being possible? And on the capacity side, is it to see that also this comes out of Europe. And 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 comp is quite strong. So 2 questions. Should we expect normal seasonality to do from what you can tell right now, i.e., that it should be stronger underlying on earnings in terms of cash in Q1. And 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 out that you already foresee today that prevent you maybe possibly a higher than previously guided for figure?

Yes, Tim. And let me start with your -- 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 being 4% and 5.5%. And this, we expect a net EBIT improvement, and all this, despite of all the headwinds we have faced geopolitically, the regulations, the market and the expenditures and transformation. And this -- we are able -- because of all the work we have done during the last years. And so year-to-year, we expect a better EBIT. Then in terms of models, variants and then capacities. We the program. we have launched. We want to reduce our models and variance with a double-digit percentage and also the options where the idea is more to the bundle offers. And so making it easier at the end also for our customers and more 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 EUR 1 million in China in several plants and also leading to component plans, then EUR 1 million in Europe. There, for example, we closed Brussels, Russia, rest now turning to a technology and innovation campus, then Osnabruck is underway. And in Volkswagen and Audi, we adapted technological capacity. So 1 plus 1 we are on EUR 10 million. And we think that 9 million will be reasonable percentage of the last 5 years has been on this level. So last week, we announced another 500,000 in China. And we are aiming now for reducing capacity in Germany, Europe with another 500,000 to come to EUR 9 million. And we will bring down our cost level to this EUR 9 million and aiming for more profitability. Yes .

Tim, thanks for the question. And I would like to add on what Oliver just said. All these measures you mentioned. Look, we -- Oliver laid out or we laid out our strategic margin target of 8% to 10% some months ago. And obviously, this transformation program, we just lay out is the way in steps to achieve this margin target at the end of this decade. And we now fill the gap from where we currently trade where our current margin target is what the headwinds are and still be able to come up to the 8% to 10%. And in terms of cash flow, yes, we are quite pleased with the with strong cash flow in Q1, given the seasonality of our business, normally in Q1, when we filled up the order bank. But to be very transparent, it's about EUR 1 billion coming from from the operating business before special effects, EUR 1 billion, slightly less coming from tax versus -- tax payment versus last year. And last but at least, we were very disciplined on M&A, which is another EUR 1 billion. And so we have to take into account that there's a slight seasonality. As you know, we were successful in the winter test where we made good progress in our JV with Rivian. But as you also know, the successful winter test, we will invest in another EUR 1 billion in -- about EUR 1 billion, 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 call for last year that the working capital measures are really well in place. The whole company is focused on cash flow. You know we were like for years and years, we focused on EBIT. Now we really see a cultural change in the company. People are fighting for cash flow or net liquidity for better working capital -- so this is really now implemented in everybody's minds and gives us confidence that we will achieve the EUR 3 billion to EUR 6 billion this year. Obviously, it's much too early to change the guidance. about the building [indiscernible] here. Since cost work, I would like to remember your overhead cost reduction of almost EUR 1 billion in 1 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, Tim. And we will continue with Patrick Humel from UBS.

Thank you, Rolf. I would just like to follow up, Oli, please, regarding your comments about the cost and capacity alignment I think the point brought up was also about whether you can get ahead of the wave, so to say, or you remain reactive to safeguard margins rather than driving a margin recovery. So can I ask a bit more precisely what kind of time line we have to expect here for the exercise to cut the capacity by another EUR 1 million. I guess, the focus here is on that EUR 0.5 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. And 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 softening of global SAAR? Is it maybe an acceleration of the commodity inflation in 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.

Patrick. In terms of cost reduction, as you know, 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 which 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 billion are already done. In Germany, we announced the EUR 1 million, which is on a good way. We will complete up to 2028, for example, the adaption we have done already in Audi [indiscernible] and the adoption we are doing at Volkswagen. And a further 500,000 will be in the program by 2030. Now that depends a bit what we do have in the production lines right now, what opportunities we have to switch. But most importantly is the reduction of our plant costs. That's the main target. And last year, we were able to reduce our plant cost of over 20%. And that is ongoing and even more. And there's no argument not being able, working on the same cost level like competitors in Europe. And there, especially our plants in Eastern and Western Europe are helping.

Yes, Patrick, I would like to give you some flavor, perhaps a little bit more on the details on fuel and on other costs, we expect EUR 20 million to EUR 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 car to the customers, specifically for the premium brands, I think Porsche fund good rate there. On the raw material side, we are hedged most of it -- of course, you never hedge 100%, but we have some good hedgings, so -- and also on the order intake, I just said I just said that the order intake is also slightly increased. So what we cannot rule out second round effects both in terms of global demand and on material costs. Of course, this is a risk, and we cannot allow that, but this is another motivation to increase our efforts on the cost side on the cash flow side to compensate for that. So this is where we stand currently.

And we will continue now with Mike Tyndall from HSBC. Mike, please go ahead.

You can hear me? Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the EUR 9 million of capacity, which is broadly where we are in current sales, but we've got growth in North America and the global South, and if I knock on growth in China. And is there an implication here that potentially Europe gets smaller from a volume perspective? Or am I just trying to particular numbers around too much. And then the other question is, your components business did a 9% margin in Q1. I mean, compared to other suppliers, that's a very rich margin, and I know that 1 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 .

Mike, let me start with your first question and then I hand over to Tan with a component question. to make it very clear. The EUR 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. But what we are doing here is, on the 1 hand side, to adapt our cost structure for 9 million cars in terms of a risk scenario. What could happen if. And on the other side, we are working on a more ambitious sales planning. And this leads us to bring down our breakeven situation and making our financial situation are more robust. So that's behind this is planning. And 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. We would be better there will be a positive effect in terms of our margin situation and EBIT at the end.

I can cover your second question. First and foremost, the components 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 customers, which is in gearboxes, Saskiaengine plant and branchlike steering and at components. And so all the cost efforts we see so far, for example, I said, since 2023, 15,000 reductions in Volkswagen AG is always also happening in the components business because they have 3 big plants there, also the improvement in overhead costs. And what you can see now here is we haven't basically changed the pricing logic between the brand group and the brands and the components business, and we kept basically the logic of the prices stable. And what you see now is, basically, we measure the improvement of the Volkswagen turnaround of the Volkswagen project in that is working in the component. But nevertheless, we need more contributions also from our components business. The competition is coming to Europe and our component business, for example, is also producing electric engines, producing batteries for the material and we need also to to significantly step up the improvements there in order to be competitive for our cars versus competition.

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

Tom Narayan, RBC. First one, Arnaud, on the '26 guidance I noticed there wasn't any booking for the benefit on the EPA. The Supreme Court ruling in the U.S. The competitors have booked pretty large fits there in Q1. So I was just curious why you guys didn't book that. And then I know you a lot of hedging from 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. And then probably on the Chinese partnerships, is there any potential for the U.S.? I know it's a politically maybe sensitive topic, but what do you see out of -- as that as a possibility of Chinese relationships in the U.S.

Tom, I'll start with the second question in terms of -- I assume you're referring to the EBIT bridge, right? That is that is basically positive. Yes, it's a little bit conintuitive. It shows that we have some very good hedging there in place. But if you I would say -- and it's also versus last year, it was -- the EBIT register the effect versus last year. And last year, I think it was negative first quarter by minus 300 something also minus 400, so it's basically a reversal of some of the effects, but we don't expect that the positive effect throughout the year to stay here. I mean we have to face realities that major guaranties are weak. We have a lot of exports in other 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. And as you know, hedges don't last forever, and the next hedges will be more expensive. So yes, it's a headwind. It's, I would say, a temporary effect positive, but it shouldn't turn significantly negative throughout the year. And in terms of APA 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 all of you with that topic potentially in Q2.

Coming to your second question in terms of Chinese partnerships. First of all, 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 2 ecosystems. One is China, also with our partnerships there, [indiscernible] Verizon Robotics. We can see already the first results with our first [indiscernible] architecture. We presented at the end of last year and the first cars are entering into the market right now. And this is a blueprint in terms of architecture also for our Rivian joint venture. In the Western world, we are -- have a distance of around 1 year to 1.5 years. comparing with our Chinese activities. And this brings us in the situation to have a clear comparison in terms of speed and content what we have achieved in China. But we are very happy about the progress I mentioned with our Rivian joint venture. Coming back to the 2 ecosystems. What we are doing in China right now will help us also for the Southern hemisphere, we can localize our local platforms from China. The China main platform, bringing this to a global main satcom, for example, for South America, and we have huge export opportunities now from China. -- being on the competitive technological level, but also a cost competitive with the Chinese competitors. And this helps us to enter Southeast Asia, for example, Middle East, India, but at the end also Africa. And in the Western Hemisphere, this footprint from China helps us to speed up and build the right offer for the Western world, where we are restricted because of regulations to use Chinese software. And therefore, we have made a clear, but 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.

And we move on to the next question, which comes from Jose Asumendi from JPMorgan.

A couple of questions. Oli, can you speak a bit about your tech stack that you have in China? Thank you very much for the Capital Markets Day recently paid. I'd like to understand a bit better which part of that take back and know how you're building in China, you can actually bring back to Europe or maybe which suppliers, you think you could collaborate closer in Europe to improve the cost competitiveness and bring that tech stack into European businesses. Clearly, the closing 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 or SAC or [indiscernible] and second question, no, 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 light of the improved earnings in the first quarter?

Yes, 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. And all these measures, and that's a great opportunity. We can implement right now on our Western platform, which is already -- has already been kicked off. And on the other side, all activities we are doing there also with our component business. Arnold 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 our 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 was great. We got the by far biggest media feedback and the reach of all companies, including the Chinese companies there in China, and 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 the risk or -- we are now in good negotiations for [indiscernible] for example, with defense companies. That's 1 approach. And the other approach, we also will check if there are opportunities for our Chinese cars in Europe or for opening this for partnering maybe this with our partners. We do have them in China, and we haven't taken a decision, but the solution field is flexible. And 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. And the second option at the end and that the worst and the most costly 1 is to close the plant, but we will go on this topic very, very openly.

Yes. In terms of margin, we expect and we need a step up in [indiscernible] Our guidance is 4% to 5.5%. We currently reported at 3.3%, and we want to achieve a reported margin within that guideline. And we have also some promising results. Look at brand [indiscernible]. Yes, they are more closer to [indiscernible] currently. But if you take into account the write-off for the IDI in U.S., they are 3.5% currently running. And we have a typical seasonality in our business at Q3 and sorry, Q2 and specifically Q4 are normally stronger than the first quarter. And it's also a good chance for Oli. Oli 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. And thus, but not least, we really drive forward the restructuring methods throughout the whole group. You saw the fixed cost improvement, first quarter $1 billion. And obviously, we want to continue that. That should give also more tailwind. We have a little bit cautious. We will ramp up the BEVs in the second half of the year, which are margin dilutive. And yes, there might be some economic headwinds from the conflict in the Middle East. But all in all, taking this into account, we still are fully underway to achieve our guidance of 4% to 5.5% and confirm the guidance.

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

Yes. Thank you, and good morning, team. The first question that I have that relates to the impact on consumer demand coming from the higher oil price. Since you are the largest -- one of the largest car makers of the world, clearly, the market share [indiscernible] in Europe, I think you can maybe best answer this question. And it's not just about Q1 average, is more about the latest trends that you have seen since the oil price spike. So what shift do you see in terms of demerger from ICE to BAF down-trading assessments. Differences is premium versus mass and also between diesel and gasoline. So that's a question of number one. The number 2 is a little bit following up to that, what also Jose has asked on if you are prepared to share plans with Chinese OEMs. This seems to become kind of industry trends. So we heard that also Stellantis wants to do that. . So it seems that several carmakers are thinking about that. And 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 the way the industry is opening up the market of the Chinese competition opening up to a world and cheap clothing potentially. So is the outlook from here that Europe can just get worse. The competition is feeding up and that the incumbents lose more market share.

I start with we had just like 2 days ago, the discussion what is your department called -- economic [indiscernible] they showed us all the risks, and there some really great scenarios on how long the conflict as -- what has been the full prices in different scenarios. And yes, there might be -- they have been coming up in terms of overall market demand -- but you ask -- and then put another they will include that in the total market guidance. But what we currently see with in 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. And what we specifically saw January, February, we saw a little bit more pressure on those civil values of the BBs and that turned in March, which is really positive. And in total, we see more, I would say, demand for BVs or interest in BVs, lets me put it that way, although [indiscernible] order intake both increased. Yes, this is where we currently stand. Of course, we cannot rule out that they are headwinds. We prepare for them on the cost side. We are cautious on capacity, what Oliver said. We -- and we don't want to end up this being like on the inventory side, above ideal stock, we carefully monitor that. But we don't see a major effect so far in Europe .

And just a quick follow-up. When you talk about rising best 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 any more, but you also lose profitable ICE car. So what's the net equation is that it or negative as best demand is increasing.

No, this is a great question. Currently, we are on the balance -- that means we have a margin dilution on the BV side, but we still expect full year to book EUR 400 million to EUR 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. But net-net, if we were to significantly increase our bet share, that would be a margin dilution going forward, which is what we always said, structurally, we must decide -- we must distinguish between 3, I would say, technology platforms. one is MAB platform. For example, in our volume brand. We run currently ID3, ID4, and now with the arrival of the ID2 family comes in MAB plus, which which has an LFP battery seltopec, next generation for electric trains. So there the margin dilution effect is still there, but it's smaller. The IDI [indiscernible] is much closer to the TROC. And -- so this is -- we have to take into account. But until we implement our next-generation SSP platform, the margin dilution effect will continue smaller than today, but it will continue.

Let me come to your second question, situation in Europe. We expect a tougher competition in the next years, especially from the Chinese current manufacturers. But we see ourselves very well prepared. First of all, we have a great product momentum. Order intake is increasing, both on ICE and BEV. We are, by far, a market leader for both. And the new products we kicked off 3 years ago are now entering into the market. The Polo and [indiscernible] about others also in the bet segments, and then Ana mentioned also the product momentum at Audi with SRS models. . So first we are counting on our own strength, while keeping with our cost initiatives, at the end more profit visit our product. Second approaches, what we will check is once on China products could fit for the European markets, especially in segments where we are not present right now. But 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 owned Chinese products, which are very attractive to the customers. And third approaches at the end for capacities check if we could share capacities with Chinese partners. But a is very clear. First approach is what we are doing right now in our fabric is being in contact with the defense industry that it'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 make in Europe companies who made business here in Europe. Should have a European footprint. And therefore, we are in contact also with the European Commission, the made in Europe initiatives making progress. And so I think this will bring the market situation and the competition in Europe to a more fair trade situation. And that's also important because we are placed in other regions of the world. These restrictions and this is more a European interest policy. It's not protection. But I think we need it and to the companies who are investing in Europe can benefit.

Okay. Great. Also as the German citizen, I keep the finger crossed for you that you make all these challenges, all the best .

And we continue with Michael Punzet from DZ Bank.

Yes, I have 1 question regarding a report of [indiscernible] mentioning that you have to increase your liquidity. So far, you gave us a target of roughly 10% of revenue. Can you give us any indication for the new target? And maybe also the topics in which you need to increase net liquidity and if this has any impact on upcoming dividend payment yes .

Yes, Michael. Look, I'll give a little bit of color. Overall, we want to make sure that in the transformation, we have a really strong balance sheet. And the rating is really important for us. And so -- so this is not the only reason, but another reason why we are focused on improving our result on improving our net cash flow. So net liquidity, we said always at least 10% of revenue. But if you look into the industry, others have an even stronger balance sheet. And going forward, it is clear that we want to improve our operating result and the cash conversion rate with more discipline and being more disciplined and then on R&D, and that's driving also our cash conversion rate. And so 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 it's a question how can -- what are potential ways to use that cash flow. And one net cash flow is obviously that strengthen our net liquidity position and our balance sheet. Another possibility is or means is let our shareholders participate on a much stronger Volkswagen. And third, we have also hybrid bonds. We look into potentials there. And this is why we said 10% of revenue is the minimum we want to keep. And with a stronger Volkswagen going forward in an uncertain world, we potentially also want to increase that.

Okay. Maybe a short follow-up. You mentioned the sale of [indiscernible] will this have also no impact on you in as net cash and all the 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. I mean, yesterday portion said that we'll book in and also the cash inflow from the deal will not have any impact on the automotive division. Is it the same as a level.

This positive effect on net cash flow at Porsche will be since we are fully consolidated also positive in the cash flow and group level. .

And we continue with Christian Frenes, Goldman Sachs. Christian, please go ahead.

Goldman Sachs. Most of my questions have been answered. Just I 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 and you mentioned, I think, the minimum pricing discussions between the EU and China. How do we -- how do you expect pricing to evolve throughout the rest of the year -- in this year? And what impact do you think the minimum pricing discussions will have on that? And 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 sell a lot of the impressive products you have coming and also your strategy and targets. But could you comment a little bit about your expectations for China pricing again for the remainder of the year this year?

Thanks for the question. Obviously, good cannot make up public discussions on what prices we plan and what we expect. What we can say and what we're prepared for, the competition is clearly increasing. 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 a very strong movement based on our really good product substance, and our portfolio, you saw pricing was even slightly positive in the first quarter with EUR 0.2 billion. Of course, we have to take into account the negative mix, basically from the ramp-up of the BVs. In total, we expect more pressure, but this is also why we compensate on the cost side on in order to be prepared on the cost level. Now we have great products, we have good technology, and we have to have the competitive cost base. And this is what we work on. .

Yes. And maybe to China, we have seen during the last 2 years, an average decline of 15% of pricing. And we don't expect that the pricing level will come back where it has been years ago. So margin improvement will come only over tough cost work. And this process has already been kicked off. We have shown you a cost improvement of 40% to 50% sending our platforms in China, and we will continue to do so, yes. And the same what we are doing there is our task in Europe to being more competitive in terms of pricing while having the opportunity in improving margin. .

And 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. But if you -- when would you expect to have more clarity on 2027 regarding these issues?

Yes. Today, our supply chain is not affected. And also in terms of raw materials, for example, away we are hedging. What would it mean for '27 is too early to predict. It depends on the conflict. And 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. .

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

It's about possible divestments. Thinking about Evolent stake or a floating [indiscernible] Are you also thinking of a divesture of Duccati or Lamborgini IPO .

Now we were very transparent about our plans for [indiscernible], and we are pretty confident that this is a really very good process and progressing well. 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 and -- but these are the topics we decided on so far. We look at various alternatives for Powerco. We opened our capital structure there. But Frank, please have understanding for that. We can only talk about topics like this once we have decided on.

But there's a clear intention that's part of our program for the next steps of transformation to reorden our investment portfolio, that's very clear to reduce complexity. And that, for example, why we kicked off last year, the Bugati deal at Porsche as 1 example. Many others, we are working currently, but we won't go into details speculations, some software [indiscernible]. But the activities are placed, and we have clear priorities what we'll tackle first and then step to step up step. But overall, reducing complexity is our goal.

It's a good point. 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, and so we need to reduce that complexity. There are 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. Thank you. .

Thank you, Frank. And we move on to Steven [indiscernible]

[indiscernible] handlebar interview last week, we also talk about reducing factor costs, which I think was well for [indiscernible] and you want to reduce that to EUR 3,000 in Europe. Could you comment on what the situation looks when you compare plants across Europe and how they also then compare to the situation in China and in other locations. Just give us some kind of [indiscernible] .

Yes. First of all, this hasn't been an interview in [indiscernible] but talking about the figures, that's the direction we want to go to. And we are very confident that we have turned to the right direction right now. Now the first results from having reduced our plant costs in Germany. -- over 20% last year. It is massive. We haven't achieved this over the last 10 or 20 years, and this in 1 year 20% and that's not the end. Today, we can say that our plants in Eastern and the Western Europe are competitive to all the others, reacting in Europe. And therefore, we decided, for example, to bundle our Urban part family in Spain and the IDO1 to come in Portugal on a very competitive plant level. In Germany, we still have work ahead but also very clear measures to reduce, and so a plant cost level per car of around EUR 3,000 is a feasible level comparing to the competition. In China, the level of plant cost is even lower. That has clear because of labor costs and energy and everything around, but this you can't compare with Europe -- and for us, it's important to compare our situation in the different regions of the world. And 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 and where we have also a strong footprint in South America, we are working on a competitive level. And that's what we have to do and which was written there. It's an average like a go to go to .

I just got a question, a follow-up question on my remark on the number of entities and layers. And I must confirm we are -- we are 100% convinced that we are the best owner of Lamborghini. Lamborghini is an integral part of Brand Group progressive. There's a lot of synergies between the 3 brands there. And so that's not -- hopefully, you didn't get it wrong. So we clearly stick to the current setup in the brand grow progressive, including Lamborghini right now. .

Thank you, Arno, for the clarification. There is we have handing [indiscernible] from Barclays actually has difficulties with asking the question. So he brought me an e-mail. And 2 questions. One is on, I think Oli can you update us on U.S. localization. Is there a chance that localization would take out into considerations -- and if we would localize would that be compensated within the EUR 160 billion investment budget for '26 to 2030, so in the current planning round. And the second Arno question is for Arnaud update on Evolent. There are obviously short listed PE names. If you would like to comment on that. and capital allocation from proceeds of the potential sale of Evolent 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.

Yes. Let me start with the first question in terms of U.S. localization. With the Scout plant, we have great opportunities, making good progress. We are in line with our milestones. -- and the capacity also provides opportunities for other brands of Volkswagen Group. And but we are not at the point today to communicate what are the concrete plans in terms of more capacities in the U.S. we are still in contact with the different states. But at the end, this depends in terms also support we are getting there, and the stick to my position. We can't do both paying high tariffs on the 1 hand side and on the other side, heavily invest in new capacities. And so there are some states interested and in our investment. But at the end, the balance in between support and investment is important. And so we plan step by step. -- first now ramping up the Scout capacities, maybe using them for other brands of Volkswagen Group and then thinking due to the next step. But our goal is clear. to improve the local footprint in the U.S., have in the U.S. as an opportunity market for the future.

And regarding [indiscernible] Needless to say, this is a great company with a strong position in the market continuing 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, and the process is very well underway. The potential process are not included in the cash flow. This is what we always made very clear. And we also have understanding that we decide on the dividend towards the end of the year, taking all the factors into account and is decided on by the group Board and Management and Supervisory Board and it is too early to comment on now specificities on the dividend.

Thank you, Arnaud. 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.

Yes. So a slightly difficult question again, and I don't like the short-term ones. But [indiscernible] conversation in relation to [indiscernible] question earlier with regard to IAA, the market largely ignored that -- and by the way, I 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, as you know, are going to run probably as long as most of you. But with relation to policy and IA specifically. First question, how do you see the IAA impacting on the potential fleet sales for Chinese OEMs how restrictive do you think the IAA made in Europe policy might be? I suspect you'll focus that I'd love to understand that better because I think there is some potential there. And then secondly, same question, but with relation to other policy, we're seeing some German government now looking to subsidize industrial electricity you've seen the EU protecting the steel industry much more carefully. To what degree should we hope -- I always want to hop and I'm always [indiscernible] But to what degree should we hope that the EU or the European governments will actually start to try to finally, finally start to help this industry. So you understand where my question is coming from.

Yes. And in terms of the Main Europe policy in -- from the European Commission, it hasn't been already fixed completely. But -- it is a European interest politic, which we support. And this starts with a European production footprint. But then also there different levels for components. And therefore, this has to be carefully balanced -- and I also agree that at the end, the different regions would be comparable. What we see in other regions which happened in Europe, and then you have a fair competition. And 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. And we feel ourselves 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 an important point in there, I think it should be important the focus also on the most important industries. For example, the battery industry right now in Germany, for example, is excluded from the energy regulations. And that's for me a wrong decision. They have to expand the energy regulations also for battery brands because the battery industry is a crucial 1 for Germany and Europe. And this has to be supported. It's battery manufacturing or production is high energy entities. And therefore, I think they have to adapt the regulations. That's only 1 example. And at the end, energy accounts 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. So the customer is calculating and switching to battery electric vehicles. And there, we still have something to do, especially in Germany.

Thank you all actually for a very lively discussion, a lot to ask, a lot of debate. Clearly, you see that Volkswagen is moving ahead. This concludes the session for the investor and analyst call for today. If anything was left unanswered, yes, please contact the IR team here in Rosberg. They are really happy that we're keeping them employed. And 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.