Volkswagen's profits fall 40% over US tariffs, missing EU carbon emission targets

Due to US tariffs and penalties for breaching EU carbon emissions limits, Volkswagen's first-quarter profits dropped by as much as 40%. As a result, according to a Bloomberg article, the operating profit for the quarter was €2.8 billion, "significantly" below market estimates, and down from €4.6 billion a year earlier.

Since automobiles manufactured in Mexico account for the majority of the brand's US sales, and its Audi and Porsche brands lack US manufacturing bases, the tariff impact resulted. Nonetheless, there is some good news regarding these two variables.

According to a report by news agency Reuters, the European Commission has now suggested to relax the emission limits in Europe, which the majority of the industry is likely to violate this year and incur fines of billions of euros. Volkswagen and the rest of the industry may have additional time to increase sales of electric vehicles even though the European Parliament has not yet approved this.