Okay. I hope everyone can hear me loud and clear. Warm welcome to all of you to our today's H1 conference call. It's a combined investor, analyst and media call, which is moderated by Nicole Mommsen, our Head of Group Communications; and myself Rolf Woller. I'm heading the Treasury and IR activities at Volkswagen. Together with us here in Wolfsburg is our CFO, Arno Antlitz. And before we start I have to make some housekeeping remarks. We have already published and you should have already received the press release, our interim report for the half year of 2022, and all related IR materials. If you have not received them you can find them on our website. How will we proceed today? After Arno's presentation, we will host first a Q&A session for the investor and analyst community, followed then by a Q&A session for our media community. The latter is moderated by Nicole. Before I hand over to Arno, let me quickly draw your attention to the disclaimer in the presentation, which is on Page 3. I will not read it to you, and therefore ask you kindly to read it carefully yourself. And with that I hand it over to Arno, who guides us through the deck. Arno, the floor is yours.

Yes. Thank you, Rolf. Good morning from my side and welcome everyone to our today's first half 2022 combined investor, analyst and media call. Within the next 30 minutes, I will take you through the major milestones we've achieved in H1 and achievements in our financial performance and robustness. The war in Ukraine has been going on now for almost half a year and we always should be aware of this extraordinary situation. It not only continues to challenge our business but also the human tragedy continues. Before I start, let me make some opening remarks around last week's decision taken by our Supervisory Board. I sincerely want to thank Herbert Diess for his outstanding commitment and contribution to Volkswagen's transformation over the past six years with NEW AUTO being clearly defined strategy for the challenges ahead. Herbert and myself were closely together to drive this process. During his leadership significant process – progress across a number of important strategic frontiers were made. With our new group steering model, we systematically have aligned the group focus towards the future profit pools of the mobility industry in the future including batteries, software and mobility services. We also formed strong brand groups, strengthened entrepreneurial freedom and responsibilities. I'm convinced that thanks to this setup we can continue to transform the group from a position of strength. This is illustrated again by the results of the second quarter, where we performed remarkably well in a demanding environment. With Oliver Blume assuming CEO position for Volkswagen Group starting from September onwards, I'm very much looking forward to continuing the transformation journey we have begun together with him. Driving the transformation forward consequently means that we continue to execute our plan for a potential IPO of Porsche later in this year. The preparation is continuing with a decision expected late summer, now with even more emphasis than before. The potential IPO would give us additional financial flexibility to accelerate our strategy and emerge as one of the leading companies from this fundamental transformation in the auto industry. Oliver Blume in his capacity as CEO of both companies Volkswagen and Porsche stands for an independent Porsche with access to Volkswagen synergies. He has an excellent track record as CEO of Porsche AG. Porsche is strategically, technologically, financially and culturally well positioned to be a leader of the sustainable transformation in the automotive industry. Lastly, I fully understand your interest on the future working mode. How exactly Oliver and I will work together in my capacity as COO is something we will talk about in more detail in the coming weeks. And Oliver, since many years, and I'm very much is looking forward to working even closer together with him in the future. But now let's switch over to the H1 performance. In summary, solid operating results again showed the robustness and resilience of our business model in a challenging environment. The supply chain disruptions related to wiring harness have been taken care of and the improved supply of semiconductors should bode well for our H2 sales ambitious. Positive fair value measurements on hedging instruments outside hedge accounting burdened our result in Q2 by about minus €2.4 billion and the positive from Q1 declined to €0.9 billion in H1. Including this small positive effect, we reported an operating result of €13.2 billion and an operating margin at 10% for the first half of the year. Thanks to our robust net liquidity position, we are able to consequently continue our transformation including required investments towards electromobility and digitalization. Let's have a brief look at our unit sales in Q2. The demand, especially for well-equipped cars continued and led to a strong product mix. However, sales in the second quarter were heavily impacted by the semi and wiring harness shortage, as well as COVID-related measures in China. The situation stabilized in May and we saw a clear upward trend in June with more than 800,000 deliveries worldwide. In China, we recorded an increase of deliveries in June. They were up 27% year-on-year and we regained market share. We are moving in the right direction. In Q2, we saw 118,000 BEVs, reflecting a total share of 6%. The shortage of wiring harness hit our electric cars especially hard, but we are all set for higher BEV volumes in the second half of the year. Especially in Western Europe, we continued to sit on a strong order bank. BEV order intake is in Western Europe up 40% in H1 versus prior year. Demand for ID.5 is above our expectation and I.D. BUZZ had great customer response. From where we are now, we anticipate a constantly growing BEV volume and share in the remaining quarters of 2022. The next chart provides an overview of our already retooled MEB plants in major regions. Based on a better supply of parts, we operate now three shifts in Zwickau and ramping up our Emden plant. The ramp-up of our retooled plants, Emden, Hanover and Chattanooga will support volumes. The global production footprint will help and new exciting models will be launched. Especially in the US, we see huge opportunities for BEVs and we will intensify our activities in the future, with the revival of the Scout brand. PowerCo, established our European battery center with the group's first own cell factory at the Salzgitter site, which is expected to begin production in 2025, a further milestone in our electrification road map. With the unified cell and the standard factory, we are able to set new industry standards. The plants are highly flexible with regards to cell chemistry. We are convinced that PowerCo will have one of the most standardized and most cost-efficient cell factory networks globally. Let us move from strategy implementation now to our financial performance. Vehicle sales for Volkswagen Group came in at €4 million in H1 2022, around 650,000 units less than in H1 2021, caused by an ongoing limited vehicle availability. Despite lower sales, sales revenues amounted to €132 billion, including around €5 billion of the first consolidation of Navistar. The operating result before special items came in at €13.2 billion. The operating margin stands at 10%. This demonstrates impressively the robustness of our group in a challenging environment. The result still contains a cumulative positive effect of around €900 million from positive fair value measurements on hedging instruments outside hedge accounting. But this is a significantly less than the €3.2 billion as of the end of the first quarter. Our financial result came in around €1.2 billion in H1. This is up €1.4 billion year-on-year, benefiting mainly from slightly higher equity contributions from our Chinese joint ventures and an improvement of our interest result. Clean net cash flow amounted to almost €6 billion and reported net cash flow came in at €2.3 billion. The difference relates to diesel payments of €0.9 billion and M&A of €2.6 billion. Thereof €1.7 billion are related to the Europcar settlement in Q2. Despite the strong operating performance, net cash flow of the Automotive Division is somewhat muted due to the working capital being burdened by higher inventories. We built up goods in transit, especially to our overseas markets and work in process in anticipation of higher sales volume in H2. Net liquidity in Automotive Division amounts to €28 billion, slightly down versus Q1, but still up year-on-year 2021. So far, only around €500 million of Chinese dividends were declared and paid in H1, representing a significant lower amount compared to the prior year period. The remaining declaration and payments of around €2 billion are expected for H2. Coming now to the performance of our divisions. Passenger Cars delivered very solid €9.3 billion operating result and a margin of 10.4% before special items. Our Commercial Vehicles came in at around €600 million and a margin of 3.5%. H1 was impacted by the production stop at MAN, due to the war in the Ukraine. And this was partly compensated by Navistar, which contributed €155 million in H1. The Financial Services Division continued with their strong performance also in Q2 and recorded a profit of €3.1 billion. Now, moving to our Passenger Car EBIT bridge. The strong results before special items of €9.3 billion for the Passenger Cars business was driven by a positive mix effect from well-equipped cars and favorable pricing. This more than offsetted the negative impact from lower volumes. As already mentioned earlier, the bucket exchange rates and derivatives reversed significantly and resulted year-on-year even [ph] into a burden of €0.5 billion. Product costs deteriorated further to minus €1.5 billion due to an increasing raw material costs. We expect this position to increase even further in the second half. It could total more than €5 billion by the end of this year. The position in fixed costs and others had a negative effect of minus €300 million from higher R&D, while our fixed cost program contributing to the resilience of our business. After special items, the result came in at €9 billion, including minus €360 million for the diesel-related costs. Let's now have a brief look at our newly established brand group reporting within the Passenger Car business. A closer look into the volume group represents -- paint an encouraging picture. The margin of volume group improved from 3.6% in Q1 to 6.1% in Q2, resulting in a 5% margin for the full half year. Brand Volkswagen performed quite well in H1, with a margin of 5.6%. Contributions to this major step towards our 6% margin target came from an excellent performance of the region North and South America, favorable mix and fixed cost discipline. ŠKODA's margin is with 6.6% on par with Q1, which is a decent performance as they are consolidating our Russian business and they're ramping up their factory and our business in India. Looking at SEAT, a restructuring program has been initiated, leading to an extraordinary burden of minus €244 million in June. Excluding that, the performance is quite solid, which is mainly due to the success of the CUPRA brand. Our premium brands are well underway. Audi with a very solid margin of 16.6% in H1, benefiting both from strong mix and pricing, as well as positive effects from derivatives. Lamborghini and Bentley performed strongly. Synergies within the premium group are clearly materializing. Premium brand group combined achieved almost stable revenues and a solid operating result of almost €5 billion. Q2 margins stayed well within the strategic corridor due to €7.9 billion negative effect from hedging of the disposition contributed with €1.5 billion in Q1. Porsche is well underway, with 149,000 units sold in H1 2022, showing impressive return on sales of almost 20% in H1 in its automotive business. Deliveries in Europe increased, while other markets, especially China were still impacted by the semi and wiring harness shortages. Posting a 20% operating margin in its automotive business is exceptional and shows what the business and the Porsche team is capable of. Yet the results were supported by price and mix as well as ForEx effects. CARIAD sales revenue improved by 36%, driven by license revenues with brand groups, reflecting the ramp-up of MEB cars. The negative operating result is in the ramp-up phase, a consequence of our established business model. Just for a reminder, CARIAD is developing the group-wide software architecture, financing the upfront investments incurred and receives license fees from the brands for the use of their software for every car sold. So far the details for our Passenger Car business. Coming now to our Commercial Vehicle business. TRATON unit sales are up 9%, supported by the Navistar consolidation. We saw a significant impact on operating results from supply shortages and production stops at MAN. Lower capacity utilization and higher costs for raw materials were partially compensated by Navistar consolidation. Net cash flow was impacted mainly by payments related to legal proceedings, €1.4 billion, and working capital improvements. For the full year, we are adapting our outlook for TRATON's operating margin to a range of 4% to 5%. Our Financial Services business again came in strong. It continued to benefit, especially from growing used car business and demand better residual values and lower risk costs. Operating profit margin of 30.4% in H1 remains on the high level already shown in Q1. For full year 2022 we are raising our forecast for the Financial Services Division from €4.5 billion operating profit to €5 billion. Looking at China. Our joint ventures had a decent start into the year before the COVID-related lockdowns caused distortions in the supply chain, production, logistics and sales, especially at our SAIC joint venture. In total 1.47 million vehicles have been delivered to Chinese customers; thereof 36,000 BEVs. Despite the lockdown, the proportionate operating profit in Q2 came in at €578 million. Since June, a strong catch-up has now fully kicked in and recovery is accelerating. Insurance sales outperformed the market allowing us for regaining market share. Let's now come to the outlook for 2022. And to make it short, we largely confirm our outlook for March 15 and are in certain aspects even more constructive. We expect our deliveries to customers to stay between 5% and 10% above prior year, but now be more likely at the lower end of this range for the full year. Net revenue is likely to reach the upper end of the range of 8% to 13% due to continued positive mix effects. We expect our operating margin guidance still between 7% and 8.5%. However, given the strong H1 performance and the encouraging outlook, we are confident to clearly end up at the upper end of this range. We expect mix to slightly normalize as semi supply eases and raw material costs starting to roll over in the second half. Reported net cash flow is expected to stay at the same level as in 2021, despite the effect of filling up our worldwide pipelines in the second half of the year and the challenges of the transport sector. In 2022, net liquidity in the Automotive Division is further anticipated to be up to 15% higher than the prior year figure. Our planning is based on the assumption that the global economic output will continue to grow in 2022 albeit at a lower level overall, after the recovery observed in the past fiscal year provided that COVID-19 pandemic does not flare up and that the shortages of intermediates and commodities become less intense. Ladies and gentlemen, we are focused on the financial steering of the transformation. Let us give you a view of -- a short brief glance on where we stand on some of these topics. To finance our ambitious transformation towards electrification and digitalization, we have initiated in 2021 our overhead cost program. We achieved our 2023 target of 10% cut in overhead costs already in 2021. So far, we showed continued fixed cost discipline and achieved to maintain this level, despite an increase in energy costs and despite the rise in inflation. Stringent capital deployment and synergies across brands stay our top priority. In the first half of 2022, the R&D expenditures within the Automotive Division increased to €9.3 billion due to significant development activities for future BEV models and technologies. At the same time, the group spent around €4 billion on CapEx. CapEx ratio is at 3.8% only, despite the retooling of MEB in our Emden plant Hanover and Chattanooga showing a sticking discipline on CapEx spending. For the full year, we are increasing our forecast for R&D as a percentage of sales from 7% to 8%, but we lower our CapEx ratio from 5.5% to 5%. This shows clearly our focus to compensate for higher R&D with greater discipline in CapEx. Let me finish today's presentation with our steering metrics in our view the key of successfully managing the transformation. Based on a very convincing product range, our brand groups performed really well in a challenging environment. At the same time, we continue to drive forward our key platforms. Within all value drivers, we achieved good progress in H1 this year. BEV sales are significantly up year-on-year and are further gaining speed. With the signed partnering agreement, we are all well underway to add an additional partner on our MEB platform. CARIAD significantly improved their 1.1% performance and they initiated localization in China. PowerCo was established and we had the groundbreaking of Salzgitter, our first owned cell factory. Siemens entered Electrify America as first external investor driving the valuation of our assets towards €2.5 billion -- $2.5 billion. Europcar was successfully settled as one of the building blocks for our mobility platforms. So we are not standing still. We are moving forward seizing the opportunities within the operating business as we go along. We have achieved robust operating results in H1 2022 across all brand groups and in our Financial Services business and can rely on a very solid balance sheet and a robust net liquidity position. We continue to execute our plan for a potential IPO push later in the year. The preparation is continuing with a decision expected late summer. Now there's even more emphasis than before. Of course, we are aware of some of the challenges that we might face in H2 and beyond, but confident we stick to our plan and execute on our targets based on integrity and on our values. Thank you for taking time and listening in so far. Now we are very much looking forward to answering your questions. A - Rolf Woller: Very good. Thank you very much Arno. [Operator Instructions] So we give it a couple of minutes or a couple of seconds, better said, in order to give people a chance to register. Then we would start with the first question, which comes in from Tim from Deutsche Bank. Tim, please go ahead.

Hi, everyone. Thanks very much. Tim from Deutsche Bank. I will have two questions please. Obviously, pretty impressive Q2 and H1 numbers. Arguably [indiscernible] over the last few years. Now that Russia is improving, again, we [indiscernible]. That is one. Regarding the revenue, when do you believe you have reached the ideal inventory levels? And how can you make sure you realize that you have reached those quickly enough? And how do you keep fixed costs under control during this ramp-up? And secondly, you increased your revenue and margin goals to the upper end of the guidance range, which is great to see. How should we think about pricing and mix in the coming quarters? I assume that you think you can -- that you'll remain -- that you believe that this remains very positive? Thank you.

Yeah. Tim, thanks very much for your question, and you're quite right. And actually I communicate that -- or internally we discussed that since months. We see an extraordinary situation now, which basically we made the best out of it. We have a supply-side shortage. On the other hand, we saw strong mix strong pricing and fixed cost discipline. So if we move now into the second half of the year as you can see on our guidance on the sales, we expect specifically the semi shortage to ease. But with easing semi shortage in the whole industry then we expect competition to become tougher. And a second topic you already mentioned as well is raw material pricing. So we are prepared for that in two things. We stay basically disciplined or we're planning to stay disciplined on pricing and specifically in incentives. And on the other hand, we intensify our cost work. But again we are -- we think there are very good challenges. We have a very solid first half of the year. And looking forward, we are confident that we can compensate for raw material increase and higher competition for these measures. So don't worry we will stay disciplined on both topics fixed cost and pricing. Yeah, on your -- on our guidance. We have a very solid first half of the year and we guide now for upper end of the margin. And I think that the topics are already set. We expect no positive from valuation. It's rather negative. As you know technically we always take out the valuation effects for the full year guidance so there's even a slight negative. We expect volume. There will be an -- I would say technically a dilution of mix since we have more production. Specifically, we see a small dilution in terms of regional mix. We ramp up then for example Brazil and other regions and also in terms of product mix. But again we will stay disciplined on pricing. And on the other hand we will compensate then on the raw material. So -- but we are confident that we will end on the upper end of our guidance despite these headwinds.

Tim has those answered your questions?

Yeah. And mainly just as a follow-up to the first. I can hear myself with an echo, so I'm not sure if -- hopefully you can hear me well. Yeah, that's better now. When do you really believe Arno that you have reached ideal inventory levels? Can we see a period where you overproduced versus sales for a quarter or two? And how do you measure what is an ideal inventory?

Yeah, yeah. Sorry, sorry, I forgot. Look, I come to inventory and then I come to topic of ideal inventory. Currently we -- it's a little bit counterintuitive, yeah? We have really long lead times. We have a huge order bank and we increased inventory. And thus inventory increase is basically due to a basically better production in June and now we send these cars to overseas markets. Like we ship them to US, we ship them to China. So it's more a technical effect. And the second effect is, we really increased our raw materials. We have a lot of batteries on stock and other raw materials in anticipation of better supply of semi. So, first and foremost, we want to go back to inventory level we saw at the beginning of the year or end of next year. So, this is quite a challenge. But this is very important to achieve our free cash flow target and our working capital targets. In terms of ideal stock, we will end up significantly below ideal stock from today's perspective at the end of 2022. And I always said, we see a structural shortage of semi also in 2023. So now I would say economy is cooling down slightly, so demand is like coming down. But we still see for quite some quarters, the situation where we have a huge order bank and have not real ideal stock. And that also makes us confident that even if we see a difficult Q1 and Q2, our order bank will carry us through this difficult time and hopefully then we will catch up. So this situation makes us also confident for 2023 despite the challenges ahead.

Thank you very much.

Very good. The next one in line would be Patrick Hummel from UBS. Patrick, please go ahead.

Yes. Thank you. Good morning, everybody. Let me first ask a question about CARIAD. I mean, there was a lot of media coverage about internal disputes and solutions found. I just wanted to hear Arno in your own words how has CARIAD's strategy been, yes, modified or changed? And how do responsibilities now look like? If you can just give us a quick update here because – yes, there's been a lot going on and it's not quite clear from the outside what is really the modus operandum, so to say, within CARIAD. And my second question, sorry, I have to ask this because this has been really dominating client conversations since last weekend. The potential conflict of interest that Mr. Blume will have in his double role. There are lots of investors that see it as a poor governance that new structure. And I'm just wondering what your reply is to that pushback and specifically, when it comes to Porsche's envisaged independence post IPO and whether you would potentially come to a point to revisit that double role if it starts to threaten the success of the IPO. Thank you.

Patrick, thanks for these two questions. So basically on CARIAD, the business model was designed long ago and has not changed. CARIAD is developing three software stacks of 1.1 the 1.2 and the 2.0. And this we early on communicated like basically since two years. And so basically what's happening at -- if you see a look at the numbers of CARIAD they will absorb basically in their books, the upfront investment in the R&D and CapEx. And then later on they will get the revenues. So we talk about these three basically, I would say, architectures. And what you see the architecture 1.1 now we really made good progress. Driving assistance functions were added automatic lane change. So they're -- it's updating over the year. And we are localizing functions for the 1.1 also in China for our MEB cars. Just for the reminder of the community, the 1.1 software architecture is the architecture for all our MEB cars for ID3, ID4 from Audi Q4 e-tron. So this is I would say very well underway. So and what has slightly changed now or I think with more focus is that the CARIAD together with Porsche and together with Audi is focusing stronger on the ramp-up on the 1.2 to make sure that the SOPs of E-Macan and also Audi Q6 e-tron are coming. And CARIAD is focusing together with Volkswagen more on the 2.0. So basically that takes to account that management attention is much better aligned and resources are much better aligned. But that doesn't mean that we give up the target of 2.0 being a unified software stack for the whole group. It's just like -- it's that the one team is concentrating on the 1.1 and the other team is more concentrating on the 2.0 with Volkswagen. Does that answer your question, Patrick?

Yes. It does.

Yes. And in terms of the potential topic of interest or conflict of interest, first and foremost, as said before we are still working on the IPO of Porsche. It still absolutely makes sense and it's still in the interest of both companies. So it's in the interest of Porsche. They will get more entrepreneurial freedom and Volkswagen would get more flexibility in financing the transformation. So it's absolutely in the interest of both companies. And there are a lot of like synergies that we will see. And if it comes to specific questions where there might be a potential interest, we established really robust processes to avoid conflict of interest and there are external advisers involved. But we think or we believe these questions where it's -- really we have different interests are very rare and we will handle that with great care.

Thank you, Arno.

Thank you, Patrick. And we are going to the next question. And the next question comes from George Galliers from Goldman Sachs. George?

Yes. Thank you for taking my question. I was wondering if you could perhaps help explain the contrasting performance of Volkswagen Brand between Q1 and Q2. Obviously, we've seen a very big step-up in the profitability there. Could you perhaps articulate what drove that and how we should think about the Volkswagen Brand profitability in the second half and in 2023? Thank you.

Yes, thanks for asking. This is something we are really proud of, I must say. It's -- look we talk about improvement of profitability of Volkswagen Brand since quite a while and we stick to our 6% margin target in 2023. And this is still something we clearly have in our sight from today's perspective. And now specifically in Q2, but in total also in H1, we make really a good step forward. And there are several topics. First and foremost, the region performed really well. As you know in the past we made losses in South America. We made losses in North America. And we embarked on a strategy where despite the losses, we set up a completely new product program in both regions doubling up SUVs. And so with good cost performance these regions performed. Second, we see also good mix and good pricing in Volkswagen brand. And last but not least, there's really a good fixed cost discipline in Volkswagen brand and if you take these two things together and look at the plans for the second half of the year in terms of volume, I'd say there's more to expect from this team. However, there are headwinds and one of the headwinds we mentioned already -- we mentioned is raw material prices and other setbacks. So, we expect quite a decent performance this year and we have inside the 6% which we want to achieve next year.

Great. Thank you.

Okay. Thank you, George. And we are coming to the next question which is from Jose Asumendi from JPMorgan. Jose, please go ahead.

Thank you very much. Jose from JPMorgan. Couple of questions Arno. Can you talk about the opportunity for second half of the year with regards to working capital and also China earnings momentum improving in the second half? That will be the first question. Second, can you comment on your -- I mean you obviously, have a CFO role for the group, but you're taking also responsibility for COO. So, can you comment a little bit around what are your priorities to support the CEO into the second half of the year? What are the key most important topics for you? thank you.

Yes, Jose, thanks very much. We have working capital really in sight. I told you we built up basically inventory in anticipation of the higher production in second half of the year which we're really confident we can achieve. We see better situation in semi. We don't expect a further lockdown in China from today's perspective. And also the wiring harness situation, which was very critical to the Ukraine war is almost solved with the measures we discussed. First and foremost, Ukraine suppliers are delivering. And second, we did a retooling and duplication of production. So, based on that, we expect a higher production. And from a CFO perspective or from a working capital point of view, we must make sure that we get this higher production through the pipeline to our importers, to our dealers, and then to our customers. So, we will have a very close eye on ramping basically or cleaning then the pipeline until the end of the year to make sure the customers get their cars. In terms of then CapEx, as said before, we want to keep the CapEx discipline. Yes, there are challenges on CapEx since we are retooling several plants worldwide to electric vehicles. But as you can see in our figures, we are really proud on our CapEx discipline. Despite all this retooling, we see a very good CapEx discipline so far and we guided for a 5% CapEx discipline, which should then also support cash flow. And we don't expect from this perspective from a change in receivables and other positions payables a specific situation at the end of the year. So, we have the working capital in sight to achieve our free cash flow target. In terms of my role as COO, we -- I must say, we haven't really laid out the specificities of that so far. We will talk about that later on this year, potentially after 1st of September. But what I can tell you, you shouldn't be expected that the focus of the CEO should be -- shouldn't be completely different to what I'm focused so far was -- as CFO. As CFO, I work basically -- or we worked on two topics; financially steering the transformation, building up our brand groups, building up our platforms, ramping up the platforms financing the transformation first; and then the typical CFO topics cash flow, working capital, pricing, fixed cost discipline. And we add an additional element to the creation, productivity. So, why do I say we add that? Look in the past, I would say, two years. It was really a challenge for our teams in the factory to build the cars. We had shortage of semiconductors. We had shortage of wiring harnesses and they did really a great job in building the cars under very difficult circumstances. And of course, they were not like the first focus on productivity. But now with like moving on into second half and potentially 2023, when production processes normalize again we have really a closer look then also on productivity. And I'm very much convinced that we can also gain some of the positives from that now better like availability in terms of productivity in our plants. So these are the priorities: transformation ramping up the strategy, financing the transformation and making sure that our cost position and margin position stays as it is.

Thank you very much.

Thank you José. And we are coming to the next question, which is from Daniel Roeska from Bernstein. Daniel?

Good morning. Thanks for taking my question. Looks like you have a good second half to look forward to. I'd like to tease out a little bit how you think about potential headwinds in 2023. Arno, could you kind of recount in past slowdowns and recessions? Kind of what were the early warning signs for the business in past recessions or slowdown scenarios? And what numbers are you looking for kind of right now? I'm sure you've got a dashboard almost on a daily level. So kind of what are the numbers you're looking at to judge the health of demand and the business out there? And then secondly if the macro situation were to deteriorate and you already mentioned that you have some confidence given the long order book, but what are the two or three key levers you think you would be able to add to the group next year if you need to mitigate it if you were to mitigate margin compression for the group kind of next year? Kind of what are the key levers you'd be thinking about going into tougher times next year? Thanks.

Of course, I think, you understand that it's too early to do an outlook for 2023. That's clear, but of course, we are preparing. And as you rightly said, we are preparing for an environment that becomes more difficult, specifically in US and Europe. But don't forget we have a strong China business and we are ramping up China again. Now specifically on the ICE situation, we are expecting to come back to old strengths, and we are also ramping up our BEV business. So this is an additional stabilization factor, I would say, going into 2023. In terms of early warning signs, yes, I mean, the typical figures we look at are economic outlook IHS expectations. But of course, we add our own basically set of figures. And as said before, this is really an important topic for us. We expect to also end up at the end of 2022 with a decent order book. Unfortunately, that means that customers still have to wait for the cars, and we are producing them as fast as possible. But that means that this order book will carry us at least through the first quarters of 2023. Now Audi has an order book of almost a year and sometimes seven to a year. And also Volkswagen and the order book for the BEVs is even longer. So that order book will carry us into the year 2023. If it gets really worse then we will revisit our plans. But look we think we are well prepared. We show fixed cost discipline. We show CapEx discipline. From that perspective, we expect a growing volume in 2023. And you mustn't forget the whole situation still is in a phase of undersupply. So even if demand will slow down, it will take quite a while until that demand and supply will be in balance. And that's even a chance -- from my personal point of view a chance. All the supply chains got out of balance. So if demand and supply would come a little bit closer down that's also a challenge for global supply chains getting more in balance, getting more efficient. So as you hear I'm -- we realize the challenges for 2023, but we are partially optimistic about our own situation and our own position.

Okay. Thanks, Arno.

Thanks Daniel, yes. In summary, I think, mindful of what's going on in the global economy sitting on a strong order bank in particular in Europe, luckily in the position that China -- that the warning signals actually are only for Europe and for North America, less for the Chinese region. And therefore, very mindful also about our fixed cost position. So the next question comes from Horst, Horst Schneider from Bank of America. Horst?

Okay. Thank you both. So it's Horst from Bank of America. I have got one larger question, one smaller question. The larger question that relates to your 5% retail sales growth guidance versus the 13% revenue growth guidance. If I just do the math, then the 5% retail sales growth would imply something like 40% sequential volume growth in H2, whereas the Passenger Car revenues if they grow by 13% this would imply 20% sequential revenue growth. So that implies that you expect the revenues per unit to come down more or less significantly. So therefore, I just want to ask, if you can maybe explain this discrepancy. And of course, it would be helpful to understand if this strong recovery would happen already in Q3 or that is more a last-minute thing in the fourth quarter. And the second question that is a more simple one I read in the newspaper that maybe there’s 2.0 sub diversion will not be continued to develop. So therefore, maybe there's a chance that Volkswagen changes from a make approach to a more buy approach when it comes to software. So I don't know maybe too early this question at this stage. I'm not sure if you can comment on that already now. Thank you.

Well, thanks for those two questions, yes. First, as guided there for the sales – for the volume we are more like at the 5%. So this is more like a risk. And we are a little bit more optimistic on the revenues, basically due to the – due to the – I mean better mix we still expect. Not better than in the first half but still a positive mix we expect, despite what I said before Yes we will see some dilution of the mix in terms of regional mix and in terms of product mix. But that's true. So when you talk about the 5% you have to take into consideration that all our Chinese sales by units are not part of our books but the turnover. So that implies that we are slightly more optimistic in terms of recovery of China. And so that – their AAK, we call their deliveries to customers that are in our books they are slightly less. We are slightly less optimistic there. And only the sales to our customers outside our JVs contribute to the turnover. So this is more like the technical explanation, right?

Can you constrain that Arno maybe that you didn't give a guidance on retail sales growth ex China or I want too much at this point?

When you do run the numbers actually, you comment exclude China, and also take into consideration a slight deterioration of the regional mix. I think then the average price per unit is not that far away actually from H1. We think actually it's very much in sync. Very happy to guide you through after the call then with the IR team.

That's great. Thank you.

No worries. Yes but the cost – Horst on CARIAD, this is too early to comment on that. I said before, what we decided on is that the 2.0 will be a basically closer development between CARIAD and the Volkswagen team at the very beginning. Not to say that its won’t be a group by its softness and we have – we will constantly revisit our make versus buy. And once we have new information we come back to you. But so far the change have not planned on the – not changed on the 2.0. They are developed together with Volkswagen…

Okay. Thank you.

As a group-wide platform yes, to reiterate that.

Thank you, Horst. And we are coming to the next question which is from Daniel Schwarz. Daniel Schwarz is with Stifel.

Thank you for taking my question. The first one is on fixed costs. So obviously, you made good progress in the first half. Now the IG Metall goes into collective bargain negotiations with 8% demand. I assume for Volkswagen maybe even more. Volkswagen is on track for record-high earnings which I'm assuming unions are looking at as well. Do you expect an increase in wage costs around the 8% for 2023? And could you say how many employees would be covered by that? The second question would be a follow-up on the corporate governance. So Oliver Blume showed a slide at the CMD that said that his long-term incentives will be based on the Porsche AG share price, which I think is an important part of the IPO story. Now in the new setup will he be paid on based on the Volkswagen compensation scheme or Porsche, or will it be a mix? And a very short question on China. Can you say how much incentives do consumers get on average per Volkswagen ICE car and Volkswagen battery electric cars in China? Thank you.

So I'm not sure whether I completely get the first question.

The first one on IG Metall in light of our strong first half year results and their request to increase the wages by 8%. How would we react to that?

Yes. I think I can't comment now on the negotiations between us and IG Metall. I would leave that to my colleague Gunnar Kilian and the team who's taking care of that. What we have to take into mind we have also a scheme. We have all the workers not only in brand Volkswagen but throughout Germany like at Audi and Porsche and also Financial Services benefit also from the good operational result in terms of a bonus. And what – all I can say you have to take these two factors into account when we talk about wage increase. Also the question is how temporary is inflation. There's a lot – from our perspective, there's a lot of temporary inflation in terms of energy, in terms of gas. And so it also has to be taken into account, what's basically the underlying inflation. But again, I don't want to comment too much on these discussions. In terms of, remuneration of the contract of Oliver Blume it's 50-50. 50% on Volkswagen and 50% on Porsche. And the elements are as described in the Capital Markets Day.

Cars in China.

In terms of China, we -- for competitive reasons we don't really want to comment on individual incentives on individual brands in regions. But what I can say -- and I'm really confident now, that China now after the lockdowns and with a little bit better supply of semi really increased their BEV sales. We are on a monthly run rate not at but almost at 20,000. And we are quite confident, then that we can achieve our original target of 160,000 to 200,000 in China from today's perspective.

All right. Thank you, Daniel. And we are moving on to the next question which is from Harald Hendrikse from Morgan Stanley. Harald?

Yes. Thank you, Rolf. Can you hear me?

Loud and clear.

Perfect. Look as usual a little bit more conceptual question from me. Firstly, I mean congratulations. I haven't seen this sort of margin at Volkswagen Brand for a really, really long time. So, it's unusual. And we didn't congratulate you, but this is really a really big result. Question obviously, is the sustainability of that result and that's exactly what investors are asking. You've already mentioned the mix situation and I think, we understand that pretty well. What's much more difficult for me to understand is just, how strong pricing is and remains right? The comps in the second half get much tougher. Pricing started to rise last year obviously, with the lack of inventory. So we have a situation with rising prices that are really -- we've never seen this before, ever right at least not in my 25 years in the sector. And we've got poorer and poorer consumers. So something has to break. And so what I wanted to see, was if you could maybe just talk about, how you see that sitting right now, how you see the pricing across the different brands or the brand groups. At least, I can understand maybe rich people are more willing to pay up than poor people, but it has to impact on the demand at some stage doesn't it? So can you just talk about price in much more detail, for me and maybe how you see that going into 2023, please?

Thanks for your question. And yes pricing -- you're right, pricing is strong currently. And pricing has been to elements its really the real price and also the incentives and. And really, what we should achieve at least at Volkswagen, that we don't go back to the old level of incentives because incentives is not something a great product, or a great brand should apply. We have a great product substance, and that and what I really makes me confident that the whole organization learned that, we can work very profitably with much less incentives, yes? And we'd rather more invest in product substance both of ICE cars and BEVs than in incentives again. So we really will stay disciplined on incentives. And on the other hand, don't forget we have to compensate for the significantly higher raw material. It's also something, we have to be aware of. If you look at our first half of the year, which still benefited from material in our books that was like bought on lower prices, since we have the first in, first out element so they were significant more burden in the second half of the year. We also looked on our overall footprint. And you see we don't add really capacity. So we revert capacity, from ICE to BEVs. So that should also help us to have a good balance between yes, basically demand and capacity.

Okay. And sorry, just as a quick follow-up but can you make any comments about regional or brand by brand? I mean, I know you're not going to want to say to me exactly, what each brand is doing in terms of pricing, but maybe conceptually or how it's trending [indiscernible] different part of the business?

I mean you see this trend you see throughout the regions and throughout all the brands. Per brand basically, the pricing discipline is equally distributed by brand, some even slightly more than others, but it's really a good development throughout all the brands. And in regions you see specifically -- we see specifically low incentives in the US, where we see although -- also the huge used car demand and used car prices. But also the incentives discipline, is something we see throughout all the regions, yes North America, South America, Europe and also China.

Okay. Thank you very much

And Harald, this should not sound cynical. But luckily, actually the region where you could be most worried about is where we are. We have the smallest market share, at the moment, yes because we want obviously, to strengthen our position in the US.

And I would like -- before we go on, I just got a small hint of my colleagues. I think it was with Horst, when we discussed the topic of CARIAD and as I said when we talk about make or buy, I don't want you to get that my answer wrong. When I talk about make or buy, or when I said, we will revisit that perhaps, we have our plan to do at least 50% to 60% even more percent of our software development in-house at 2.0. And to do the software 2.0 in-house that won't change. What we might revisit is 50% or 60% or 70%, the right percentage. This is something we will basically have a look at over time, but there's no principal plans for changing make or buy in terms of 2.0 by ourselves. It's actually the other way around. We look at our PACE cooperation, we look at our Qualcomm cooperation. So there won't be a change in terms of really make or buy, but rather perhaps a slight revisiting of what is the right percentage of value-add we do in-house by our own people. Just for clarification of that.

Thanks for that clarification Arno. And we move on now in the queue with Charles. Charles Coldicott from Redburn. Charles, please.

Hi. Good morning. Thanks for taking my questions. I've got a couple on EVs please. So firstly Arno, I think you said during the Q1 call that the order book in Western Europe was 300,000 units. So I just want to know if that figure has risen in absolute units or fallen. Basically have you managed to deliver more vehicles than the orders you're receiving now that some of those production bottlenecks have eased? And secondly you mentioned and I think you said an additional partner for the MEB platform. So were you referring to someone other than Ford there? And if so how material might this additional partner be in terms of units for the MEB platform. And secondly, I wanted to ask about the Scout brand. Can you talk a little bit about your plans for this new brand? I think first model is due in 2026. How many models would be in the lineup? How much do you expect to invest in that brand, which of the group's EV architectures will be built on it? Thank you.

Yeah. Thanks very much for these three questions. I would say, it depends on the perspective. When I look from the customer, I must say unfortunately our order book of EVs have even increased. This is a good news for us, because then it gives us even more confidence, but the order intake was higher than we were able to build electric cars, specifically in Europe and also US, but we reacted to that as said before. We're ramping up now our Emden plant, our second -- our third MEB plant ramping up an offer for the ID bus and we're ramping up Chattanooga. And so these three capacities will materialize or will come into operation in the third and fourth quarter. And with the ramp-up of these three additional factories, we will be able to basically deliver more EVs and then decrease our order book. Currently it's much more than like six, eight, nine months. Audi it's even -- for an Audi Q4, you have to wait even a year or longer. So this is really a long order book, but we look forward to deliver these cars to our customers, because we know they are waiting for them. Second question was about…

Addition to the MEB platform.

Addition to the MEB platform? I think we can name the partner, the potential partner, it's not finalized yet. It's Mahindra. And we are in very good talks and that would be a great strategic sign for us, because one can imagine India in terms of cost is a very cost-sensitive market. And we could achieve an agreement there that would be also a good sign for the competitiveness of our MEB platform both in terms of cost and performance. And Scout brand, we are in very early discussions on Scout brand. Yes, it will. We see a ramp up from today's perspective in 2026. There are two models planned. The key model, of course, is C-pick up electric. We now currently look into working mode how to develop these cars, where to produce these cars. But this is much too early to say. I'm really delighted that Scott took over, he's very experienced and a great guy. I’ve worked closely together with him over the year in my role as Chairman of Volkswagen Group of America. And, yeah, I'm very happy about that decision we took on the Board, and I really look forward to the next steps, but it's too early to communicate.

Thank you.

Thank you, Charles. And now we have three on the list to go ahead. So the next one would be Tom Narayan from RBC, Royal Bank of Canada. Tom?

Yes. Thanks. Thanks Rolf. Tom Narayan, RBC. Quick follow-up to Patrick’s question. Just to confirm, Mr. Blume’s dual CEO role is not temporary, it’s permanent, correct? And then on gas rationing, I understand you guys have the ability to produce some of your own power locally. But the issue seems to be more to do with the supply chain. We also heard from another German OEM yesterday, some optimism that the German government is working hard to protect industry. Could you just update us the situation layers relates to VW? And lastly, we’ve been hearing a lot of LFP battery chemistry gaining interest from some large OEMs in the U.S. recently in light of sourcing issues with nickel and cobalt. Could you comment on your ability to switch to LFP? And maybe how important you think this chemistry will be for VW. Thank you.

Yeah. Thanks Tom. I can confirm that the position -- the board positions, Mr. Blume will takes are not temporary. Gas rationing, yeah, you're quite right we have to decide or to distinguish between our own position and supplier. And as you're quite right supplier is a critical topic. For ourselves, we are in the position that we just -- we're in the process of converting our power called, power unit. How do you say -- power plants to gas and of course we -- in the light of the current development we stopped that and we basically retooled it to -- to in parallel the two power units. And we basically are now producing our energy at least for this winter and potentially also for the next winter with this coal again. And yeah, you mentioned optimism. Yes, we think there are good plans underway to handle the situation overall for Germany, but there is a risk. And of course we take every risk serious, even if it's a small likelihood. Don't forget, we have some experience unfortunately gained over the last years in terms of managing the situations that are critical in terms of supply. It started with WLTP. We had the COVID situation the semiconductor shortage wiring harness. So our task force is working on transparency. We talked to thousands of suppliers. We categorize them in terms of what are the regions they are working in. What are the product categories? Is it steel? Is it aluminum? Is it small plastics? But this is more an effort of transparency. From that perspective we are also optimistic that we can get through the current situation. That's the situation of gas. Sorry LFP chemistry. Yeah, we are very well aware of LFP chemistry. We are aware of the advantages and disadvantages in terms of cost, in terms of capacity, in terms of capacity density, energy density. And then also in terms of range they are plus and minus. And we think that both chemistries NMC and iron-based chemistries will have -- play a significant role in the future. And so we prepare for that. Our standard factory started already and other factories are prepared for both chemistries. And not only the factories, but also our -- the package of our cars and the packages of our batteries are designed that we can use both chemistries in the cars and even in the same car. So this gives us flexibility in the dimension you mentioned in terms of cost, in terms of pricing, then in front of the customer in terms of rate but also a very important topic you mentioned in terms of availability of resources since -- of course we are all aware that you -- for an iron-based battery you need different chemistry, specifically cobalt and others you don't need. So we are aware. And we prepare for flexibility both in terms of using it in the cars and producing it in the factory.

And I think even with small adoptions, if I'm not completely wrong we could also adapt to solid state in the future, so giving us even greater flexibility in our power core standard plant. Thanks Tom actually for excellent questions. The next one comes from Stephen Reitman from Société Générale. Stephen?

Yes. Hi. Good morning. I'm looking at your slide number7 about the global rollout of the BEV production. And I was wondering if you could put some numbers on this. Where do you think your installed capacity is going to be at the end of the year in these three regions to give us an idea about potentially what you could be producing in 2023, if as we hope your semiconductor shortage situation is significantly eased and other critical components or not so much of an issue? Where you think it might be in terms of total capacity of the Volkswagen Group? Thank you.

Yes, Stephen, thanks for this question. So basically on that exhibit, we are looking on this only the MEB. This is basically the toolkit that does develop for the MEB, on top comes then other platforms, the Taycan, for example, and others. So the total capacity we installed -- we will have installed at the end of the year is about 1.2 million cars. Even if you look on flexibility on shift, it would be even slightly more. And on top of that comes then the capacity of Audi e-tron or Porsche and other electric cars we have in China. And basically, this capacity ramp-up will then go on, so that we are able to achieve our target 2023 and then through 2025 of at least 20%. So this is our capacity plan now and we are ramping that up.

And can you talk about how quickly the US will ramp up?

I mean, the US is ramping up in -- yet now, in the next month. I think, they had the first pilot cars are up there already. Actually, I've been -- last week, I've been at the Chattanooga factory and we had a look at the first cars and they look really great. So they are ramping up. Actually, I think they start this week. So -- but, yes, this will be basically 100,000-plus capacity in Chattanooga for the first step. Then additional to that, there will be imported cars that comes from Europe. Cars that are not localized. And as said before, we look into additional potentials to localize even more electric cars in the region. We talked about Scout which will be clearly a great next step in 2026, a huge segment. But as said before, we look into different opportunities, but it is too early to tell on concrete projects. We will come back to you as soon as we decided on.

Thank you. If I could just -- additional question, please. Clearly, you've made it very clear how CARIAD is going forward with its software development. I was just wondering, are there any ways you think that CARIAD can improve maybe its communication externally, because at the moment, obviously, what we read is more, was leaked to the German press. And how can you think the Volkswagen Group and CARIAD out sort of get better control of the narrative about how things are developing within the business?

We take your comment and believe us, we have that in mind. We have to improve on both sides. I think, the decisions taken, a step forward. And now we take your comment. Perhaps, I will hand over -- Nicole, do you want to comment on that?

As Head of Group Communications, I guess, it's also true for Investor Relations. I think, yes, this is part of the leadership changes now as well. I think, communications will improve also when it comes to uncontrolled leakages. So, yes, it's a step in the right direction and more to come.

Thank you.

Thank you, Stephen. Very reassuring message, I would say. And so, coming to the last one in the Investor and Analyst queue, Richard Carlson from Credit Suisse, last, not least, right?

Thank you very much guys for squeezing me in. I just want to know if you could talk a little bit about the strength of FinCo. That was a very strong number you put up in 2Q. I know, your guidance implies a softer back half. I just wonder what you guys are seeing there. I know that you are seeing a lot of confidence or having confidence, because of your backlog. But are you seeing anything different from your FinCo customers that might be a little bit more worrisome?

Yes, you're quite right. I think, the FinCo business is quite strong and I would distinguish two factors. The one is there are extraordinary effects which you're aware of, yes, as soon as or as long as the new cars are scaled. We see better residual values on the cars with the higher used car prices. And of course, our FinCo benefits from that. But as you're aware, basically, we also lifted our midterm guidance for FinCo significantly, because they are also very well underway. They do a great job in consolidating business worldwide. They invest heavily in IT architecture, have their fixed costs also inside. Basically, they grow contracts without growing the demand of workforce. So there are also efficiencies in that. And also the advantages of refinancing is also something that helps us on our FinCo business competition. So it's basically, I would say, a combination of very good and competent work done by the team and an extraordinary effect that will basically normalize once supply is higher in the industry, once residual values will more normalize. And this is how I see our FinCo business.

Richard, I hope this has answered your question.

Yes. Thank you.

Thank you. So we are now at the end of the investor and analyst session. Let me briefly summarize actually what we have outlined from big picture again. So underlying operating profit improved sequentially in the second quarter, with margins being greater than 10%, if we back out the hedging effects. The performance was broad-based. It means that all of our brand groups contributed. Cash flow development, reassuring. We can rely on a strong balance sheet and high net liquidity. We are confident on the second half. We see revenues increasing but would also be confident with regards to our operating profit guiding for the upper end of our margin range. And we are mindful of 2023 in light of the slowing global economic activity. With that, I conclude the investor and analyst call. And we are doing now a small break, and then we continue with the media Q&A. Thank you very much.

[Operator instructions]

So, good morning from my side as well. I already made a brief comment during the analyst call, but good morning. Nicole Mommsen, Head of Global Communications, and we are starting now, as Rolf mentioned in the early call, with the media Q&A. And the first question comes from Monica from Bloomberg. Good morning, Monica.

Good morning, Nicole. Thanks for taking my question. One of my -- I have sort of two questions. One, I would like to start off by focusing on battery cells. I'm wondering if Volkswagen can detail what the company has done to secure battery cells in the short-term for its EV transformation, before its battery facilities are up and running. And then, maybe to reiterate, I know we heard a bit from Arno this morning about the guidance from Volkswagen brand. Obviously, TRATON and Volkswagen brands are raising their guidance on operating return on sales for the year. And I'm wondering why the group is keeping its guidance the same. If you could sort of, give a quick response on that. Thank you.

Yes, thanks very much for the two questions, Monica. First, you’re quite right. Our own capacity, if you allow me, this comment kicks in basically in 2025 and beyond, with the first cell factory up and running then in so it’s glitter then the next will be in Spain and then more to come in Eastern Europe and potentially other regions. Until then the battery supply we need for our ramp-up of our 2025 target of 20% is secured by partners, we acquired already. We have contracts with already both in Europe and in US and in China. So, our own battery capacity kicks in then. And also to mention that -- also beyond 2025, we will keep this additional, these current partners. So, it's more like a tool forcing strategy than planned from today's perspective, because battery capacity and the secure and efficient supply of battery capacity, will be key to the transformation of the whole industry and also the ability to ramp up our business will depend on the ability to ramp up battery. This is why we think we have such a huge competitive advantage with our Power Co. And yes, the guidance. We had smaller guidance changes Volkswagen Group then also on the FinCo. We increased our guidance slightly. On the other hand, we turned the guidance down on TRATON. I think overall we see the situation, as I said before. We're now at the upper end from our total group guidance 7% to 8.5%. So, giving you confidence that we end at the upper end is then also a small increase in guidance, basically on group level and that's reflecting both the good first half of the year and the confident that some of our units, specifically also brand Volkswagen will perform better than planned.

Thanks. And just one more follow-up question. I'm wondering if you could provide some color or details on supply chain comments so far and things sort of improving, maybe why you see things improving or how?

Supply chain's improving. We had three major issues in the supply chain. One, of course, the terrible war in the Ukraine with the effects on supply of wiring harness; second, a more underlying structural undersupply of semi, which started basically already last year, which we see still at least until like summer; and then the third one, obviously, COVID measures in China. And I don't want to talk too long, but perhaps quickly, if I go through these three topics war in the Ukraine unfortunately still going on, it's a human tragedy. But the supply of wiring harness still goes on. So this is really a great achievement of our local suppliers there. They produce I would say, at least in two shifts, and the additional capacity we need to be secured by relocating and doubling up of capacity and installing that capacity in other regions for example, North Africa or Eastern Europe. So, basically from today's perspective the wire and harness topic is under control. Supply of chips, we discussed that already. We see easing of the shortage in the second half of the year, although, the undersupply from our perspective will at least stay until 2020, 2023 perhaps even beyond, but from today's perspective until 2023. We improved there several measures. First and foremost, it's starts with transparency we have to take into account that a lot of these chips are not from our direct suppliers, but from parts that are Tier 3, Tier 4. So we started with transparency. We negotiated long-term contracts with foundries, and we also reworked some of the semiconductors that are scarce. So we basically take other semiconductors for the same part. That takes quite a while in our industry, because we have to make sure that the past works well, but all these measures kick in now. And together with the increase of capacity will help us from the second year onwards. And COVID China you're very well aware of there are huge improvements there. And from today's perspective, we don't think that we see a major lockdown, but this is obviously something we can't control. So basically, these were the three factors. And I mentioned the measures on the three factors and they make us confident that we can really ramp up our production and also our sales in the second half of the year to achieve our plus 5% target on sales versus last year.

Thanks so much.

Thank you, Monica. And then the next question is comes from Joe Miller at the FT. Good morning, Joe.

Good morning. Can you hear me?

Very well.

Marvelous. Thanks very much for taking my question. It's quite a straightforward one recently -- it's quite straightforward one. I wonder if you could help me explain to our readers what strategy changes if any will be implemented by the new leadership. And if there aren't any strategy changes why there is a new leadership. I heard you talk now about CARIAD in the analyst call and I thought I detected a change in strategy there, but you appeared to roll back on that. So I wonder if you could clarify. Thank you.

Joe, look, we have all -- the whole team has the same view of the developments of our industry in the future. Look today we earn basically our money with combustion engine cars. The total market is two trillion, and that will change significantly. In 2023, there will be three profit pools. One is still basically combustion engine 50%, but then 50% the revenues will come from BEVs. And the third revenue will emerge based on software-based business. And so you see like Porsche is well underway in that direction. Electrification of Porsche works very well. Volkswagen is underway, the whole group is underway. So the total picture where the industry is heading and what we need to do is pretty clear. There will be continuity. We will strengthen robustness of our business. And also in terms of CARIAD, what we talk later on, what won't change is our view on the importance of having the software in our own hands. In 2030, there will be a significant revenue pool comes from software-based business. And it's important for us that we have that business in our hand, that we have the data in our hand, and that we can participate on that software-based business, which will be a key pillar in 2030 both in terms of autonomous driving, mobility and transport as a service and also in terms of like Level 3, Level 4. So, basically, we share the same picture, the whole team shares the same picture. So you could expect great continuity there.

And just to clarify, CARIAD, earlier is communication strategy going to change? Is that one of the things we can expect?

I hand this question over to Nicole.

Joe, no, I don't think the question earlier was on leaks around CARIAD and the media coverage we saw. And I think what we can say is that we are all in the entire Board and all the other stakeholders are looking for sort of calmer communications environment, and we'll all contribute to that. But that's sort of -- there's not going to be a fundamental change in our communication strategy.

Perfect. Thank you very much.

And then the next question comes from Jan [ph] at IFP. Good morning, Jan.

Hi. Good morning. I hope I can be heard well. I had two questions. The first one would be on gas. Looking forward if the supply becomes a problem, what type of reduction can you live with refer from other industries? I know they can live with 50% of supply. What type of production supply can you look with you continue operating as normal as possible? And are you already implementing some gas consumption reductions in the paint shops, et cetera? And my second question is on software and the MEB platform. You said you were looking at adding another partner to the MEB platform. And I was wondering how – what part of the software plays in that because the MEB platform is obviously a fully-fledged product. It's working. It can be sold. And the software is perhaps lagging a bit behind that. So how is the software in the discussion where you're looking for partners for MEB?

Yeah. Jan, thanks for the two questions. I think, as we discussed already did. We also look into our operation into potential reductions and there it's really a mid-double-digit percentage. We can do ourselves both in terms of reducing the consumption of natural gas. And also as said before, reducing or re-substituting our gas plant back to coal. So these are the measures there. And it's too early to tell you percentage-wise, when it comes to a shortage what were the effects by percentage. Of course, we do that math internally, and we also look at the supplier base. But as you are aware we need – of course, we need the supplier we need the parts. So this is more a task that has to be done throughout the whole supplier network. We look at our situation we hope we are quite robust. It depends a little bit in a different plant by plant and region by region. But this is the things, I can tell you. I said before, we have a task force in place that look into that topic very, very, very carefully and we are prepared. Yeah, software this is really a great and detailed question. You are quite right. If you talk about our first partner Ford, Ford is using our platform. And that platform is then comes with also the software. So also CARIAD basically together with that platform is providing at least the back end and parts of the software, and basically the stack. In terms of a potential different partner like Mahindra, they are two directions either Mahindra takes the whole platform, including the software stack or parts of the platform. This is in negotiation and in discussion yet. But yes, you're right, we are open for sharing our MEB as a platform to third party, including the software – the key software stack within the MEB, which is it's 1.1, which then would be external revenue for CARIAD as well.

And just to follow-up, would you be open to sharing the MEB kind of hardware and someone to add like Android out on top of it, or is that something that you exclude?

Can you repeat that question?

I was wondering, if there is a way you see if someone wants the MEB platform with just the basic minimum software and wants to put its own software or end at on it, if that's an option that you exclude or not?

No. It depends. So what we can say is, you could either take basically models of the MEB which are really powerful electric engines battery. And so that basically then goes basically these are pure models hardware models. Basically, we've come with the key software. Of course, you have to a battery software that's during the battery or the whole platform but then is basically if you check the whole platform then it's basically a software stack is coming with that. So the third option you just mentioned is I don't think that it's a viable option.

Thank you.

Thanks, Jan. And then the next question comes from Frank at Automobile. Good morning, Frank.

Just two or three – at least three questions. So first one on CARIAD, we heard that Volkswagen wants to invest additional money and get new additional experts on board to speed up the development of the software 1.2 and 2.0. We own about €3 billion additional money for CARIAD 2700 additional IT experts. Can you confirm that? And how will this affect your results because €3 billion extra is quite huge figure, I think? Another question on the ID.4 production in the US you told that capacity will be 100,000 per year of ID.4 in Chattanooga. When will you reach this target? I think not this year? Obviously it's probably not next year because it was total will be 7,000 per month by the end of the year which will not end up with 100,000 annually in 2023. And will you go on export costs from Germany to the US IT forecast of course and how many will still come from Europe? And perhaps, the last short question, if you can comment on that on the plans of the German government to reduce incentives for electric cars by next year for especially plug-in hybrids. Are you worried about that that the demand will slow down because of that? Thank you.

Thanks very much. A lot of questions. Yes, the basic path I laid out already. I want to reiterate that software is an important pillar of our strategy. It's in one of our platforms. And we are constantly adding capacity and also talent and know-how, both in terms of organic growth and also in terms of we acquire smaller companies in order to enlarge our competency there. So this will go on. I don't want to really comment on the figures you just said. The additional investments per year. But what I can say, our longer-term target, which we set out in summer last year that doesn't change based on the latest discussions. ID.4 in US, yes they are ramping up now. So if you talk about 7,000 a month, that's basically not 100,000, but that's close to 100,000. And that means that, we will achieve a 100,000 sometime. I'm not 100% sure with the 7,000. I think this is a market figure for US and Chattanooga will also produce cars for Canada. So, if you combine US and Canada, that's basically the 100,000, we should achieve the 100,000 capacity peak next year. They are only produced for US and Canada because already from today's perspective, we see that we are limited on capacity rather than have overcapacity to export it to other regions. And in addition to that, there will be export from Europe, other brands, TRATON great success, e-tron, e-tron Sportback, Q4 e-tron for Audi will be introduced in the US, but will come from [indiscernible] and their potential other cars also from Brand Volkswagen from Emden, which will be exported to the US. So, we are really committed to ramp up our BEV operation there. Actually, we think to make a little bit more general statement. Today, we have not such a high market share in the US, but we think it's a unique opportunity for Volkswagen, because in the BEV segments, everybody starts from scratch. And that's the opportunity for us to grow our share, to grow our business there because we have a great tool kit. We have a lot of competence in electric cars, we were early on. And we want to use that moment that one of the kind moment for us in the US to significantly increase our footprint there and at the end of the day until 2030 up to 10%. And we make -- we really will make sure that we use that opportunity for us. Last, but not least, yes, we are aware of the latest announcement, but what I can say, yes, it's a political compromise. It may not fulfill all visuals, but it satisfies us and we don't change our plans or our plan doesn't change based on the latest announcements on the subsidies on electric cars and plug-in hybrids.

Does that answer your questions, Frank? Then the next question comes from Neil Unmack [ph] from Reuters.

Hello. Can you hear me?

Very well thank you.

Yes. Great. Great. Thank you very much. So two questions. One, you were asked by one of the analysts earlier about how Mr. Blume will manage sort of hypothetical conflicts being both CEO of Volkswagen and Porsche. I mean, clearly this issue has raised a lot of concerns with investors and even the survey earlier this week suggesting that something like 41% of investors will not particularly keen on the IPO actually going ahead with the current structure. But my question then, can you give any just color or details on how those potential conflicts will be handled or addressed because nobody is accusing you of deliberately having such conflicts, but can you just give any more detail on how that will be addressed. And then the second question is, just again regarding gas. And I'm sorry I have to make you repeat yourself a bit because you talked earlier before about switching to coal and reducing usage, but can you give any color on how you would expect a Russian gas shutoff to affect your volume revenue and profitability. Is it just the European problem? Does it become a global problem? What kind of sort of stand side scenarios are you thinking about? Thanks.

Yes, you're right, we discussed it earlier on. And we are very aware of the topic. But I want to start like the double role is also a chance. In fact, as said before, there are a lot of decisions that are absolutely aligned. For example, the Porsche IPO is in the best interest of both companies. It will give Porsche more in the neural freedom and it will help us to finance and give us flexibility to finance our ambitious transformation. So we have also a track record in brand group combination, synchronizing expertise and the strategic dimensions of that role. And we will consistently drive the transformation forward. In terms of specifically, how we manage it if they might avoid potential conflict in a certain situation there. As I said before, we will handle that. And then Mr. Blume will then basically only decide be on the Porsche AG side, but we expect very few of these situations and we will handle it with great care. And we are very well convinced that there are much more chances in the current situation. And then the double role is much more an advantage in going forward.

Sorry, when you said, you will only be able to Porsche AG side. You mean, if there was a situation that required that would have different impacts on both Porsche and AG. You would only vote on the Porsche AG side would abstain from the VW post. Is that what that means?

And back on a very established and very precise process with external legal advisers. So we will make 100% sure that in very few occasions, where this might occur that they are really handled properly. The gas -- sorry there was the Russian gas, yes. Also I said before from today's perspective, we are still optimistic that our governance together with all authorities and also with our help and all the help of all the -- I would say all the people in Germany and Europe, we'll get through the situation. We all do our best to reduce our gas consumption. And so we think we -- from today's perspective, we can get through the situation. But as always, as a good company with good risk management, we manage this risk we look at the risk we'll run different scenarios and we prepare for that scenario. Not only ourselves, we basically send letter out to thousands of our suppliers categorize them and try to find out what their position is in very critical circumstances. We even think of duplicating. On the other hand, we are a global company. Look don't forget we are strong in China. We are strong in the US. So there are also possibilities in reshuffling if something would really happen. But from today's perspective, we are optimistic then that we can get through the situation. The critical situation in later this year from today's perspective.

And Neil [ph], does that answer your question?

Yes. Yes. Thank you.

Thank you. Then I don't see any other questions asking in the line right now. I'm going to give you another 30 seconds, if you still have a question. Otherwise we are also available both the IR team and the Comms team all day obviously for questions and answers. No. So there don't seem to be any more questions at this point. I hope those of you who are still going on vacation will enjoy their summer vacation. And I'm looking forward and we are looking forward to working with you after the summer break again. Thank you. Bye-bye.

Thanks very much. Bye-bye, also from my side.

And from my side as well.