"1.5 billion is the risk... That's the fine we would be facing, the theoretical amount if we would do nothing at all," the source told AFP.

"We have new [electric] models coming. That's not the value we expect for the year," the source added.

From this year, the European Union is lowering the average emissions that new vehicles sold in the bloc are permitted to produce, with carmakers facing hefty fines if they fail to comply.

Several EU countries including France and Italy had urged Brussels to ditch the penalties for embattled European carmakers, who have been plunged into crisis by a stuttering switch to electric vehicles and increasing competition.

Xavier Chardon, who heads Volkswagen in France, told AFP that the group was counting on the French and German markets above all to boost sales of electric cars.

In a separate statement, the 10-brand group, which apart from its namesake also owns Audi, Skoda and Seat, said that previously introduced and upcoming all-electric models would help the firm achieve the EU target.

One way of avoiding fines would be the purchase of other carmakers' unused carbon credits. However Volkswagen said it hopes to avoid fines "primarily through its own efforts, based on the positive product momentum", according to the statement.

"There is no doubt that the 2025 targets represent a particularly significant challenge, as sales of electric vehicles across the industry have not been meeting expectations," it added.

In Germany alone -- Europe's biggest auto market -- electric car registrations fell 27.4 percent in 2024, hit in particular by the removal of government subsidies.

They now make up of 13.5 percent of all vehicle registrations, compared to 18.4 percent in 2023.

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Volkswagen