Volkswagen believes Tesla is not a threat and plans to stick with diesel engines

Key Points
  • The chief executive of German automaker Volkswagen says that the diesel engine has a "great future" ahead.
  • Matthias Mueller says that VW plans to continue to develop diesel cars.
  • Muller also spoke about rival carmaker Tesla, saying he doesn't think of Tesla as a threat.
VW CEO: Tesla business model not a threat to us
VW CEO: Tesla business model not a threat to us

The chief executive of German automaker says the current discussion regarding diesel cars is unjustified and that the diesel engine has a "great future" ahead.

"The diesels we are offering today are clean. They comply with the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) requirements and they meet the requirements and needs of our customers," Matthias Mueller, CEO of VW, told CNBC at the Frankfurt motor show.

Mueller explained that VW plans to continue to develop diesel cars, despite a global pushback against the technology by regulators and governments since the emissions scandal.

"There's going to be a co-existence between combustion engines and electrified drive systems over the next 10 to 20 years, so against this background we should all be patient and relaxed and leave the decision to our customers, they should decide which concept they prefer," he told CNBC during an interview recorded on Monday.

Volkswagen has been under pressure since the emissions scandal began in 2015. The car maker admitted that it used software to cheat U.S. and European regulators' tests from 2006 to 2015. This allowed the company to sell diesel-equipped vehicles without installing emissions control systems that could have affected performance or inconvenienced customers, according to U.S prosecutors.

Mueller added that he understood customer concerns regarding diesel engines and the possibility that diesel engines could be banned in the future. He said it is the responsibility of the car industry, as well as the electricity industry and the authorities to make sure bans are not implemented.

The VW I.D. Buzz microbus.
Source: Volkswagen

Looking ahead to where the company can create growth, Muller admitted there are markets in the world where the brand has been weak in the past.

"I think we have to implement a greater presence in Russia and then we have to revive the South American market. And then there is the big issue, Africa. It remains to be seen to what extent the situation down there will be stable, politically speaking, so that is a market where we have to do our homework," he explained.

Muller also spoke about rival carmaker Tesla. In May, Volkswagen outlined plans to leapfrog Tesla in the electric car market, with a plan to sell 1 million battery driven vehicles by 2025. Muller said he doesn't think of Tesla is a threat to Volkswagen.

"We can't compare apples with pears. Tesla is a company that sells less than 100,000 units and we sell 10 million. Currently, Tesla burns a 3 digit million amount and we've got results of 12 to 13 billion euros per year, so I think we have to be realistic here," he said.

Muller said he respected Tesla and it remains to be seen who will have the upper hand in the future.

Follow CNBC International on Twitter and Facebook.