Amid several reports that Volkswagen is cutting EV production at two German plants, the automaker revealed the reason – slowing demand.
Volkswagen suspends EV production in Germany
Last week, a report from the German newspaper Automobilwoche claimed Volkswagen was pausing EV production at its Dresden facility in Germany.
Volkswagen’s Dresden facility has built over 150,000 VW Phaeton, e-Golf, ID.3, and Bentley Flying Spur models since beginning production in 2002. Last year, 6,500 ID.3 EVs were built at the location.
The automaker will temporarily suspend ID.3 production at the plant for two weeks during the Saxon autumn holidays, as first reported by Germany’s DPA news. Starting October 16, the electric car will be built again in regular single-shift operation.
Dresden’s roughly 300 employees will be reassigned to other areas, including “innovative manufacturing and testing.”
Meanwhile, at Volkswagen’s main BEV plant in Zwichau, one of the two production lines will shut down during the holidays, according to a spokesperson (via Automobilwoche).
The news comes after VW announced at a staff meeting earlier this month it would be cutting 269 temporary jobs at the site.
Although Volkswagen’s ID.3 and Cupra Born will be impacted by the halt, ID.4, ID.5, Audi Q4 e-tron, and Audi Q4 sportback e-tron models will continue regular production in three shifts.
Volkswagen is discussing with local labor reps how to proceed with EV production at the Zwickau plant.
The company did not specify how many units or employees would be affected by the changes.
Volkswagen is struggling to attract new EV orders amid higher inflation and weaning subsidies in Europe. Europe’s largest automaker also faces a growing threat from more advanced EV competitors like Tesla and BYD.
The core Volkswagen brand faces pressure as cheaper, more advanced EVs are taking market share at home and abroad.
Top comment by Doggydogworld
EU 95g effectively forces 20% of vehicle sales to have plugs. Former CEO Diess thought that once they achieved scale and momentum, consumer demand would lift sales beyond 20% at ICE-like margins. But that didn't happen. They've only been able to meet the 20% quota by discounting to the point where margins suffer.
The quota jumps to 30% in 2025. VW and other legacies will discount prices further then, and raise ICE prices somewhat to compensate for lost margin. If VW tried that today, the other legacies would eat their lunch on the ICE side. But in 2025 they'll all be in the same boat.
In Volkswagen’s largest market by revenue (China), the automaker was surpassed by BYD as the best-selling car brand earlier this year.
In the wake of slowing demand, VW slashed ID.3 and ID.4 prices in the region. But how long can VW keep this up?
Volkswagen Group CEO Oliver Blume aims to boost VW brand returns to 6.5% over the next three years. Currently, it’s around 3.6%.
With EV makers like Tesla, BYD, and several other Chinese start-ups expanding rapidly, Volkswagen will need to act urgently to risk falling further behind.
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