Volkswagen is scaling back production of electric vehicles due to sluggish demand for its electric models. Volkswagen’s electric vehicle (EV) troubles deepen as it finds itself struggling to keep pace with industry leader Tesla.
Although Volkswagen’s electric vehicle deliveries reached 531,500 units by September, a 45% increase over last year, this figure does not accurately reflect the current market situation.
According to Arno Antilitz, Volkswagen’s Chief Financial Officer, electric vehicle (EV) orders have plummeted to approximately 150,000 in Europe, with this information shared publicly last month. The company’s quarterly profits have dropped by half to $150,000 compared to last year’s figures.
The German-based automaker hinted in September that it might reduce staffing levels at its Zwickau facility, a significant electric vehicle production site in Europe. Volkswagen Group announced plans to eliminate 269 temporary positions at a key assembly site where electric vehicles (EVs), including the ID.3, ID.4, ID.5, Audi’s upcoming e-tron, and Cupra Born models, are manufactured.
Exactly one week after the initial announcement, a report emerged in a prominent German publication claiming that Volkswagen deliberately decided to cease production of the ID.3 at its Dresden facility.
The report attributes the transfer to a trifecta of factors: plummeting demand, surging inflation, and the elimination of subsidies.
Volkswagen’s Electric Vehicle Woes Continue to Plague the Company
According to a recent report, Volkswagen’s electric vehicle (EV) troubles have escalated further. The German automaker is streamlining its production processes at its Zwickau plant by consolidating shifts.
Volkswagen has transitioned its production at Corridor 5 to a two-shift operation, a reduction from the previously employed three shifts. Two electric vehicles, the Volkswagen ID.3 and Cupra Born, both manufactured at this location. The spokesperson explained, “This decision guarantees seamless day-to-day functioning and ultimately secures the site’s lasting sustainability.”
The German automaker Volkswagen temporarily suspended production at its Zwickau plant due to a shortage of electric motors. The manufacturing suspension affects the Volkswagen ID.4 and ID.5 models, as well as the Audi Q4 e-tron SUV, this autumn.
Notwithstanding the supply chain disruption, the ID.3 and Cupra Born were initially unaffected. Slumping demand for Volkswagen’s electric vehicles has resulted in the non-renewal of numerous temporary worker contracts, a development that reflects the automaker’s struggles to maintain momentum in the competitive e-mobility sector.
Zwickau is home to Volkswagen’s largest electric vehicle (EV) manufacturing site in Europe. The corporation invested approximately $1.3 billion into the plant in 2018 to enable production of electric vehicles (EVs).
Volkswagen has faced challenges in keeping pace with Tesla and other electric vehicle pioneers. The confluence of German EV subsidies’ expiration, coupled with rising interest rates and inflationary pressures, is exerting a significant strain on the market.
Electrek’s Take
In Europe, Volkswagen dominated the electric vehicle market, with a staggering 341,000 units – representing a significant 64% of its total electrified offerings by September – making it the company’s largest EV market by far.
The sudden decline of 50% in orders is nothing short of alarming. Volkswagen is finding it challenging to keep pace with Tesla’s momentum, as the Model Y leads in sales figures.
Volkswagen is putting off its plans to build a fourth electric vehicle battery factory. Porsche’s CEO Oliver Blume attributed the decision to market conditions in Europe, including the slow development of the battery-electric vehicle market.
Volkswagen faces intensifying pressure as electric vehicle (EV) market leaders such as Tesla and BYD aggressively slash prices, threatening to marginalize their rivals.
