Volkswagen stops electric vehicle production: Alarm for the automotive industry!

Volkswagen stops electric vehicle production: Alarm for the automotive industry!

The automotive industry is facing turbulent times - this is clearly reflected in the current developments at Volkswagen. On Friday, the car breakfast table announced on the company website that production in two German factories for electric vehicles would be stopped for the time being. More specifically affected are the locations in Zwickau, where the ID.3, ID.5 and Audi Q4 e-tron models are manufactured, and in Dresden, also for the ID.3. The reason for this step? Weaker demand than hoped. A spokesman for the company emphasized that production planning is now being adapted to the market situation in order to avoid excess stocks. This is intended to counteract the declining interest in buying.

When you look at current market developments, the situation becomes more tangible. After a slight recovery at the end of the summer, the European car market is once again fragile. Buyers hesitate and find themselves in a dilemma between the old combustion engines, hybrids and the new electric vehicles. This is not only due to price issues, but also to the uncertainties caused by trade conflicts, especially with the USA, as well as the debate about phasing out the internal combustion engine in Germany. Manufacturers must respond to this reluctance.

Consequences for the industry

Volkswagen is not alone in this dilemma. The supplier Bosch recently announced that it would cut 13,000 jobs, or around 10% of its workforce in Germany - a drastic sign of the falling demand for electric vehicles. Ford also has to cut up to 1,000 jobs at its Cologne site, which specializes in electric vehicles. Stellantis even plans to temporarily close six European plants for similar reasons.

However, the challenges facing the industry are not just limited to Germany. Demand for electric vehicles in Europe remains below expectations, although forecasts predict significant growth of $2.8 trillion for the market by 2032. The electric vehicle market is currently valued at a whopping $368.9 billion and is expected to grow at a CAGR of 29.1% between 2024 and 2032. So the way is prepared, but companies have to overcome the current hurdles.

A look forward

Looking ahead, Volkswagen plans to have 50% of its sales electric by 2030, while Stellantis is even aiming for a 100% electric sales strategy for Europe. Furthermore, a new electric vehicle from Volkswagen is expected to hit the market by the end of 2025 with a price of around USD 21,600. This shows that the major car brands are not giving up without a fight, even if the current circumstances are anything but rosy.

The expansion of the charging infrastructure is also seen as key to overcoming the current difficulties. The EU plans to install charging stations every 60 km on major highways to promote the acceptance of electric vehicles. These measures are necessary to reduce the initial high costs of electric vehicles and create broader acceptance.

The automotive industry is in transition and it remains to be seen how the market will develop in the coming months. One thing is certain: the challenges are great, but with a good hand the turnaround could come in time. Let’s stay tuned to see what the next steps bring.

For more information on this topic you can read the reports from Engine1, 20 minutes and Global Market Insights read up.