Volkswagen's electric vehicle challenges escalate amid job concerns.

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【Summary】Volkswagen's largest EV production site in Europe, located in Zwickau, Germany, is facing potential job cuts due to low demand for electric vehicles. The company is expected to announce the news at a staff meeting. The plant, which produces MEB-based electric cars such as the ID.3 and ID.4, was converted from producing combustion-engine vehicles in 26 months. Competition from Tesla and Chinese EV makers, as well as higher inflation and reduced subsidies, are contributing to the weak demand.

FutureCar Staff Sep 13, 2023 11:16 PM PT

Volkswagen's electric vehicle challenges escalate amid job concerns.

Volkswagen's largest EV production site in Europe is facing the risk of job losses due to low demand. The company has scheduled a staff meeting on Thursday to inform workers about the situation.

The Volkswagen plant in Zwickau, Germany, is responsible for manufacturing MEB-based electric cars such as the ID.3, ID.4, and ID.5. Additionally, other VW brand EVs like the Audi Q4 e-tron and Cupra Born are also produced here.

In 2018, Volkswagen announced an investment of $1.29 billion (1.2 billion euros) to transform the Zwickau plant into an EV production facility.

To maintain workforce stability, the plant successfully transitioned from producing combustion-engine vehicles to EVs in just 26 months. However, competitors like Tesla and Chinese EV makers are rapidly expanding their presence in Volkswagen's home market and abroad.

The combination of low demand, higher inflation, and reduced subsidies is weakening the market. According to the German newspaper Automobilwoche, Volkswagen is expected to cut jobs in response to these challenges.

Although Volkswagen has not officially commented on the potential job cuts, Saxony Prime Minister Michael Kretschmer's remarks at an event indicate that the company's plans have been leaked. Kretschmer stated that unfortunate news regarding job losses at Volkswagen in Saxony is imminent.

The exact number of affected employees is yet to be confirmed, but it could potentially impact a few hundred out of the 11,000 employees by the end of October.

Saxony's Economic Minister Martin Sulig expressed concerns about the situation and emphasized the need to provide the affected employees with a positive perspective. However, he also mentioned that possible solutions cannot be discussed publicly at this point.

The situation has worsened with declining demand and a pessimistic outlook. Dealers have reported a decrease in interest for Volkswagen Passenger Car's three MEB electric models.

Furthermore, the European Union has recently launched an investigation into Chinese EV imports, which have surged in 2023. The probe comes as Chinese EV makers like BYD, NIO, and XPeng are rapidly expanding their presence in the European market. EU Commission President Ursula von der Leyen highlighted the unfair competition caused by Chinese EV makers benefiting from state subsidies.