Volkswagen's electric vehicle struggles deepen amid job concerns.

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【Summary】Volkswagen's largest EV production site in Europe, located in Zwickau, Germany, is facing job cuts due to low demand. The plant produces various electric models, including the ID.3 and ID.4. Competition from Tesla and Chinese EV makers, along with higher inflation and reduced subsidies, have weakened demand. While Volkswagen has not officially commented on the job cuts, leaked information suggests that several hundred employees could be affected.

FutureCar Staff Sep 14, 2023 9:28 AM PT

Volkswagen's electric vehicle struggles deepen 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, including 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 at this facility.

In 2018, Volkswagen announced an investment of $1.29 billion (1.2 billion euros) to convert the plant for EV production. The transformation from producing combustion-engine vehicles to EVs was successfully completed in 26 months, ensuring the stability of the workforce. However, competitors such as Tesla and Chinese EV makers are rapidly expanding their presence in Volkswagen's home market and abroad.

The combination of lower demand, higher inflation, and reduced subsidies is weakening the market. According to the German newspaper Automobilwoche, Volkswagen is expected to implement job cuts 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 suggest otherwise. He mentioned that unfortunate news regarding job losses at Volkswagen in Saxony would be announced in the coming days or even hours.

The exact number of affected employees is yet to be confirmed, but it is estimated that a few hundred out of the 11,000 employees may be impacted by the end of October.

Saxony's Economic Minister Martin Sulig expressed concern about the situation and emphasized the need to provide a positive outlook for the employees, even though immediate solutions cannot be discussed publicly.

The demand for Volkswagen Passenger Car's three MEB electric models has been declining, exacerbating the situation. Dealers have reported a decrease in interest from customers.

Furthermore, the European Union recently initiated an investigation into Chinese EV imports, as they have surged in 2023. The probe is a response to the rapid expansion of Chinese EV makers, including BYD, NIO, and XPeng, in the European market. EU Commission President Ursula von der Leyen highlighted the unfair competition caused by Chinese EV makers benefiting from state subsidies.