Volkswagen's electric vehicle struggles intensify 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 for electric vehicles. The plant, which produces various VW brand EVs, was converted from producing combustion-engine vehicles in 26 months. The competition from Tesla and Chinese EV makers, along with higher inflation and reduced subsidies, has weakened demand. The exact number of job cuts is unknown, but it could affect a few hundred employees.

FutureCar Staff Sep 13, 2023 4:15 PM PT

Volkswagen's electric vehicle struggles intensify amid job concerns

Volkswagen's largest EV production site in Europe, located in Zwickau, Germany, is facing potential job losses due to low demand. The automaker is set to hold a staff meeting on Thursday to inform workers about the situation. The Zwickau plant is responsible for manufacturing MEB-based electric cars, including the ID.3, ID.4, and ID.5, as well as other VW brand EVs like the Audi Q4 e-tron and Cupra Born.

In 2018, Volkswagen announced a $1.29 billion investment to transform the Zwickau plant for EV production. The successful conversion from producing combustion-engine vehicles to EVs was completed in 26 months, ensuring stability for the workforce. However, competitors such as Tesla and Chinese EV makers are rapidly expanding their presence both in Germany and globally.

Furthermore, higher inflation and reduced subsidies have weakened the demand for EVs, adding to the challenges faced by Volkswagen. According to the German newspaper Automobilwoche, the company is expected to implement job cuts in response to these factors.

While Volkswagen has not officially commented on the potential job cuts, Saxony Prime Minister Michael Kretschmer's remarks at an event suggest that the plans have been leaked. Kretschmer stated that unfortunate news regarding job losses at Volkswagen's Zwickau plant would be announced in the coming days or even hours. The exact number of affected employees, which could be a few hundred out of the 11,000, is yet to be confirmed.

Saxony's Economic Minister Martin Sulig also expressed concerns about the situation and emphasized the need to provide a positive perspective to the affected employees. However, he acknowledged that discussing potential solutions publicly at this stage may not be appropriate.

The demand for Volkswagen Passenger Car's three MEB electric models has declined, exacerbating the situation. Dealers have reported a waning interest in these vehicles. In addition, the European Union recently launched an investigation into Chinese EV imports, as they have surged in 2023. EU Commission President Ursula von der Leyen cited unfair competition due to Chinese EV makers benefiting from state subsidies.