German electric car factories shut down as Chinese electric cars take over the market

More and more news agencies such as Reuters are reporting that VW halted production at its Transparent Factory in Dresden and its electric car plant in Zwickau, Saxony, for a whole week from October 6. VW cites "the slowdown in electric car sales" as the reason. BEV production is being halted in Zwickau, where electric car models based on the Modular Electric Drive Matrix (MEB) roll off the production line. The production of the Audi Q4 e-tron has also been affected by the stoppages.

There are also massive reductions at other locations. At the Emden plant, where the VW ID.4 and ID.7 models are assembled, employee hours have already been reduced. Production breaks lasting several days are being negotiated. For Osnabrück, it has been decided to have at least one closing day per week until the end of 2025.

The contrast: Combustion engine boom at the main plant

The VW plants in Zwickau and Emden specialize in electric cars and so are particularly vulnerable to the short-term "slump in demand", as claimed by the company. According to media reports, business with combustion engines continues to be strong. At the main plant in Wolfsburg, for example, special shifts are planned for almost every weekend until Christmas due to the allegedly strong demand for bestsellers such as the Golf, Tiguan and Tayron. Volkswagen reportedly has had to ramp up production there in order to work through a growing order backlog.

Volkswagen under attack from two sides

Volkswagen is currently under attack from two sides:

• The price-performance powerhouses: Chinese manufacturers such as BYD (whose European sales rose by almost 250% in the first eight months of 2025) and MG are on the offensive with aggressive pricing. Some of their models are €10,000 to €15,000 cheaper and often offer superior standard equipment (large rotating display, panoramic roof, longer warranties etc.).
• Companies such as Tesla and Hyundai/Kia are attracting tech-savvy customers with faster charging architecture (e.g., 800 volts), better software, efficiency and attractive design.

Volkswagen's first ID generation has been heavily criticized by experts. The MEB platform is outdated in terms of charging speed, the bumpy launch of the CARIAD software has damaged its reputation enormously, and the sluggish corporate structure is making the necessary changes and adaptations difficult.

VW's counteroffensive

VW CEO Oliver Blume described the past year as one of "setting the course" and is relying on the "Accelerate" strategy to catch up with "China speed". The company's plans are as follows:

• New platforms: As a development for the future, a more efficient SSP platform is intended to make vehicles competitive again.
• Costs and models: The group is working on electric models with a base price of around €25,000 in order to regain its position in the mass market.
• Integration: In-house battery production by subsidiary PowerCo is intended to reduce costs and dependence on suppliers.

For many market observers, the production stoppages in Zwickau and Emden are a "clear warning sign" that the time for half-hearted reforms at VW is over and that the Volkswagen Group must rethink its entire cost structure and corporate culture in order to survive in a fiercely competitive market.