VW overestimated interest in electric cars by 30% and will lay off EV autoworkers as gas prices drop
Volkswagen is putting the brakes on its electric vehicle production as rising electricity costs and lowering gas prices, as well as disappearing subsidies, have changed the calculation for buyers in its main markets. After missing its sales forecast by 30%, VW will idle its dedicated EV factory in Emden for six weeks and will lay off 300 out of the 1,500 autoworkers there.
The move comes in contrast to the success stories that other EV makers logged this past quarter, with Tesla, BYD, Rivian and others all notching record delivery numbers. According to a statement by Volkswagen UK:
The Volkswagen brand, like other car manufacturers, is currently seeing softening demand for electric cars. Reasons for this include: reduced subsidies, higher inflation and recent longer delivery times due to the shortage of parts. We are confident that demand for all-electric cars will pick up again as the year progresses. With the extensively revised ID.3 and the new ID.7, we continue to launch attractive new models.
That being said, the launch of VW's performance ID.7 sedan which was originally supposed to be this month, has been postponed for later in the year.
Moreover, Volkswagen is now seemingly a willing participant in the EV price war that Tesla started in the beginning of the year, after balking at the thought just a few months ago. Tesla has multiple production cost, software, and government subsidy advantages, though, so it remains to be seen how low can VW go with the price of its electric cars.
It already announced a mass market VW ID2.all concept that will cost half of what its EVs cost now and will go into production in 2025. Gas-powered cars are still £10,000 cheaper than EVs on average, however, so VW may have to speed up its battery factory and R&D plans to remain competitive in the EV era.