Volkswagen is adjusting production at several German plants as demand shifts faster than expected from combustion cars toward electric vehicles. Wolfsburg will build fewer ICE cars than initially planned, while EV production in Emden and Zwickau is increasing.
“Turning point”
The reversal is striking. Not so long ago, Volkswagen struggled with underutilized EV factories and repeatedly reduced output at its electric strongholds. Now, extra shifts planned for combustion-powered cars in Wolfsburg are being canceled, while shutdown days at the EV plant in Emden have been scrapped.
Wolfsburg, where models such as the Golf, Tiguan and Tayron are built, will produce around 30,000 fewer vehicles than planned. Meanwhile, “several thousand” additional EVs are expected to come from Zwickau and Emden.
Volkswagen itself calls the development a “turning point” in the transformation of the car market.
75% increase
Germany is showing an unusually pronounced shift. According to figures from the German Federal Motor Transport Authority (KBA), registrations of battery-electric cars increased by around 75% year-on-year in August. Petrol registrations, meanwhile, fell by almost 38%.
Volkswagen points to high fuel prices, an improving charging network and a broader range of electric models as reasons why consumers are moving towards EVs. Affordable EVs have long been considered one of the missing pieces in Europe’s transition to battery power.
Therefore, Volkswagen’s most important driver sits in southern Europe. A large part of Volkswagen Group’s additional electric volume will come from Spain, home to its new generation of cheaper small EVs.
Orders for the group’s so-called ‘Electric Urban Car Family’ have exceeded expectations. Volkswagen said in July that more than 70,000 orders had already been placed for the new family centered around the ID. Polo, which includes the Skoda Epiq and the Cupra Raval.
Volkswagen started taking orders for the entry-level 37-kWh ID. Polo, starting at €24,990 in Belgium, this summer.
Financial problems persist
Selling more electric cars does not automatically solve Volkswagen’s financial problems. The company still earns less on its battery-powered cars than on comparable combustion models, partly because of battery costs.
The group also continues to struggle with overcapacity in Germany, weaker business in China, and the high cost of its transformation.
The turnaround at Emden and Zwickau is, however, symbolically important. Both factories have previously suffered from insufficient demand for Volkswagen’s electric cars. Today, Emden no longer needs the planned shutdown days and has even operated some additional shifts. Zwickau is also receiving extra volume.
Whether that is enough to secure their long-term future remains uncertain. Volkswagen has yet to clarify what will happen to both German EV sites in the next decade, which have been cleared from guaranteed production after 2030.
‘No time to lose’
“We have absolutely no time to lose and will therefore significantly ramp up our performance program once again,” Volkswagen brand CEO Thomas Schäfer said about the planned job cuts, involving 100,000 people.
The Volkswagen Group also recently revised down its profit forecast, with a margin of no more than 1%, citing write-downs running into the billions at subsidiary Porsche and sluggish sales in China.
