Tuesday, April 16, 2024

VW is cutting jobs at its German EV factory because demand is plunging

Must read

German Federal Foreign Minister Annalena Baerbock visits the Volkswagen booth at the 2023 IAA Mobility car show.

Leon Kuegeler—Photothek via Getty Images

Volkswagen AG is cutting temporary workers at its main electric-vehicle factory in Germany because of waning orders for its EVs in Europe.

The manufacturer plans to let go nearly 300 people at the Zwickau plant when their contracts expire in October, according to people familiar with the matter. The fate of around 2,000 additional temporary staff remains uncertain, the people said, declining to be named because a final decision hasn’t been made yet.

Volkswagen is having a tough time selling enough mostly made-in-Germany electric cars to challenge Tesla Inc.’s global dominance. Lackluster economic growth as well as higher energy, living and borrowing costs in Europe have weighed on demand for its ID fleet of EVs.

The company hired around 2,700 temporary workers at the Zwickau facility near the Czech border to meet expected surging EV demand. But orders from corporate clients — which account for around 70% of the IDs built at the plant — have been plummeting since a federal subsidy for battery-powered company vehicles expired this month, one of the people said.

A spokesperson for Volkswagen declined to comment.

At the same time, Volkswagen is following Tesla, BMW AG and others in exporting an EV from lower-cost China to Europe. Its Cupra brand has announced plans to produce the Tavascan SUV at a factory in Anhui. Built on the same hardware and software platforms as the ID series, the model is due to hit the European market in 2024.

It remains unclear how the competitive landscape for Chinese-made cars develops after the European Union on Wednesday said it’s launching an investigation into Chinese EV subsidies to ward off a flood of cheap imports.

Germany is gradually reducing support also for private buyers over the coming months, raising the cost of the ID models that are already more expensive than similar offerings from Stellantis NV and Renault SA.

DPA first reported on the potential job cuts. VW had planned to eventually churn out as many as 330,000 vehicles annually in Zwickau, making it one of Europe’s largest such factories.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

More articles

Latest article