Volkswagen Abandons $2.1 Billion EV Plant in Germany Amidst Shifting Auto Market Dynamics  

Volkswagen has dropped its plan for a $2.1 billion EV plant in Germany. Sales in the global auto market have generally increased as challenges such as the spread of COVID-19, parts shortages, and production cuts by automakers have eased. In the first half of 2023, the global sales volume of new energy vehicles was about 5.832 million, an increase of 40.2% year-on-year, and the market penetration rate reached 15%.

Sales Rose up, But VW’s Plans Tanked  

European new-car sales have risen for 12 straight months, driven by increased demand for electric vehicles and improved parts availability. In July, new car registrations in Europe rose 17 per cent year-on-year to 1.02 million, with sales of pure electric vehicles soaring 62 per cent while diesel sales fell 9 per cent.

However, in such an environment, Volkswagen’s plan to build a special electric car factory in Germany at a cost of $2.1 billion has failed. The automaker reportedly plans to modify its existing plants in Zwickau and Wolfsburg to produce a new flagship electric vehicle (the delayed Project Trinity) and an all-electric Golf hatchback.

“Trinity is a sort of crystallization point for our ACCELERATE strategy, a lighthouse project, our software dream car,” says Ralf Brandstätter, CEO of the Volkswagen brand. The newly developed vehicle architecture will set standards in terms of range, charging speed (“charging as fast as refueling”), and digitalization.

The failure of the plan was well-documented and chimed with an earlier statement by Thomas Schaefer, the boss of Volkswagen’s passenger cars. Schäfer said that with VW planning to phase out some combustion-engined models, it may have room to put Trinity’s production lines in an existing plant.

“By the time we were planning to bring the car in the middle of 2026, the factory at Wolfsburg—actually four factories—was chock-a-block,” Schäfer told Autocar at the Los Angeles Auto Show. “To integrate another car almost diagonally into the factory would have been a total disaster. Not possible. So we had to make a plan for another factory close by, run it up, clean up the rest and then reintegrate as much as we can into the old factory.”

VW Not in Its Best Shape  

In July, Schaefer said VW’s “roof is on fire” in a meeting with senior leaders. Schaefer outlined in an hour-long meeting the challenges that VW faces in the near and long term, but with a particular focus on the nearest weeks and months. He called for managers to make “small wins” and revealed a plan to severely cut spending at the auto manufacturing giant. His call for a freeze on spending was immediate, saying that the costs have run too high in too many areas.However, VW still hasn’t really flexed its muscles in electrics. Volkswagen (VOWG_p.DE) will suspend production of ID.3 and Cupra Born electric cars at its Zwickau and Dresden plants in Germany in the first two weeks of October due to weaker demand, a spokesperson for the carmaker said recently. Due to the current market situation, vehicle production will be reduced during the autumn holidays in Saxony from Oct. 2 to Oct. 13 at Volkswagen’s Zwickau plant, the spokesperson said.


Ivy Wu

Ivy Wu was a media reporter at btw media. She graduated from Korea University with a major in media and communication, and has rich experience in reporting and news writing.

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