Volkswagen Might SHUT DOWN EVs Soon! | HO

The current crisis engulfing Volkswagen, particularly focusing on their struggles with the electric vehicle (EV) market.

Volkswagen is facing an uncertain future in the electric vehicle (EV) market, with significant challenges that could force the company to reconsider its commitment to EV production. Despite the global push toward electrification, VW’s recent financial struggles and declining demand for EVs have raised questions about whether the company might scale back or even shut down its EV operations.

The company’s CEO, Thomas Schaer, has expressed concerns over Volkswagen’s escalating debt and the increasing pressure to keep up with rivals like Tesla and BYD. VW’s decision not to reduce the prices of its EVs, despite the decline in demand, reflects its struggle to maintain profitability in a market where cost reduction is key. Adding to the pressure are rising costs of raw materials, external challenges like the Russia-Ukraine conflict, and disruptions in supply chains.

In response, Volkswagen has already pulled back from some EV production and made the tough decision to halt production of two of its leading EV models in Germany due to a drop in demand, exacerbated by cuts in government subsidies. Furthermore, the company’s sales in China—their primary market—have also fallen, forcing them to reduce prices on some models to stay competitive.

With competitors offering more affordable EV options, Volkswagen’s strategy of not reducing prices could backfire, especially if it continues to alienate customers. Despite this, Volkswagen is exploring partnerships to develop more cost-effective electric vehicles, including discussions with Renault for a $2,000 EV aimed at mass production.

Whether Volkswagen can recover and remain a key player in the EV race is still uncertain. Their financial strain, coupled with rising competition and the struggle to balance EV production with traditional vehicle offerings, leaves the company at a critical crossroads. The next few years will be crucial in determining whether VW can adapt or if it will be left behind in the rapidly evolving electric vehicle market.

Volkswagen deliveries fall in 2024 as electric push slows

Volkswagen’s deliveries fell last year, the German carmaker said Tuesday, underlining fierce Chinese competition and faltering demand for electric vehicles.

The 10-brand group, which includes Audi, Porsche and Lamborghini, sold 9.03 million vehicles last year, down 2.3 percent from 2023.

But in China, VW’s second-largest market by volume, deliveries plunged 9.5 percent.

Marco Schubert, responsible for sales operations at the firm, said an uptick in the last three months of the year was promising.

“In the final quarter we again approached the previous year’s volume in China,” Schubert said. “We have created a good starting point for this year.”

However, analyst Pal Skirta from Metzler Bank said Volkswagen’s troubles in the country were unlikely to pass soon.

The carmaker has been outmanoeuvred by local firms such as BYD and Xpeng, who have developed affordable EVs with the kind of entertainment software that Chinese drivers expect, he said.

“Volkswagen was still living in the old world of combustion engines and they neglected how quickly competitors like BYD were developing until recently,” he said.

“Chinese manufacturers, they don’t have this kind of legacy business, the combustion engine business. They could concentrate all their efforts on electric vehicles and software.”

Worldwide, Volkswagen’s EV deliveries fell 3.4 percent in 2024. EV sales in the United States dropped 30.5 percent while in Europe they were down 5.2 percent.

The European Union plans to force the transition to electric cars in an effort to combat climate change. A ban on the production of combustion engine vehicles is planned for 2035.

However, state support for EVs has been patchy. Germany, Volkswagen’s home market, abolished subsidies for electric cars at the end of 2023.

Volkswagen is one of a number of European carmakers struggling in the face of fierce Chinese competition and the switch to EVs.

BMW warned investors in November that its performance for the year would fall short of expectations, citing weak demand for its cars in China.

Stellantis, whose brands include Jeep, Peugeot and Fiat, likewise said in September that Chinese competition would hit its performance.

In December, Volkswagen reached an agreement with unions to cut 35,000 jobs across Volkswagen’s German locations by 2030.

The company said the drastic cuts should save around four billion euros ($4.1 billion) a year in the medium term and avoid plant closures in Germany, which Volkswagen had previously warned might be required.

The Volkswagen group publishes its full financial results for 2024 on March 11.