Volkswagen delays fourth EV battery plant over ‘sluggish’ sales

Europe’s largest automaker, Volkswagen, is delaying plans for a fourth EV battery factory for now. CEO Oliver Blume said the decision was based on market conditions in Europe.

Volkswagen pushes back fourth EV battery plant plans

The Volkswagen Group announced plans to open six gigafactories by the end of the decade. VW has already chosen three sites, including one in Salzgitter, Germany, another in Valencia, Spain, and the most recent in St. Thomas, Ontario.

Volkswagen initially planned for the third to be in Europe but chose North America to take advantage of IRA incentives.

The company has been searching for its fourth in Eastern Europe for over a year, considering sites in the Czech Republic, Hungary, Poland, and Slovakia.

Although the Czech Republic has been pulling for VW to establish a plant, officials said they could not wait any longer and would offer the site to others. The news comes after Blume met with Czech officials this week, according to Automotive News.

Blume explained that “there is for the time being no business rationale for deciding on further sites.” VW CEO said the decision was “based on market conditions, including the sluggish ramp up of the BEV market in Europe.”

Volkswagen is already in the middle of building three facilities. Blume said the three plants have up to 200 GWh production capacity annually.

The news comes after the company’s CFO, Arno Antlitz, said EV orders were down 50% in Europe from 300,000 last year to 150,000.

Europe is Volkswagen’s biggest EV market, accounting for over 60% of global sales. Its second largest, China, is also at risk. Antlitz explained the automaker could lose market share in the region until new models with XPeng begin rolling out.

Electrek’s Take

Volkswagen delaying its fourth EV plant comes after several major automakers, including Ford, GM, and Toyota, pushed back their own plans.

Ford said it would push back its 600,000 EV run rate goal for another year while delaying around $12 billion in planned manufacturing investments.

GM is delaying production of the Equinox EV, Silverado RST EV, and GMC Sierra EV Denali. Both automakers revealed battery plant delays as well.

Toyota announced Wednesday it’s cutting its EV sales forecast for the fiscal year by nearly 40%. The Japanese automaker said the move was due to the “intensifying price war” in China.

Despite this, Toyota surprisingly invested an additional $8 billion into its North Carolina EV battery plant, bringing the total to roughly $13.9 billion.

Automakers investing now will see the benefits as EV adoption is only expected to continue climbing from here on out. Those delaying plans now will fall further behind as leaders like Tesla and BYD rapidly gain market share globally.

Volkswagen cited “sluggish” EV sales in Europe, but Tesla’s Model Y was the best-selling passenger vehicle (gas or electric) in September. This is the sixth time the EV has earned the title in nine months. How is that so?

Tesla is building EVs people want to buy, providing value to customers. Meanwhile, some buyers are not seeing the value in Volkswagen’s EVs. The automaker has struggled with software and other features, which has led to sluggish orders. That’s not to say Volkswagen EVs are bad. They are just lacking that Tesla-like appeal.