![Why is Volkswagen cutting ID.4 production just as US sales are surging? [Update]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2025/02/Volkswagen-ID.4-best-selling-EV-1.jpeg?resize=1200,628&quality=82&strip=all&ssl=1)
Why is Volkswagen cutting ID.4 production just as US sales are surging? [Update]
Volkswagen is cutting production in Chattanooga, Tennessee, where the ID.4 electric SUV is built. Although the ID.4 was the third top-selling EV in the US earlier this year behind Tesla’s Model Y and Model 3, a company spokesperson tells us “cautious demand for EVs” is behind the adjustments.
Volkswagen cuts ID.4 production in the US
After sales fell by over 50% in the US last year after Volkswagen halted production and deliveries, the electric SUV made an impressive comeback in 2025.
The ID.4 was the third best-selling electric vehicle in the US in January, trailing only the Tesla Model Y and Model 3.
Volkswagen sold nearly 5,000 ID.4s in January alone, putting it on pace to sell about 60,000 by the end of 2025. A company spokesperson told Electrek that although “ID.4 remains in strong demand, we are adjusting production to align with a lower-than-expected EV adoption rate in the US.”
The spokesperson added that the lower expectations are not specific to the ID.4 but to the entire US electric vehicle market.
Starting March 31, Volkswagen will return to a primarily two-shift production schedule. Meanwhile, the body shop for the ID.4 will still run on three shifts.
Volkswagen said in a statement, “This decision reflects the need for flexibility and a profitably-run business to support continued investment and growth in the US market.” The company is optimizing production across all sites, adding, “Given the currently cautious demand for EVs in the U.S., we are adjusting our production in Chattanooga accordingly.”
Although it didn’t directly say it, Trump’s tariffs on imports from Mexico and Canada are likely the biggest to blame.
Volkswagen said its vehicles made in North America are USMCA compliant, but it’s still expected to see the most damaging blow of German brands from the new tariffs.
Audi and Porsche are both primarily built in Europe, while Volkswagen brand vehicles in the US are likely imported from Mexico.
The spokesperson told us that VW is offering a “voluntary attrition program” with complete benefits, including severance packages, retirement options, and more.
Volkswagen said it remains “committed to our team members, our customers, and our presence in Chattanooga,” adding, “This change supports that commitment.”
The decision comes after last April’s historic decision, in which VW workers at the plant became the first in the South outside of the Big Three to join the Union since 1940.
On Wednesday, the UAW filed unfair practice charges against VW. In a statement, UAW president Shawn Fain said, “The UAW has notified the Trump Administration of Volkswagen’s unacceptable, anti-union, anti-worker, and anti-American conduct.”
In response, VW said the “unions claims in its filings from March 13 are categorically false.” The automaker said it “has negotiated with them for months regarding a shift reduction in Chattanooga.”
It has also “repeatedly educated them on the economics that have led to this difficult decision – shifting EV demand and an uncertain market.”
Electrek’s Take
As we keep saying, Trump’s tariffs do much more harm than good. Volkswagen is considering moving Audi and Porsche production to the US, but it only has until early April before the tariffs kick in.
Nearly every automaker has warned that added tariffs on its biggest trade partners will put the US further behind China and other emerging tech leaders.
Some automakers are already turning to China for smart EV tech (to sell globally) because it’s cheaper and easier to scale. And this is just the start. Other countries, like Australia, are now opening up to Chinese-made EVs and other tech. What’s next?
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ACME stock soars on today’s cartoonishly silly episode of Quick Charge, we watch Tesla Autopilot crash into a wall with a painting on it, make the Elon stans look silly when they point out shady behavior from their fearless leader, and toss out the notion that some franchise dealers might help the troubled EV brand make more sales in red states.
We also cover Toyota as it moves to position itself for global battery dominance by suppling batteries to more than 400,000 electrified Honda vehicles per year, plus an upgraded Xpeng G6 electric SUV that makes everything on this side of the Pacific look positively plebeian. All this and more, enjoy!
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Tesla has already started offering 0% APR on loans for the new Model Y in China, showing a clear sign of weak demand.
We recently reported that Tesla is under increased pressure from competition in China, the world’s largest EV market.
The Tesla Model 3 was recently surpassed in sales by the Xiaomi SU7 in a record short period from starting production. The SU7 not only outsells Model 3 in China, but Xiaomi’s electric sedan has a 31-34-week-long order backlog compared to just 1-3 weeks for Tesla’s.
Last month, Tesla started offering a new RMB 8,000 ($1,100 USD) insurance subsidy and 0% loans on new Model 3 orders.
Tesla didn’t apply these same offers to new Model Y orders because Tesla enjoyed more demand for the vehicle due to the launch of the Model Y refresh, and the production launch limited the supplies.
However, we also noted that reports of more than 200,000 orders for the new Model Y were exaggerated and the current delivery timelines pointed to soft demand for the new Model Y.
We noted that a good indication of when Tesla is running out of the backlog of orders, which was opened in January, for the newly delivered vehicle would be if Tesla brings back financing incentives on the Model Y.
Today, Tesla announced that it was bringing back the 0% interest loans on the base version of the new Model Y:
The Model Y RWD is by far Tesla’s best-selling car in China and Tesla is now offering up to 3 years at 0% for a 30% down payment and some discounted rates for a smaller down payment.
The incentive starts now and up to April 30. Tesla wrote:
If you purchase a Model Y rear-wheel drive version from March 18, 2025 to April 30, 2025 and pick up the car before the order expiration date according to the delivery and payment terms in the order, eligible customers can apply for the following financial preferential plans:
Tesla currently quotes “2-4 weeks” as a delivery timeline for new orders for the new Model Y RWD, and 6-10 weeks for Long Range AWD.
The Long Range appears to enjoy a bit more demand. Tesla even slightly increased the price by RMB 10,000 yuan ($1,380).
Electrek’s Take
It’s important to consider that Tesla is believed to be selling a mix of RWD vs AWD around 3 to 1 or even 4 to 1. Therefore, any change in pricing and subsidized loans to the Short Range RWD would have a massive impact on Tesla.
I have to say, I’m surprised. I suspected Tesla would have some issues selling the new Model Y in the second half of the year after some excitement for the new version wore off and competition like the Xiaomi YU7 would arrive, but I didn’t think it would come so fast.
Even if this is because Tesla was able to ramp up production of the new version faster, which could mean more deliveries in Q1, the fact that they are already discounting them is a terrible sign of demand.
I didn’t have high hopes for Tesla’s prospects in China in 2025, but even I thought this would not come for another 3-5 months.
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The World Liberty Financial website arranged on a smartphone in New York, US, on Wednesday, Feb. 12, 2025.
Gabby Jones | Bloomberg | Getty Images
President Donald Trump’s World Liberty Financial crypto project said on Monday that it raised $250 million in its second token sale, bringing the total amount of coins sold to $550 million.
WLFI, a venture backed by the first family that describes itself as a sort of crypto banking platform, launched in October, weeks before Trump’s election victory. In a document published at the time of launch, WLFI said the Trump family could take home 75% of net revenue.
In Monday’s release, WLFI said more than 85,000 participants underwent so-called know-your-customer verification to gain access to the token sale. Co-founder Zach Witkoff, son of billionaire U.S. envoy Steve Witkoff, is quoted in the release as saying that “WLFI is on track to supercharge DeFi,” or decentralized finance.
In January, Tron blockchain founder Justin Sun upped his stake in WLFI tokens to $75 million. A court filing the following month showed that Sun and the SEC were exploring a resolution to the regulator’s civil fraud case against the crypto entrepreneur.
WLFI is one of several crypto projects in the Trump family that are kicking off just as the president is pushing a crypto-friendly agenda. Earlier this month, President Trump signed an executive order to establish a Strategic Bitcoin Reserve.
According to a memo from the White House last week, David Sacks, the Trump administration’s AI and crypto czar, sold over $200 million worth of digital asset-related investments personally and through his firm, Craft Ventures, before starting the job. Sacks said in a podcast that he “didn’t want to even have the appearance of a conflict.”
At the end of February, the SEC declared that meme tokens are not securities. The announcement came after the president and First Lady Melania Trump launched their own meme coins in the days leading up to the inauguration.
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