Volkswagen Cuts EV Manufacturing, Cancels New Wolfsburg Manufacturing unit

Volkswagen has decreased the output of electrical automobiles at its German factories and has cancelled plans to construct a brand new $2 billion manufacturing unit in Wolfsburg, based on a report from Bloomberg. Is that this excellent news, unhealthy information, or simply information? Let’s dig into each tales to see if we will discover some solutions to these questions.

Volkswagen Trims EV Output

Bloomberg reported on September 26 that demand for electrical automobiles in Germany has suffered a major decline this month primarily as a result of the German authorities has determined to finish EV subsidies for enterprise prospects — a giant a part of the brand new automotive market in Germany. That call led to a giant enhance — 171 p.c — in EV gross sales in August as prospects raced to purchase new automobiles earlier than the subsidies ended. Since then, EV gross sales have been falling within the wake of the subsidy phaseout. 70% of the electrical automobiles manufactured in Zwickau are bought by enterprise prospects.

With out the subsidies, the worth of shopping for a brand new electrical automotive for enterprise use has gone up considerably, however customers produce other considerations on their minds as effectively. Electrical energy charges are going up, as is the price of dwelling for a lot of Germans, and there are nonetheless lingering considerations about charging infrastructure and the driving vary of battery-powered automobiles.

Manufacturing of the Volkswagen ID.3 and Cupra Born electrical fashions might be dialed again on the firm’s principal EV manufacturing unit in Zwickau till October 16, a spokesperson mentioned. Meeting of the ID.3 on the Glass Manufacturing unit in Dresden will stop for the primary two weeks of October.

Volkswagen is engaged in talks with native labor representatives on how manufacturing in Zwickau will proceed within the second half of October, the spokesperson added. Meeting in Dresden will return to regular beginning within the final two weeks of October.

Volkswagen mentioned earlier this month it is going to be letting 269 short-term employees in Zwickau go as soon as their one-year contracts expire.

No New Manufacturing unit In Wolfsburg

When Herbert Diess was operating the present as head of Volkswagen Group, he talked typically of his plans for a brand new electrical automotive structure he referred to as Trinity, and mentioned the corporate would construct a brand new $2 billion manufacturing unit in Wolfsburg that may rival the effectivity and productiveness of the Tesla manufacturing unit in Grünheide.

However when Diess obtained changed by Oliver Blume, an intensive evaluation of the Trinity program and the proposed new manufacturing unit was undertaken. Now that the evaluation has been accomplished, a choice has been made and accredited by the 20 members of the Volkswagen Board of Administration to scrap the plans for a brand new manufacturing unit — which was projected to price greater than $2 billion — and reshuffle the plan for which automobiles might be made the place among the many firm’s present factories.

In an organization press launch on September 29, 2023, Thomas Schäfer, CEO of the Volkswagen model, mentioned, “Our business faces complicated challenges because it undergoes a change that’s being performed beneath troublesome enterprise situations. It’s all the extra necessary that we put together our particular person crops and the Volkswagen manufacturing community in Germany for the longer term. Throughout the context of our efficiency program, this newly accredited automobile allocation plan will make a considerable contribution to a robust, aggressive VW model.”

Christian Vollmer, the Volkswagen model Board of Administration member for manufacturing and a member of the Prolonged Government Committee for Manufacturing, added, “We’re utilizing the transition to electromobility as a chance to scale back the complexity of our manufacturing operations and enhance the effectivity of our crops even additional. We’re systematically bundling autos primarily based on the identical structure throughout all manufacturers in our crops. By doing so, we are going to save important investments within the integration of various automobile architectures. Reasonably, we would like our crops to supply a number of totally different fashions on the technical foundation of 1 automobile structure.”

The corporate mentioned that manufacturing of the ID.3 might be ramped up in 2023 on the Zwickau manufacturing unit (after the early October pause is over, presumably). The Wolfsburg manufacturing unit might be tasked with producing a second electrical mannequin — an all-electric SUV for the high-volume A phase — beginning in 2026.

Wolfsburg may also produce the still-popular Volkswagen Golf and the subsequent technology Tiguan. Starting in 2025, the successor mannequin of the Tiguan Allspace might be produced on the Wolfsburg manufacturing unit  as effectively.

Shuffling The Manufacturing Deck

The board determined — little doubt on the behest of Oliver Blume — there was no have to construct an extra plant in Wolfsburg. As an alternative, new electrical fashions primarily based on the SSP structure (scalable programs platform), that might be launched on the finish of the last decade, might be built-in into present and modernized buildings on the principal plant. A battery electrical model of the Golf can also be to be constructed there on the SSP platform. As issues stand right this moment, the Trinity automobile mission initially deliberate for Wolfsburg will go to the Zwickau manufacturing unit.

Handelsblatt provides some context right here. An unidentified member of the supervisory board informed the German newspaper that the plans for a brand new manufacturing unit to construct the Trinity automobiles “have been too optimistic. Briefly: they might not be fulfilled. However there’s extra to the story. The present settlement with the works council in Zwickau expires in 2029.”

The Trinity platform is anticipated to enter manufacturing in 2028. Subsequently, constructing automobiles on that platform in Zwickau will present the employees at that manufacturing unit with the job safety they search after the present settlement expires. Vehicles constructed on the Trinity platform are anticipated to be able to a lot greater charging speeds and at the least have the potential of Degree 4 autonomous operation.

Bloomberg studies the choice to assign Golf manufacturing to Wolfsburg comes because the model pushes by means of financial savings measures demanded by Blume. Excessive demand anticipated for the mannequin bolsters the argument to maintain staffing ranges excessive as a job safety package deal with the union runs expires in 2029. Lastly, Volkswagen Industrial Automobiles in Hanover is anticipated to construct a brand new household of electrical fashions on the scalable EV platform deliberate for the top of the last decade.

As at all times, the union was closely concerned in all this planning for the longer term. Daniela Cavallo, the pinnacle of the Common Works Council, mentioned in an announcement, “With the selections for our home automobile manufacturing VW crops, now we have now taken an necessary step within the planning spherical. In doing so, even in troublesome instances, the corporate and the Works Council are demonstrating their means to work collectively to seek out stable options that mix the very best financial utilization of the factories and clear prospects for our work forces. With that in thoughts, we are actually transferring on to the subsequent phases tfor the planning spherical and the efficiency program.”

The Takeaway

The query we requested firstly was is that this a great factor or a nasty factor? To an outdoor observer, there’s a trace of panic about all this sturm und drang over the Trinity mission, the sacking of Herbert Diess (sure, we all know he wasn’t fired, nevertheless it appears no one has heard something from him in nearly a 12 months — is he locked in a brush closet someplace?), the on-again, off-again rumors of the ID. Life/ID.2, and the persevering with saga of software program that doesn’t work the best way it ought to.

Oliver Blume is clearly tremendous competent, nevertheless it should be a relentless problem coping with the Porsche and Piech households, to not point out the federal government of Decrease Saxony. It may possibly’t be enjoyable balancing all of the calls for being made on him.

The EV revolution goes to see some corporations fail. So far, it has appeared that Volkswagen would survive, however there’s a whiff of desperation within the air in Wolfsburg. What do you assume? Tell us within the feedback.