Low demand, Volkswagen announces postponement of construction of its fourth electric vehicle battery factory

On November 2nd, it was announced that Volkswagen Group has temporarily postponed the construction plan of its fourth electric vehicle battery factory. CEO Oliver Blume stated that this decision was based on market conditions in Europe

On November 2nd, it was announced that Volkswagen Group has temporarily postponed the construction plan of its fourth electric vehicle battery factory. CEO Oliver Blume stated that this decision was based on market conditions in Europe.

Volkswagen plans to open six battery factories in the 1920s and has chosen three locations: Salzgit, Germany, Valencia, Spain, and St. Thomas, Ontario, Canada.

The company initially planned to open a third battery factory in Europe, but ultimately chose North America to take advantage of the US Inflation Reduction Act (IRA) incentives.

For over a year, Volkswagen has been searching for the location of a fourth battery factory in Eastern Europe, considering places such as the Czech Republic, Hungary, Poland, and Slovakia. Although the Czech Republic has been promoting Volkswagen to establish factories locally, officials have stated that they cannot wait any longer and plan to provide the factory site to other companies. According to reports, this news was released after Obom met with Czech officials this week.

Obom explained, "There is currently no commercial reason to decide to build more factories." He stated that this decision is based on market conditions, including the slow growth of the European pure electric vehicle market

Europe is Volkswagen's largest electric vehicle market, accounting for over 60% of global sales. In addition, there is a risk of Volkswagen's market share being eroded in China. As local manufacturing companies launch new models one after another, Volkswagen may lose more market share in the Chinese electric vehicle market.

Previously, major automakers such as Ford, General Motors, and Toyota have also postponed their electric vehicle production plans.

Ford has stated that it will delay achieving its target of 600000 electric vehicle operations and postpone its manufacturing investment plan of approximately $12 billion.

General Motors is delaying production of electric vehicles such as the EquinoxEV, SilveradoRSTEV, and GMCSierraEV Denali, and the two automakers have also postponed plans to build battery factories.

Toyota announced a nearly 40% reduction in its expected sales of electric vehicles for this fiscal year. Toyota stated that the escalating price war in the market is the reason for this move.

Despite this, Toyota has invested $8 billion in an electric vehicle battery factory located in North Carolina, bringing the total investment to approximately $13.9 billion.

At present, the popularity of electric vehicles is constantly increasing, and investing in car manufacturers is expected to yield more profits. Market leaders such as Tesla and BYD are rapidly gaining more market share globally, and companies that delay their plans will fall behind.

Volkswagen called the sales of electric vehicles in the European market "sluggish," but Tesla's ModelY was the best-selling passenger car in September this year, winning the sales championship for nine consecutive months. This is mainly because Tesla is producing electric cars that people want to buy, while some buyers do not see the value of electric cars produced by Volkswagen. Volkswagen has been facing problems with software and other automotive features, resulting in low orders. It's not that Volkswagen electric cars are bad, it's just that they lack the appeal of Tesla electric cars.(Chen Chen)