Volkswagen (VW) AG is considering closing factories in Germany as European automakers struggle to compete with Chinese electric vehicle (EV) makers.
The company has never closed a German factory in its 87-year history but is now considering its options as it faces slowing car sales in Europe and tough competition from Chinese electric vehicle maker BYD. According to Experts predict the move will trigger closures across Europe, with more than 30 European car factories currently operating at unprofitable levels. (Related article: Volvo abandons 2030 EV goal amid continuing market woes)
“Even if Volkswagen were to consider closing a German plant, it means things are very turbulent, given how difficult the process would be,” Pierre-Olivier Essig, an equity analyst at London-based Air Capital, told Bloomberg. “The situation is very worrying.”
Volkswagen considers first-ever factory closure as German economy hits hard by 'decline'
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European auto market shrinks due to COVID-19 pandemic, facing demand shortfall of about two factories pic.twitter.com/Z1CaydWh13
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European car sales are down by nearly a fifth compared to pre-pandemic levels, and demand for EVs has slowed after Germany and Sweden eliminated or reduced incentives for car purchases, Bloomberg reported. As a result, Chinese EV maker BYD entered the European market and slashed the price of its Seagull to $2.50 to $3.50. Model The price before tax is just $9,700, a big difference from the average European EV price of $48,000 in 2022.
VW began cutting jobs in July, with subsidiary Audi cutting 90% of its 3,000 employees at its manufacturing plant in Brussels, Belgium, according to Bloomberg.
The company's shares are now near the lows of the 2015 “diesel crisis,” when the US Environmental Protection Agency accused the company of installing illegal software in its cars to artificially improve diesel emissions test results. BBC News ReportedThe company also recorded a net cash flow of EUR 100 million. loss The company will focus on its automotive business in the first half of 2024.
BYD is set to overtake Tesla as the world's largest EV maker in 2023, selling more than 3 million vehicles and increasing profits by more than 80%. The company is tied to the Chinese Communist Party's Belt and Road Initiative. Large scale The Chinese-led infrastructure project aims to expand the country's global influence.
“I'm deeply concerned,” Bernd Westphal, an economic policy expert in Germany's ruling party, told Bloomberg. “Despite fully understanding the challenges facing the auto industry, I don't see plant closures and job cuts as a plausible strategy.”
Volkswagen did not immediately respond to a request for comment.
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