VW Turns on Germany as China Targets Europe's EV Blunders
fliptop writes:
Losing ground in the race to produce electric vehicles, German and French carmakers are heading toward a disruptive wave of factory closures:
Volkswagen AG is considering factory closures in Germany for the first time in its 87-year history, parting with tradition and risking a feud with unions in a step that reflects the deep woes roiling Europe's auto industry.
After years of ignoring overcapacity and slumping competitiveness, the German auto giant's moves are likely to kick off a broader reckoning in the industry. The reasons are clear: Europe's efforts to compete with Chinese rivals and Tesla Inc. in electric cars are faltering. (full article is paywalled)
"If even VW mulls closing factories in Germany, given how hard that process will be, it means the seas have gotten very rough," Pierre-Olivier Essig, a London-based equities analyst at AIR Capital, told Bloomberg. "The situation is very alarming."
[...] Car sales in Europe are down nearly one-fifth from prior to the COVID-19 pandemic and EV demand has slackened as Germany and Sweden have removed and reduced incentives to purchase the vehicles, Bloomberg reported. As a result, Chinese EV manufacturer BYD has jumped into the European market, pricing its Seagull model at just $9,700 before tax, a far cry from the European's average EV cost of $48,000 in 2022.
VW began downsizing in July, with its Audi subsidiary cutting 90% of its 3,000 person workforce at its manufacturing plant in Brussels, Belgium, according to Bloomberg.
The company's share price is now approaching the lows of its 2015 "diesel crisis," when the U.S. Environmental Protection Agency accused the company of installing illegal software in its cars in order to artificially improve its results on diesel emission tests, BBC News reported. The company also posted a 100 million net cash flow loss on its automotive business in the first half of 2024.
Related:
- South Korean EV Battery Makers Reporting Big Losses as EV Demand Slows
- General Motors Lays Off Hundreds Of US Workers
- Auto Woes
- Why are All the EVs so Expensive?
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