Embattled European carmaker Volkswagen is considering the unprecedented step of closing factories in its home country of Germany as it struggles to transition assembly lines to EVs.The Wolfsburg-based company — home to the world’s largest car plant — told its worker council on Monday that it is looking at closing “at least one larger vehicle manufacturing plant and one component factory in Germany” to find billions of Euros in potential cost saving to offset losses in its EV division.To that end, it cancelled its so-called ‘employment protection’ agreement — akin to a collective bargaining agreement — that had been in place since 1994 to secure “urgently needed structural adjustments.”“The situation is extremely tense and cannot be resolved through simple cost-cutting measures,” the company said in a statement..The irony is that gasoline and diesel powered cars remain hugely profitable even as it scales back production of those models.Volkswagen had previously reduced shifts and cut production at its German factories but this is the first time it is considering closing any in the Fatherland itself, which would carry a heavy political price both for the company and the German government which lost a state to the right-wing Alternative fur Deutschland for the first time since the Second World War.“The European automotive industry is in a very demanding and serious situation. The economic environment became even tougher, and new competitors are entering the European market,”Volkswagen CEO Oliver Blume said.“In addition, Germany in particular as a manufacturing location is falling further behind in terms of competitiveness. In this environment, we as a company must now act decisively.”.It parallels the struggles of North American automakers like Ford that is reportedly losing up to USD$40,000 on every EV sold.Both are facing competition from cheaper Chinese imports that threaten to flood Western markets and billions in taxpayer subsidized assembly lines and supply chains.In Canada alone, Volkswagen was handed CAD$13.9 billion in 2023 to build a battery plant in St. Thomas, ON.Ford last month cited Chinese competition for cancelling a planned new electric SUV and delayed a new electric pickup truck. General Motors and Mercedes — even Tesla — have also scaled back their respective EV manufacturing plans.Whereas the US and Canada have both slapped 100% tariffs on Chinese EVs, European surtaxes range from 17% to 38% on top of a 10% import fee. Even so, many Chinese brands remain cost competitive.In addition to its namesake brand, Volkswagen also controls Porsche, Audi, Lamborghini, Bentley and Ducati.In July, Audi said it was considering closing a factory in Belgium, which would be the first for the company globally in 40 years.German workers’ groups and unions were unimpressed. The General Works Council and the IG Metall union were quick to condemn the proposals.“The board of directors today presented an irresponsible plan that shakes the foundations of Volkswagen and poses a massive threat to jobs and locations,” Thorsten Gröger, district manager of IG Metall, said in a statement, according to a Google translation.“This course is not only short-sighted, but also extremely dangerous — it risks destroying the heart of Volkswagen.”
