The Volkswagen Group finds itself in a production problem as reports from Germany indicate growing struggles to align supply and demand for their electric vehicles. Specifically, the production of Volkswagen ID.3 and Cupra Born will be halted in the first two weeks of October at their Zwickau and Dresden plants. The surprising element? The demand issue appears to be more acute for their compact electric hatchbacks rather than their crossover/SUV variants.

The company is even talking about job cuts in order to stabilize again

This move is particularly eyebrow-raising as the company had transitioned its Zwickau plant entirely to electric vehicle (EV) production. The factory, originally designed for a full three-shift production cycle to output approximately 330,000 vehicles annually, could muster only 218,000 in 2022. Volkswagen’s strategy seems to be misaligned with market demands, despite the general upswing in the all-electric market both in Europe and globally.

Volkswagen

The immediate consequence has led to talk of job cuts and even discontinuing the third shift at the Zwickau plant by 2024. The company now finds itself in negotiations for a new production agreement with its Zwickau workers, aiming to come up with a plan that ensures the “economic viability” of the production site while taking into account the current market scenario.

This situation raises questions about consumer preferences in the growing electric car market. Why is there a lukewarm response to compact electric hatchbacks when the entire electric vehicle space is heating up? It begs the question whether car buyers are still tied to traditional vehicle types, even as they venture into electric territory. Are compact EVs losing their spark even before catching fire?

What’s also noteworthy is that production for the Volkswagen ID.4 and ID.5, along with the Audi Q4 e-tron variants, will continue as usual, suggesting that perhaps the European consumer is still more inclined towards larger, more robust electric vehicles. It’s a puzzle that Volkswagen, and perhaps other automakers, will need to solve sooner than later.

While production is set to resume on October 16, it’s clear that temporary production cuts are merely a band-aid for a more complex issue. The automotive giant will have to think long and hard about what European consumers really want in an electric car.

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