Volkswagen AG’s PowerCo battery subsidiary has made a significant decision regarding its Salzgitter plant in Germany, opting to operate it at half its planned capacity. This decision comes in the wake of financial pressures and a dip in the demand for electric vehicles, a trend impacting the automotive industry globally.
During a staff meeting, Volkswagen’s technology chief, Thomas Schmall, announced that only one of the two planned production lines at the Salzgitter plant would be constructed. The plant, originally designed to accommodate two lines, will now have a reduced capacity of 20 gigawatt hours. This news, reported by Reuters, has sparked concerns among employees about the potential for the second line to be permanently abandoned, potentially as part of a larger cost-saving strategy at Volkswagen. This news follows the company’s recent announcement about potential plant shutdowns and job cuts, signaling a pressing need to “turn things around” within the next 1-2 years.
Despite these cutbacks, a PowerCo spokesperson assured that production at the Salzgitter plant will begin in 2025 as planned. However, the company will now adopt a more flexible approach to expanding production capacity, aligning it with future demand.
This decision by Volkswagen comes shortly after Tesla CEO Elon Musk raised questions about Volkswagen’s proposed $5 billion investment in Rivian Automotive. Musk expressed skepticism about the German automaker’s ability to fund this investment, especially considering reports of potential factory closures in Germany. The decision to scale back the Salzgitter plant further reinforces these concerns.
Volkswagen’s stock closed at $11.20 on Thursday in the OTC market and experienced a 2.50% decline in after-hours trading, according to Benzinga Pro.
This move by Volkswagen highlights the evolving landscape of the electric vehicle market. As demand for EVs fluctuates, automakers are adjusting their strategies to navigate the complexities of this rapidly changing industry.
