Volkswagen Navigates Perfect Storm: EV Costs, China Competition, and Looming Trade Wars Threaten Future

Volkswagen Faces Unprecedented Challenges Amidst Global Shifts Frankfurt, Germany – Volkswagen, Europe's largest carmaker, is grappling with a confluence of formidable challenges that threaten its profitability and future, according to a recent report by the Financial Times. The company is navigating a complex landscape marked by a significant slowdown in global vehicle demand, the immense financial burden of transitioning to electric vehicle (EV) production, and fierce competition in the crucial Chinese market. Patricia Nilsson, a Frankfurt correspondent for the Financial Times, emphasized the gravity of the situation. "What happens in the next couple of years will say a lot about the future of European industry and its ability to build electric cars profitably," she stated. Kana Inagaki, Industry Editor for the Financial Times, added, "I don't think Volkswagen has ever faced such a slew of challenges at the same time." The report highlights that the shift to EVs still incurs higher production costs, primarily due to expensive batteries, which erodes profit margins. Furthermore, Volkswagen's traditional stronghold in China has seen a collapse in sales, as Chinese EV carmakers offer more sophisticated and competitively priced vehicles. As one Chinese EV driver, Nora Tan, commented, "Chinese EV carmakers are cooler because they know what we want." Domestically, Volkswagen plans to drastically scale back production capacity in Germany, with an estimated 35,000 jobs to be lost through voluntary redundancies by 2030. Danny Auerswald, Managing Director of Volkswagen Saxony, underlined the necessity for efficiency: "All the German plants have to improve their productivity in order to have a secure and safe future." Adding to the woes are potential trade tensions, with Donald Trump's tariffs threatening Volkswagen's plans in the US. While Volkswagen has historically overcome crises and scandals, experts like Ingo Speich, Head of Sustainability & Corporate Governance at Deka, stressed the path forward. "Their approach is the right one: to bring costs down and to develop new models, but they have to bring the right car," Speich noted. The coming years are poised to be pivotal, not only for Volkswagen but for all legacy carmakers and the broader electric car revolution, as politicians worldwide contend with evolving trade policies and the industry's transformation.

www.focus.de

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