Volkswagen’s plant in Dresden, Germany, may see a halt in production of the ID.3 electric models, according to a report by German newspaper Automobiliwoche. The facility, which employs around 300 full-time workers, has been responsible for building thousands of ID.3 models in the past year. However, Volkswagen is expected to retain the location in some capacity and reassign the workers to other areas of innovative manufacturing and testing.
The Dresden plant, which began production in 2002, has produced over 150,000 models including the Phaeton, Bentley Flying Spur, VW e-Golf, and ID.3. Last year alone, 6,500 ID.3 electric models were manufactured at the plant. While the fate of the additional 2,000 temporary staff remains uncertain, the move to stop ID.3 production is likely part of Volkswagen’s broader strategy to reduce costs and improve its competitive position in the market.
The annual operating costs of the Dresden plant are estimated to be between €60 million ($64M) and €70 million ($74.6M). By discontinuing ID.3 production, Volkswagen could potentially save around €20 million ($21.3M). This decision comes after Volkswagen recently announced job cuts at its Zwickau plant, where a variety of EVs, including the ID.3 and ID.4 SUV, are manufactured.
The report suggests that a combination of factors, such as a lack of orders, higher inflation, and reduced subsidies, has impacted the demand for Volkswagen electric vehicles. As a result, Volkswagen is seeking to increase profitability and compete more effectively with other automakers, including Tesla and Chinese EV manufacturers like BYD.
Volkswagen Group CEO Oliver Blume aims to boost the returns of the Volkswagen brand to 6.5% by 2026, equivalent to approximately €10 billion ($10.7B) in profits. Currently, the brand’s returns stand at around 3.6%. The decision to halt ID.3 production at the Dresden plant is part of Volkswagen’s efforts to streamline operations and focus on more profitable avenues in the electric vehicle market.