Volkswagen Contemplates Closing Historic German Plants in Response to Chinese EV Competition Pressure
According to a free-market expert, Chinese competition is gradually eroding Germany’s industrial model, which relies on manufacturing for 18 percent of its economy.
Volkswagen is contemplating shutting down factories in Germany for the first time due to mounting pressure from more affordable Chinese electric vehicle rivals.
The company aims to save $11 billion by 2026 to navigate the shift to electric cars.
“The situation is very tense and cannot be resolved with simple cost-cutting measures,” stated Volkswagen brand chief Thomas Schäfer on Tuesday.
As Europe’s leading carmaker by revenue and Germany’s biggest industrial employer with about 680,000 employees, Volkswagen also announced the end of its job security program, in place since 1994 to prevent job cuts until 2029, due to the pressure.
All decisions will be discussed with the works council.
An analyst informed The Epoch Times that German plant closures are inevitable as Chinese competition undermines the country’s manufacturing model.
Chinese EVs
In June, the German statistics office reported that 40.9 percent of all imported electric cars in the first four months of the year came from China.
In July, the European Commission imposed tariffs of up to 38.1 percent on battery electric vehicle imports from China, citing unfair subsidies that threaten European EV manufacturers with economic harm.
Volkswagen cautioned in June that the drawbacks of tariffs would outweigh any advantages, especially for the German automotive industry.
Politicians Have ‘Accelerated the Decline’
Andy Meyer, COO and energy analyst at the Institute of Economic Affairs, mentioned that German plant closures at Volkswagen and elsewhere are inevitable. He highlighted that in Germany, Chinese competition is destabilizing the unique industrial setup where manufacturing constitutes 18 percent of the economy, as opposed to the average 8–10 percent in the rest of the West.
He also addressed the impact of German politicians focusing more on climate change signaling and appeasing anti-nuclear activists over energy security, resulting in costly and unreliable energy sources, which negatively affect the industry.
Unions
The cost-cutting plan is sparking a significant clash with Volkswagen’s works council and IG Metall, Germany’s largest trade union, which vows to vehemently oppose any factory closures.
In a statement, Thorsten Gröger, IG Metall regional director, expressed concerns about the impact on jobs and locations due to potential plant closures.
Further statements from union representatives reiterated their strong opposition to any plant closures, highlighting the risks to jobs, locations, and agreements at Volkswagen.
Volkswagen was contacted for comment by The Epoch Times but did not respond by the time of publication.
Reuters contributed to this report.
