Volkswagen AG is facing a critical juncture in its electric vehicle (EV) strategy, as the company considers closing its Audi plant in Brussels, Belgium, which produces the Q8 e-tron model. This potential closure, affecting around 3,000 employees, comes in response to a sharp decline in customer orders for luxury electric vehicles and could mark the first time Volkswagen has shut down a car plant in Europe.The company has lowered its 2024 operating return on sales forecast to 6.5-7%, down from the previous 7-7.5%, citing unexpected expenses of around €2.6 billion related to the potential Brussels plant closure. This adjustment reflects broader challenges for the Volkswagen Group, including a 3.8% drop in second-quarter sales, primarily driven by a 20% decline in deliveries in China.While Volkswagen grapples with these setbacks, its German competitor BMW is gaining ground in the EV market. BMW reported a 25% increase in electric vehicle sales in the first half of the year, delivering 107,933 units in the second quarter alone. This growth stands in stark contrast to both Audi and Mercedes-Benz, which have seen declines in their EV sales.The situation at Audi reflects broader trends in the European electric vehicle market, where sales have flattened or diminished in some segments. Industry experts suggest that demand is shifting towards more affordable EVs, with companies like Volkswagen, Volvo, and Hyundai seeing success with their lower-priced models.As Volkswagen considers its options, including finding alternative uses for the Brussels site, the company remains cautious about the remainder of the year. A spokesperson stated, ‘We don’t expect an easy year,’ highlighting the ongoing challenges in the rapidly evolving EV market. The potential closure of the Brussels plant underscores the broader issues facing the automotive industry as it transitions to electric vehicles, with companies needing to balance innovation, profitability, and changing consumer preferences.
Key points
- Volkswagen is considering closing its Audi plant in Brussels due to declining demand for luxury EVs.
- The company has lowered its 2024 operating return on sales forecast and reported a decline in second-quarter sales.
- BMW is outperforming its German competitors in EV sales, with a 25% increase in the first half of the year.
- The automotive industry is facing challenges in balancing the transition to EVs with profitability and changing consumer preferences.
Contradictions👾While Volkswagen and Audi struggle with EV sales, BMW reports significant growth in the same market segment.
👾Volkswagen is losing ground in Europe and the US but gaining in China for EV sales, contrasting with its overall sales decline in China.
