The fate of Volkswagen’s plant in Dresden, Germany, is up in the air after a new report claims the automaker plans to halt production at the facility. Volkswagen’s Dresden plant built thousands of ID.3 electric models last year, employing around 300 full-time workers.
Volkswagen said to stop ID.3 production in Dresden
According to the report from the German newspaper Automobiliwoche, the location will likely be retained in some capacity, and the workers will be given other assignments.
Beginning production in 2002, VW’s Dresden factory has built over 150,000 Phaeton, Bentley Flying Spur, VW e-Golf, and ID.3 models.
It was initially opened to showcase new models under then-CEO Ferdinand Piech. Last year, Volkswagen produced 6,500 ID.3 electric models at the location.
Dresden’s roughly 300 or so employees will be reassigned to areas of “innovative manufacturing and testing.” However, the fate of the 2,000 additional temporary staff is still up in the air.
The move is likely part of a broader strategy to cut costs and better position the company to compete in the future. According to sources speaking with Bloomberg, the facility’s annual operating costs are between €60 million ($64M) and €70 million ($74.6M).
By ending ID.3 production at the plant, Volkswagen could save around €20 million ($21.3M).
Last week, Volkswagen announced at a staff meeting that it would be cutting 269 temp jobs at its Zwickau plant, where EVs including the ID.3, ID.4 SUV, ID.5, Audi Q4 e-tron, and Cupra Born are manufactured.
A lack of orders, higher inflation, and smaller subsidies are threatening demand for Volkswagen electric vehicles, according to the report.
Volkswagen is urgently looking to increase profitability, and Volkswagen Group CEO Oliver Blume wants to right the ship.
The core Volkswagen brand is seeing the most pressure with little profits, unnecessary complexity, and excess plant capacity. Blume aims to boost VW brand returns to 6.5% by 2026, or around €10 billion ($10.7B) in profits. Right now it’s around 3.6%.
With Tesla, BYD, and other Chinese EVs rapidly expanding in the region, VW is responding as it looks to compete with more profitable automakers.