Volkswagen is halting on Tuesday car production at one of its plants in Germany, for the first time in its 88-year history, Kallanish notes. The production line in Dresden is the one affected.
The move comes at a time when Europe’s largest automaker is under immense pressure due to weak demand and sales in both China and Europe, as well as increased tariffs in the US.
Volkswagen is struggling to allocate its investment budget of around €160 billion ($187 billion) over the next five years and the company continues to look for ways to cut costs and boost operating profits.
The Dresden plant has produced fewer than 200,000 vehicles since it began production in 2002, less than half the annual output of the central Wolfsburg plant. The closure is part of a deal reached with unions last year that will also see VW cut 35,000 jobs in Germany.
The plant site will be leased to the Technical University of Dresden to create a research campus for the development of artificial intelligence, robotics and chips. VW has pledged to invest €50 million over the next seven years in the joint project with the university, while continuing to use the facility as a dealership for delivering cars to customers and as a tourist attraction.
Volkswagen is also preparing major changes to its development strategy. They should allow the company to maintain its focus on electrified models, make electric cars more affordable and have greater range.
That’s why VW’s future lineup in Europe and North America will be filled with cars organised according to the principle of a sequential hybrid. These are the so-called extended-range electric vehicles (EREVs), which are very popular in China but not yet widespread in Europe and North America.
Volkswagen reports that the adoption of electric vehicles (EVs) has been slower than expected, with the main reason cited as consumer concerns about the range of the vehicle. The EREV system addresses this issue.
Investments in such hybrids will be part of the new strategic plan for the next five years. This will be published in March 2026 and is expected to take into account the upcoming postponement of the entry into force of the EU’s internal combustion engine (ICE) ban. The EU is expected to announce changes to this policy on 16 December.
Earlier, German defence manufacturer Rheinmetall said it is considering taking over one of Volkswagen’s soon-to-be-unused plants, as the arms maker seeks additional production capacity in Germany while domestic carmakers struggle.
VW’s Osnabrück plant is one of three that will remain unused for the next two years after the automaker decided last December to halve its production capacity in the country due to slowing car sales in Europe.
