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German automaker Volkswagen Group is considering laying off employees at its factory in Zwickau, eastern Germany, due to sluggish demand for electric vehicles, foreign media reported on September 13.

Sources said Volkswagen plans to cut some temporary contract workers at the Zwickau plant, including nearly 300 employees whose contracts expire at the end of October, when Volkswagen may notify them to leave and not renew them. The fate of about 2000 temporary employees remains uncertain. But the people declined to give details because no final decision had been made.

It is understood that there are currently 10,700 employees in the Zwickau factory, of which more than 2000 employees have signed fixed-term contracts. It is said that hundreds of people will be laid off this time. Media reports said Volkswagen planned to hold an employee meeting Thursday at its Zwickau plant in Germany, but did not give details of the meeting.

In response to the above news, as of the time of publication, Volkswagen officials have not responded.

According to the official website, Volkswagen Group was founded in 1938 and headquartered in Wolfsburg, Germany. It is the largest automobile company in Europe and one of the first foreign automobile enterprises to enter the Chinese automobile market. It owns Volkswagen, Audi, Skoda, Porsche and other well-known brands, and has invested in joint ventures including FAW-Volkswagen, SAIC Volkswagen, Volkswagen Anhui and so on.

At present, Volkswagen produces electric vehicles in four factories in Germany, including Zwickau, Hanover, Dresden and Emden. In 2018, Volkswagen announced an investment of $1.29 billion to transform its Zwickau plant from an internal combustion engine to an electric vehicle, which currently produces Volkswagen ID.3, ID.4 and ID.5 as well as other Volkswagen branded electric vehicles such as the Audi Q4 e-tron and Cupra Born. In November 2019, Volkswagen ID.3 was officially commissioned at the Zwickau plant and delivered to the European market the following spring.

Although electric vehicles require fewer employees than internal-combustion vehicles, the plant plans to keep the number of employees stable by increasing production, according to reports. However, due to high inflation and subsidy cuts, demand in the European electric vehicle market has been greatly affected, including Volkswagen.

It should be noted that at the end of June this year, Volkswagen also cut production of its electric ID.4 compact SUV and ID.7 sedan at its Emden plant in Lower Saxony, Germany. The main reason for the reduction in production is weak sales of models, and demand is nearly 30% lower than originally planned.

Although Volkswagen Group is a relatively active brand in the electric transformation of many multinational automobile enterprises, in terms of sales volume, compared with the current main electric vehicle brands, Volkswagen sales volume is not optimistic. According to the data, the cumulative global sales volume of Volkswagen in 2022 was 4.56 million vehicles, of which 330,000 electric vehicles were delivered, an increase of 23.6% year-on-year, among which Volkswagen ID.4 was the best-selling electric vehicle of the group, with cumulative sales of 175,600 vehicles in 2022. By contrast, Tesla sold 1.3143 million vehicles worldwide in 2022, including 439,000 in China, while BYD sold 1.8635 million vehicles.

Volkswagen Group has said its phased goal is to achieve an annual output of 1 million electric vehicles by 2023, but from the data analysis, Volkswagen Group is still a certain distance from this goal.

At present, Volkswagen Group is accelerating its electric transformation in China. According to the plan, by 2030, Volkswagen Group brands including Volkswagen and Audi will offer more than 30 pure electric models in China. Among them, in order to expand China's electric vehicle market share and promote the development and production of electric vehicles, Volkswagen is increasing its investment in the Chinese market.

A few days ago, a German engineer and car enthusiast posted on overseas social media that Volkswagen technical director Grünitz said Volkswagen could not make money on pure electric vehicles and still needed internal combustion engines to maintain profits, so it would slow down the launch of new pure electric models. Tesla CEO Elon Musk said in a post to Volkswagen that traditional car companies, including Volkswagen, must quickly switch to autonomous electric vehicles or sooner or later be eliminated.

However, unlike in the past, competition on new energy tracks is particularly fierce today, and Volkswagen Group is now in a critical period of electric transformation, but it is clear that there is not much time left for Volkswagen Group to "transform".

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