To consolidate its position as one of the automotive giants, Volkswagen has rapidly integrated into the eMobility transition, aligning with key local competitors such as BMW and Mercedes-Benz, as well as other global players.
However, over the past year, it has started to face certain challenges in this arena that could mark a negative milestone in the brand’s history.
This situation is exacerbated by the potential closure of its first European plant in Brussels, Belgium.
“The Audi Q8 e-tron model family, currently produced at Audi’s Brussels plant, has been affected by a sharp decline in demand specific to this segment,” the company detailed to Mobility Portal Europe.
They reveal: “As a result, Audi is considering an early cessation of the production of the Q8 e-tron series.”
The context in which this potential decision is framed is complex.
The plant faces prolonged structural challenges that hinder its efficient operation.
Its proximity to the city limits options for modifying the facility’s design, which, combined with high logistics costs, results in elevated production costs compared to other locations.
These factors, coupled with declining demand, have led Audi Brussels to inform its board about the intention to restructure the company, which could include measures such as the complete closure of the plant.
“An early cessation of production could impact employment and necessitate the search for alternative solutions for the plant,” the brand spokesperson notes.
The information and consultation process began on July 18, and no decisions have yet been made.
However, Audi assures that it will maintain a fair and constructive dialogue throughout this phase, fully acknowledging its responsibility towards its employees.
What will happen to the production of this model if the facility closes?
“We currently plan to manufacture the successor to the Q8 e-tron at Audi’s plant in San José Chiapa, Mexico,” they confirm to Mobility Portal Europe.
This shift, while logical from a cost-reduction perspective, raises questions about the long-term sustainability of Volkswagen’s strategy on the continent.
The European market remains crucial to the company’s success, and any move perceived as a withdrawal could have negative consequences.
Audi has justified these actions as part of a necessary adjustment in response to the global slowdown in the luxury electric vehicle segment.
In this context, the firm is reassessing its production and sales targets.
This situation is not unique to Volkswagen.
Other European manufacturers are also facing similar challenges, particularly in critical markets such as China, where competition with local electric vehicle manufacturers like BYD is fierce.
Volkswagen and the eMobility challenge
The Brussels plant is not the only Volkswagen facility that has recently faced difficulties.
In Germany, the company has had to reduce the number of employees at its Emden, Dresden, and Zwickau plants due to a drop in electric vehicle sales.
According to Thomas Schäfer, VW’s CEO, “so far we have been too inflexible. Traditionally, we plan about ten years in advance.”
This has led the company to adopt a more flexible approach to future planning.
Volkswagen’s stock has also suffered.
According to local media, this announcement led to a 1.5 per cent drop in its share value in early trading in Frankfurt.
Costs associated with the potential closure of the Brussels plant and other unforeseen expenses could have a total impact of up to 2.6 billion euros in the 2024 fiscal year.
This move, following the staff reductions made in Germany last year, raises questions about whether the company is making the right decisions or if it is an inevitable adjustment in an increasingly competitive and volatile market.
Mercedes-Benz and Ford are also adjusting their strategies
Recently, Mercedes-Benz has revised its electrification targets, announcing that it will continue to manufacture hybrid and combustion engine vehicles well into the 2030s if demand justifies it.
Ola Källenius, the company’s CEO, acknowledged that the transition to a fully electric business model might take longer than anticipated, particularly following disappointing results in its eVehicle division.
The company’s profit margin has fallen to nine per cent, the lowest in two years.
In parallel, Ford Motors has decided to invest less in its electric division, delaying the launch of a three-row SUV until 2027.
The company has admitted that it is refocusing its efforts on hybrid engines rather than fully electric ones.
