Audi closes plant: Lower demand for electric cars

The lack of interest in high-end electric cars is a major setback for Volkswagen, of which Audi is a subsidiary. The company said that management is considering shutting down production of its Q8 e-tron SUV models. Today, about 3,000 employees work at the plant producing this model. Recall that the Volkswagen concern includes such companies as Porsche, Audi, Seat and Skoda.

According to calculations, the closure of the Brussels plant or the search for alternatives, as well as other unforeseen costs will have an impact on the fiscal year 2024 in the amount of 2.6 billion euros (2.8 billion dollars). As a result, Volkswagen lowered its operating profit forecast for this year to 6.5-7.0% from 7.0-7.5%.

Audi cited some structural problems at the Brussels facility, including a hard-to-modify plant layout and unprofitable logistics. Further steps will be consulted on.

Closure of the Brussels plant is not ruled out

Audi executives are discussing options for resolving the issue in Brussels, which could also include shutting down operations if no alternative is found. Audi Brussels CEO Volker Hermann said that a final decision has not yet been made.

However, the news was extremely keenly received by employees. According to Rita Beck, spokeswoman for the Audi committee in the VW Group's European works council, Audi staff representatives are asking for long-term guarantees and prospects, so Audi management must take responsibility for the future of the company.

In the first quarter of 2024, Volkswagen reported a significant drop in profits of more than 20%. One of the main reasons is a decline in deliveries of high-end models, including Audi's top-of-the-line electric cars.

Falling demand in 2023

Automakers have invested heavily in electric vehicles in recent years, and therefore have been significantly affected by the decline in demand in this sector in recent years. According to an analysis published in May by the Transportation & Environment (T&E) center, major car companies will not ramp up electric vehicle sales for several more months. In the meantime, manufacturers will have to significantly increase the share of electric vehicles sold by 2025 to achieve an average market share of 21% for the year and meet emissions standards - the European Union's Green Policy requirements.

According to manufacturers' data, sales of hybrid cars continued to grow in Europe in May to the detriment of electric vehicles, which fell 12% year-on-year. Their market share in May was 12.5%, compared to 14.6% in 2023.

Only France and Belgium can boast about the growth of electric car sales in Europe. In Germany, where purchase bonuses will be abolished at the end of 2023, they continued to fall. Sales of the sector leader Tesla, in the first five months of this year fell by 10.2% compared to 2023 and recorded sales of 92,000 units. Sales of electric cars have been relatively sluggish since the end of 2023 despite the EU's ambition to ban the sale of internal combustion engine vehicles by 2035. This is mainly due to the high prices and low availability of such cars for the general public.