Volkswagen closes its first factory in Germany in 88 years due to low demand for electric cars

Following the earthquake caused by the emissions scandal, or Dieselgate, which engulfed the Volkswagen Group in 2015, just ten years ago, the Lower Saxony-based brand developed an ambitious plan for the complete electrification of its range. It did so by fully embracing—perhaps with the zeal of a convert—the electric car as a beacon of salvation and a guiding light during one of the darkest periods in its history.

In 2019 Volkswagen presented the new ID.3The ID.3, a new-generation electric vehicle, was meant to be a game-changer for the brand. In fact, the brand's then-CEO, Herbert Diess, asserted that the ID.3 would be the most important car in Volkswagen's history, on par with the original Beetle or the Golf. Nothing could have been further from the truth: six years later, the brand was forced to close its Dresden plant, where the ID.3 was manufactured, due to the electric car's poor sales performance.

The Dresden factory, also called glass factoryThis is the first Volkswagen plant to close in Germany in the last 88 years. Located in the capital of the German state of Saxony, the plant opened in 2001 and was initially dedicated to the production of the Phaeton luxury sedan. It was replaced in 2017 by the e-Golf, the electric version of the Golf, and from 2019 onwards by the flam. The factory's closure serves as a warning to government officials, as Volkswagen was a symbol of West Germany's resurgence after World War II.

For the time being, the German group will continue manufacturing the ID.3 at the Zwickau plant (where, among other models, the Cupra Born is manufactured), located 115 kilometers from Dresden. This is a larger factory, designed to produce around 360,000 electric vehicles annually, but this year it will hardly reach 200,000. As an example, Volkswagen's plant in Chemnitz, 78 kilometers from Dresden and 42 kilometers from Zwickau, and specializing in combustion engine vehicles (many of them diesel), manufactures more than 730,000 units annually.

Although the brand has never commented on this, several experts suggest that Volkswagen's transition from traditional combustion engine vehicles—with a significant presence of TDI diesel cars—to fully electric vehicles has not been strategically well-executed. The market currently demands hybrid and plug-in hybrid vehicles as a stepping stone to the complete electrification of the vehicle fleet, especially in Europe. This strategic misstep would benefit Toyota, the Volkswagen Group's main rival worldwide, which has been investing in hybrid vehicles for over 20 years, a strategy that time and consumer preferences seem to have proven correct.