Volkswagen to relocate production of cheaper e-car to Eastern Europe due to labour costs

The production of Volkswagen’s highly-anticipated low-cost e-car ID could be relocated to a factory in Eastern Europe and not take place in the company’s factory in Emden in Northern Germany due to cost concerns, Stefan Menzel and Martin Murphy report for Handelsblatt. Herbert Diess, the CEO of Germany’s biggest carmaker, initially told workers in the Emden factory that they would be at the forefront of the company’s e-car strategy and become one of the first locations to adopt VW’s Modular Electrification Toolkit (MEB), which will serve as the carmaker’s standard platform for electric cars. The factory should also have served as a production site for the ID model, which at a price of 20,000 euros is supposed to become Volkswagen’s icebreaker for the e-car market. But according to Handelsblatt, internal calculations by the company had revealed that high labour costs would not allow the company to produce an e-car at this price at a profit at the Emden site. However, Volkswagen’s board decided that e-car production should not be given up completely in the Emden factory but rather focus on a bigger and more expensive e-SUV model. According to the article, the company’s favoured location for producing the ID model outside Germany currently is Slovakia’s capital Bratislava. The company produces e-cars at its Zwickau factory in eastern Germany.

Volkswagen has repeatedly accelerated its rollout of zero-emission cars. It now wants to launch almost 70 new electric models by 2028 and expects to build 22 million electric vehicles in the next decade. Environmental NGOs have called VW’s decarbonisation plan a “game changer for the automotive industry.”