Volkswagen Group is reportedly planning to discontinue the production of ID.3 electric vehicles at its Dresden plant in Germany, according to sources cited by Automobilwoche. The decision to halt ID.3 production in Dresden is believed to be part of CEO Oliver Blume's cost-cutting initiative, although no specific timeline for the cessation of production has been disclosed.
The Dresden plant, famously known as the Transparent Factory, originally commenced operations in 2002, specializing in the manufacturing of high-end Volkswagen Phaeton sedans. In 2017, it transitioned to producing electric vehicles (EVs) with the launch of the all-electric Volkswagen e-Golf. However, production of the e-Golf ceased in late 2020, making way for the ID.3, which began rolling off the assembly lines in 2021. In the year 2022, the Dresden plant manufactured 6,500 ID.3 electric hatchbacks.
Notably, the Dresden facility is comparatively smaller than other Volkswagen EV plants in Germany, lacking essential components like a body manufacturing unit, paint shop, or pressing plant. The Transparent Factory, renowned for its architectural brilliance, features glass walls, allowing customers to witness the final stages of vehicle assembly. Over the years, it has served as a venue for various events, ceremonies, concerts, and even operas.
While ID.3 production will cease in Dresden, the plant will continue to operate in some capacity. Its 300 full-time employees are expected to be reassigned to various roles, particularly in innovative production and testing areas, as per insider sources. Volkswagen declined to comment on these speculations.
It's worth noting that ID.3 production will persist at Volkswagen's Zwickau plant, which serves as the company's primary site in Germany for its ID line of EVs. Additionally, starting in the autumn, the Wolfsburg plant will also commence ID.3 production, albeit initially in limited quantities, according to the German news agency DPA. The decision to discontinue ID.3 production in Dresden is likely linked to the initiation of production in Wolfsburg.
Volkswagen Group's CEO, Oliver Blume, is actively pursuing measures to enhance returns at the VW brand, with a target of achieving a 6.5 percent return rate, equating to a 10 billion euro increase in profits by 2026. The Dresden facility currently incurs an annual operating cost ranging between 60 to 70 million euros. Ending production at this location is projected to result in annual savings of approximately 20 million euros, as disclosed by an inside source to Bloomberg.
This development comes in the wake of Volkswagen's recent announcement of workforce reductions for temporary employees at its Zwickau site, the company's primary EV factory in Germany. The reduction was prompted by decreased demand following the discontinuation of a subsidy program in the country. Furthermore, European consumers are grappling with rising living costs due to inflation and a surge in interest rates. Volkswagen is also facing intensifying competition from more profitable automakers like Stellantis, Tesla, and Chinese counterparts.