Volkswagen Shares Recover Slightly as EV Demand Stabilizes and Production Cut Raises Concerns

Credit: Volkswagen

Shares of Volkswagen experienced a modest rebound on Wednesday, following a recent selloff triggered by concerns over the automaker’s potential reduction in electric vehicle (EV) production in Germany. The company has since clarified that it expects battery electric vehicle orders to gradually stabilize in the coming months, signaling renewed confidence in EV demand. Despite the recovery, analysts have expressed skepticism about the European EV market’s ability to sustain all the new models and expanded capacities amidst reports of production cuts.

Volkswagen spokesperson Christopher Hauss assured Reuters that the trend in BEV orders has already shown improvement since May and is projected to stabilize in the near future. This optimistic outlook coincides with Volkswagen’s anticipation of increased capacity utilization at the Emden plant, driven by the market launch of the ID.7 model later this year.

However, concerns arise as reports surfaced regarding the production cut, suggesting that the European EV market may not be growing as rapidly as anticipated to support the influx of new EV models and planned capacity expansions. The intensified competition with established German and Chinese-made electric vehicles, including those manufactured by Tesla and various Chinese automakers, further adds complexity to the market landscape.

Stifel analyst Daniel Schwarz interpreted the reduction in temporary staff and the cancellation of a shift as indicators that Volkswagen does not foresee an immediate improvement in EV demand. Such actions could be seen as a precautionary measure amid uncertain market conditions.

In light of recent subsidy reductions, Morgan Stanley predicts a slowdown in European EV demand and anticipates other traditional car manufacturers, such as Ford and GM, to delay or scale back their announced EV plans by several quarters or even years. The investment bank’s analysts assert that their EV forecasts for these manufacturers fall considerably short of their respective management targets by the middle of this decade.

The evolving landscape of the European EV market highlights the challenges faced by https://www.reuters.com/business/autos-transportation/volkswagen-shares-recover-after-ev-production-cut-reports-2023-06-28/automakers as they navigate fluctuating consumer demand, government policies, and intensified competition. As Volkswagen aims to strike a balance between production adjustments and future growth prospects, the industry as a whole remains poised to adapt to changing market dynamics while pursuing sustainable and profitable EV strategies.

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