CHATTANOOGA, Tenn. (WDEF)- For the second time in a year, Volkswagen is scaling back the production of the electric vehicle made in Chattanooga.
Back in March, Volkswagen announced they were cutting production down to a two shift model, and asked for voluntary layoffs.
Now six months later, they are furloughing 160 employees in late October.
The company says they are pausing production of the ID4 because it isn’t selling as well as hoped.
Based on the most recent sales figures from the second quarter of this year, the sales of the ID4 have fallen by 65 percent since the same period last year, which does not match the rest of the EV market.
UTC economics professor Dr. Claudia Kramer said, “Globally, EV sales are up about 28 percent compared to last year at this point. In the US, we’ve only seen three percent growth.”
Dr. Kramer lists two key reasons why Volkswagen is making this move now.
She said, “Because of the way their battery is sourced, consumers can no longer use the $7,500 tax credit that could go towards the purchase of these vehicles. They end up being more expensive for the average consumer.”
Other product sourcing methods are also causing issues.
Dr. Kramer said, “A lot of their inputs and their supplies by the tariffs in China and Mexico for example. Whereas a company like Tesla who has more localized sources are not being impacted by that. So Volkswagen are faced with having to raise their prices or figure out other ways to cut costs since other EV companies are not facing that.”
This comes as the UAW and Volkswagen continue to negotiate a bargaining contract.Despite employees voting for the plant’s unionization in April 2024, an agreement has not been reached.
It has reached the point where some members of the Chattanooga City Council say they want to add their voice into the mix.
Councilman Ron Elliott told the Council, “Councilman Clark and I would like to introduce a resolution that would voice the Chattanooga City Council’s support for the UAW in their negotiations with Volkswagen.”
The City Council is expected to vote on this coming weeks.
