We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Volkswagen (VWAGY) Temporarily Ceases EV Output at Two Facilities
Read MoreHide Full Article
Volkswagen (VWAGY - Free Report) is set to temporarily halt the production of its ID.3 and Cupra Born electric vehicles (EVs) at Zwickau and Dresden facilities in Germany in the first two weeks of October amid reduced demand. This could be attributed to high inflation, diminishing subsidies in Europe and intensifying competition among EV players.
The Dresden facility, having manufactured more than 150,000 units of various models since its inception in 2002, witnessed production of 6,500 ID.3 EVs last year alone. However, with this suspension, around 300 employees will now shift gears toward “innovative manufacturing and testing,” hinting at a strategy to enhance the brand’s competitive edge.
The production pause at Volkswagen's Zwickau plant aligns with the autumn holidays in Saxony from Oct 2-13.
While the halt affects ID.3 and Cupra Born, the production of other models like ID.4, ID.5, Audi Q4 e-tron, and Audi Q4 sportback e-tron continues unabated in three shifts. This reflects a selective strategy aimed at realigning production with current market dynamics.
VW's struggle to garner new EV orders comes at a time when the European market is tightening its belt, with consumers facing higher prices amid lower incentives for EV purchases. Moreover, the threat from more technologically advanced competitors like Tesla and BYD Co Ltd is palpable, challenging VWAGY’s market position.
In the lucrative China market, the shift in consumer preference was evident as BYD leapfrogged Volkswagen in sales. In response to that, Volkswagen slashed the prices of its ID.3 and ID.4 models in the region.
Volkswagen CEO Oliver Blume aims to escalate the brand returns to 6.5% over the next three years from the current 3.6%. This ambitious target underscores the urgency for a competitive repositioning. The electric transition is happening in a market where newcomers, especially China-based startups, are making significant inroads rapidly.
VWAGY has responded to these market dynamics with a robust electric roadmap. It plans to unveil 11 new electric models by 2027, aiming for a complete electric lineup in Europe by 2033. These new models, coupled with the introduction of plug-in hybrid versions of popular models like Passat and Tiguan, underline VW’s balanced approach toward a green transition while maintaining its appeal among a broad consumer base.
An intriguing part of Volkswagen’s electric vision is the resurrection of the GTI brand via the ID. GTI concept. This concept, rooted in VW’s MEB platform, aims to marry the iconic GTI brand's legacy with the modern electric ethos. The rebranding of the “I” in GTI from "injection" to "intelligence" symbolizes a blend of heritage with modernity, aiming to cater to performance-centric EV enthusiasts.
VW’s strategic steps toward an electric future are a blend of innovation, brand legacy, and market adaptability. While the road ahead may be bumpy with competitive hurdles, escalating costs of transition, global EV price war and ever-evolving consumer preferences, Volkswagen’s commitment and efforts toward positioning itself as one of the leaders in the shift toward sustainable mobility journey is commendable.
A few top-ranked stocks in the auto space include Li Auto (LI - Free Report) , Commercial Vehicle Group (CVGI - Free Report) and Oshkosh Corporation (OSK - Free Report) , each sporting a Zacks Rank #1.
The Zacks Consensus Estimate for LI’s 2023 sales and EPS implies year-over-year growth of 154.6% and 9,200%, respectively. The earnings estimate for 2023 has been revised upward by 31 cents in the past 60 days.
The Zacks Consensus Estimate for CVGI’s 2023 sales and EPS implies year-over-year growth of 4.05% and 102%, respectively. The earnings estimate for 2023 has been revised upward by 8 cents in the past 60 days.
The Zacks Consensus Estimate for OSK’s 2023 sales and EPS implies year-over-year growth of 15% and 125.7%, respectively. The earnings estimate for 2023 has been revised upward by $1.71 in the past 60 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Volkswagen (VWAGY) Temporarily Ceases EV Output at Two Facilities
Volkswagen (VWAGY - Free Report) is set to temporarily halt the production of its ID.3 and Cupra Born electric vehicles (EVs) at Zwickau and Dresden facilities in Germany in the first two weeks of October amid reduced demand. This could be attributed to high inflation, diminishing subsidies in Europe and intensifying competition among EV players.
The Dresden facility, having manufactured more than 150,000 units of various models since its inception in 2002, witnessed production of 6,500 ID.3 EVs last year alone. However, with this suspension, around 300 employees will now shift gears toward “innovative manufacturing and testing,” hinting at a strategy to enhance the brand’s competitive edge.
The production pause at Volkswagen's Zwickau plant aligns with the autumn holidays in Saxony from Oct 2-13.
While the halt affects ID.3 and Cupra Born, the production of other models like ID.4, ID.5, Audi Q4 e-tron, and Audi Q4 sportback e-tron continues unabated in three shifts. This reflects a selective strategy aimed at realigning production with current market dynamics.
VW's struggle to garner new EV orders comes at a time when the European market is tightening its belt, with consumers facing higher prices amid lower incentives for EV purchases. Moreover, the threat from more technologically advanced competitors like Tesla and BYD Co Ltd is palpable, challenging VWAGY’s market position.
In the lucrative China market, the shift in consumer preference was evident as BYD leapfrogged Volkswagen in sales. In response to that, Volkswagen slashed the prices of its ID.3 and ID.4 models in the region.
Volkswagen CEO Oliver Blume aims to escalate the brand returns to 6.5% over the next three years from the current 3.6%. This ambitious target underscores the urgency for a competitive repositioning. The electric transition is happening in a market where newcomers, especially China-based startups, are making significant inroads rapidly.
VWAGY has responded to these market dynamics with a robust electric roadmap. It plans to unveil 11 new electric models by 2027, aiming for a complete electric lineup in Europe by 2033. These new models, coupled with the introduction of plug-in hybrid versions of popular models like Passat and Tiguan, underline VW’s balanced approach toward a green transition while maintaining its appeal among a broad consumer base.
An intriguing part of Volkswagen’s electric vision is the resurrection of the GTI brand via the ID. GTI concept. This concept, rooted in VW’s MEB platform, aims to marry the iconic GTI brand's legacy with the modern electric ethos. The rebranding of the “I” in GTI from "injection" to "intelligence" symbolizes a blend of heritage with modernity, aiming to cater to performance-centric EV enthusiasts.
VW’s strategic steps toward an electric future are a blend of innovation, brand legacy, and market adaptability. While the road ahead may be bumpy with competitive hurdles, escalating costs of transition, global EV price war and ever-evolving consumer preferences, Volkswagen’s commitment and efforts toward positioning itself as one of the leaders in the shift toward sustainable mobility journey is commendable.
Zacks Rank & Key Picks
VWAGY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few top-ranked stocks in the auto space include Li Auto (LI - Free Report) , Commercial Vehicle Group (CVGI - Free Report) and Oshkosh Corporation (OSK - Free Report) , each sporting a Zacks Rank #1.
The Zacks Consensus Estimate for LI’s 2023 sales and EPS implies year-over-year growth of 154.6% and 9,200%, respectively. The earnings estimate for 2023 has been revised upward by 31 cents in the past 60 days.
The Zacks Consensus Estimate for CVGI’s 2023 sales and EPS implies year-over-year growth of 4.05% and 102%, respectively. The earnings estimate for 2023 has been revised upward by 8 cents in the past 60 days.
The Zacks Consensus Estimate for OSK’s 2023 sales and EPS implies year-over-year growth of 15% and 125.7%, respectively. The earnings estimate for 2023 has been revised upward by $1.71 in the past 60 days.