Volkswagen Blames BEV Sales Slump for Hold on Gigafactory

Slowing demand for battery-electric vehicles in Europe sees Volkswagen’s expansion of its battery production capacity pausing a decision on building a fourth gigafactory.

Reuters reports VW Chairman Oliver Blume as saying plans to build a new battery plant in eastern Europe are now on hold in view of a slump in new BEV sales on the continent. He was referring to warnings from other vehicle manufacturers and analysts that European consumers seem to be losing interest in BEVs. The Volkswagen Group’s own order book is down from 300,000 last year to 150,000 currently.

The news comes hard on the heels of Toyota recording a surge in global sales of its hybrid powertrain products, accounting for 90% of its electrified-vehicle deliveries. Toyota sales rose 41% to 888,000 vehicles for the quarter ending Sept. 30.

Volkswagen has been looking at a potential site for a new gigafactory and had already put off a decision a year ago when it was considering locations in the Czech Republic, Hungary, Poland or Slovakia. It already has gigafactories for battery cell production in Salzgitter, Germany; Valencia, Spain; and St. Thomas in Canada, which it said had combined production potential of up to 200 gigawatt-hours annually.

In a statement provided by Volkswagen's Czech unit Skoda Auto, Blume says: “Based on market conditions, including the sluggish ramp up of the BEV market in Europe...there is for the time being no business rationale for deciding on further sites.”