The sword comes for Volkswagen

It’s been a strange and unpredictable year for electric vehicle sales in America and, honestly, for the sale of new cars in general. But if you want to assess the European market, replace the above adjectives with ‘apocalyptic’. Intense competition from China, a weak economy, slowing demand for electric cars as subsidies evaporate and high interest rates have all left Europe’s auto industry in a bleak situation. Now we know the extent of the cuts that Volkswagen management wants to make, and they have no precedent.

This starts the Monday edition of Critical materialsour morning overview of must-read news in technology and mobility. And if you just come to us, then yes, Indoor EVs looks different today. (And yes, it looks better, I agree.) Check it out my announcement post if you haven’t already, let’s check out some news.

30%: Volkswagen braces for potential major job losses and factory closures

Since its rebirth at the end of World War II, aside from the ill-fated experiment in Westmoreland, Pennsylvania in 1988, Volkswagen has never closed a car plant. Now it could soon try to close three in Germany alone as high labor costs, slow sales and strict regulations driving EV adoption are starting to take their toll.

Reuters reports today that the head of the automaker’s works council has warned VW’s workforce that a “deeper-than-expected overhaul” is coming for the struggling automaker as it sprints to cut costs. Tens of thousands of jobs could be cut and up to three factories could be closed a job security program that has existed since the 1990s will end.

It’s unclear which plants would be affected, but the movements are drastic no matter how you want to look at them:

Europe’s largest carmaker has been negotiating with unions for weeks over its plans to revamp its operations and cut costs, including considering plant closures on its own territory for the first time in a blow to Germany’s industrial prowess.

“Management takes all of this absolutely seriously. This is not a clash of arms in the collective bargaining round,” Daniela Cavallo, head of Volkswagen’s works council, told employees at the carmaker’s largest factory in Wolfsburg, threatening to break off the talks.

“This is the plan of Germany’s largest industrial group to start the sell-off in its home country of Germany,” Cavallo added, without specifying which factories would be affected or how many of the Volkswagen Group’s roughly 300,000 employees in Germany could be be fired.

Volkswagen said in a statement that it would make proposals on Wednesday on how to cut labor costs, when workers and management meet for the second round of pay talks and the automaker announces third-quarter results.

“The situation is serious and the responsibility of the negotiating partners is enormous… Without comprehensive measures to regain competitiveness, we will not be able to afford essential investments in the future,” said Gunnar Kilian, board member of the Volkswagen Group.

So why is all this happening? Car demand in Europe is generally weak as the continent experienced a tougher economic recovery than even the US after the COVID-19 crisis. Chinese car manufacturers are eating into VW’s market share on its own territory, and in China itself, buyers are increasingly turning to homegrown brands. Subsidies to encourage the purchase of electric vehicles in Germany have largely disappeared, and so the high costs discourage buyers from going that route. Globally, VW’s EV sales are down almost 10% worldwide, with 40% of that in the US. and total global auto deliveries fell 7% in the third quarter.

Everything else seems fine.

Reuters also reports that Germany’s most powerful union, IG Metall, has identified a number of possible candidates for factory closures. This includes the Brunswick factory that makes various components and EV batteries; the factory in Emden that makes the Passat and ID.4; the Hanover factory that makes vans and minivans; and a few others. In Germany alone, about 300,000 people work for VW. But this is part of the problem, says VW brand CEO Thomas Schaeffer: “We’re not making enough money from our cars right now. At the same time, our costs for energy, materials and personnel have continued to rise. This calculation cannot work in In the long run, we need to get to the heart of the problem: we are not productive enough at our German sites and our factory costs are currently 25-50% higher than we planned. This means that individual German factories are twice as expensive as the competition.”

And as these stories show, these potential closures have profound implications for the European economy, next year’s German elections, and the global EV transition as a whole. But it’s becoming increasingly clear that if VW doesn’t change the way the company operates, it may not be around to see the other side of that transition.

60%: GM pushes back as Canada considers ending EV subsidies

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Photo by: InsideEVs

2024 Chevrolet Equinox EV3RS

There remains an ongoing question about how long governments should provide incentives to buy electric cars. If you do them for too long, the argument goes, you are overly subsidizing a private market. Withdraw subsidies too early and you’ll kill electric vehicle sales right when they’re about to take off and make it harder for automakers to meet their aggressive future goals. emissions and fuel consumption. Germany and other countries in Europe have withdrawn their subsidies in recent months and the effect on electric vehicle sales is palpable.

So General Motors is obviously not happy that governments in Canada – where several provinces are doing very well with the adoption of electric vehicles – are also considering rolling back subsidies. Canada is facing shortages, so those incentives could be on the table. Bloomberg reports:

Right now, some consumers can get as much as C$12,000 ($8,673) off the price of an electric car. Federal rebates deduct as much as C$5,000, while the province of Quebec charges as much as C$7,000 and British Columbia offers a maximum of C$4,000.

But government officials looking at large budget deficits are now limiting the use of taxpayer money. In March, Quebec said it would phase out subsidies by 2027. In June, British Columbia significantly limited the availability of its rebate, citing “available financing” and faster-than-expected growth in electric vehicle sales.

Meanwhile, the Canadian government has set an aggressive goal for phasing out gasoline vehicles.

It requires all new light vehicles sold by 2035 to be electric or plug-in hybrid. There are interim targets of 20% by 2026 and 60% by 2030. Under Canada’s proposed system, automakers would get compliance credits for electric vehicle sales and infrastructure investments, but would face deficits if they fall short. Some provinces have their own targets: BC’s threatens manufacturers with financial penalties for shortages.

“Just as mandates and regulations are starting to tighten, the timing doesn’t necessarily align well in the sense that support for purchasing incentives is disappearing,” Kristian Aquilina, president of GM Canada, said in an interview with Bloomberg News in Vancouver. “It will have to have an impact. So we cannot ignore that.”

As that story shows, Ontario canceled its consumer rebate in 2018. But other provinces like Quebec and British Columbia have aggressive programs to get people driving electric, and now GM’s EV sales in Canada were a very impressive 12.5% ​​in the third quarter. But if the Conservative Party of Canada wins the next election, these subsidies in particular could be on the chopping block.

90%: Waymo raises money

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Photo by: Waymo

Finally, some good news for fans of robotaxi services: you may soon see more of the leading ones in your city. Google’s Waymo division just raised another $5.6 billion, CNBC reportsintended for expansion efforts:

In a statement to CNBC, Waymo CEOs Tekedra Mawakana and Dmitri Dolgov said the funding would go toward expanding and advancing the Waymo Driver for business applications.

“With this latest investment, we will continue to welcome more riders to our Waymo One ride-hailing service in San Francisco, Phoenix and Los Angeles, and in Austin and Atlanta through our expanded partnership with Uber,” they wrote.

The Series C funding brings Waymo’s total capital raised to more than $11 billion, after raising $3.2 billion and $2.5 billion in two previous rounds. Alphabet CFO Ruth Porat announced in July that the parent company would commit to a multi-year investment of up to $5 billion in Waymo.

100%: How will Volkswagen overcome this crisis?

Volkswagen ID. Buzz on the Greek island of Astypalea

What’s your recipe for VW’s woes in China, and what do they mean for the rest of the industry?

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