2023-07-13 17:44:18
Volkswagen, a behemoth of the automotive industry, finds itself in a delicate situation today. This bitter observation is part of a more global problem, where production is only one facet of a series of challenges that the manufacturer must face, particularly in the face of heightened electrical competition.
One of the leaders of the global automotive industry, Volkswagen, is going through troubled times. While demand is not up to expectations, the German giant is forced to reduce the production of some of its flagship models such as the ID.3. The difficulty is not only in terms of production but also in terms of increased competition, particularly in the field of electric vehicles.
Crucial reforms to be undertaken
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Volkswagen CEO Thomas Schäfer recently spoke, as reported by the German media Spiegel, in front of more than 2,200 leaders, stressing the urgent need for reforms within his group, a situation analogous to that of Carlos Tavares, the boss of Stellantis. The path to transition to electric mobility, already strewn with pitfalls, is all the more difficult for Volkswagen as the market becomes increasingly competitive.
« VW needs urgent and painful reforms “, said Thomas Schäfer, aware of the challenges to be met to ensure the long-term viability of the group. The stakes are high: to increase profit margins from 3% to 6.5%, which will undoubtedly involve cost reductions amounting to billions of euros.
An electric vehicle market more competitive than ever
The German company is indeed under pressure from brands like Tesla and BYD, which offer electric vehicles at lower costs, thus making competition more intense. For example, for every VW customer who receives their ID.4, three Tesla owners receive their Model Ys. As for BYD, they dethroned Volkswagen as the Chinese market leader, ending a 15-year dominance.
It is in this context that Volkswagen recently made headlines by reducing the price of the ID.3 in China. The price war comes amid falling demand for electric vehicles, partly due to cuts in subsidies and fears of an economic downturn.
Volkswagen can overcome these difficulties
Despite the challenges he faces, Thomas Schäfer remains optimistic regarding the brand’s ability to overcome these difficulties. Moreover, Volkswagen recently unveiled the ID.2all, an electric vehicle whose price would be around 25,000 euros. This model, intended to be more accessible than its predecessors, might however not see the light of day before 2025.
Faced with the threat hanging over VW, initiatives aimed at simplifying structures, energizing processes and increasing flexibility are being studied. The VW CEO acknowledged that these changes would be taxing, but doing nothing would be even more disastrous.
It remains to be seen whether the manufacturer will be able to maintain its position in the electric vehicle market until then and how it will adapt to the dazzling developments in this industry.
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