Costly electric vehicles confront a harsh coronavirus reality

The economic crisis triggered by the Covid-19 pandemic has put the electric vehicle ambitions of Volkswagen and other major carmakers at risk

Even before the crisis, carmakers had to contend with the downturn in China, the world’s biggest car market, where about half of all EVs are sold

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Volkswagen workers are shown at an assembly line for the company’s ID.3 electric vehicle at the German carmaker’s plant in the town of Zwickau on February 25. The ID.3 is one of 70 new electric models that Volkswagen plans to bring to market in the coming years. Photo: AP

Published: 6:45pm, 27 May 2020Updated: 9:06pm, 27 May 2020

At a factory near Germany’s border with the Czech Republic, Volkswagen’s ambitious strategy to become the global leader in electric vehicles (EVs) is coming up against the reality of manufacturing during a pandemic.

The assembly lines in the German town of Zwickau, which produce Volkswagen’s soon-to-be released ID.3 electric hatchback, are the centrepiece of a plan by the world’s biggest carmaker to spend 33 billion euros (US$36 billion) by 2024 developing and building EVs. At the site, where an East German carmaker built the diminutive Trabant during the Cold War, Volkswagen eventually wants to churn out as many as 330,000 cars annually.

That would make Zwickau one of Europe’s largest electric car factories – and help the company overtake Tesla in selling next-generation vehicles.

But Covid-19 is putting Volkwagen and other carmakers’ electric ambitions at risk. The economic crisis triggered by the coronavirus pandemic has pushed the car industry, among others, to near-collapse, emptying showrooms and shutting factories.

Assembly work for a new large press gets under way at the expanded plant of carmaker Volkswagen in the town of Zwickau, located in the landlocked German state of Saxony, on May 26. Photo: DPA

As job losses mount, big-ticket purchases are firmly out of reach – in the US, where Tesla is cutting prices, more than 36 million people have filed for unemployment since mid-March. Also, the plunge in oil prices is making petrol vehicles more attractive, and some cash-strapped governments are less able to offer subsidies to promote new technologies.

Even before the crisis, carmakers had to contend with an extended downturn in China, the world’s biggest car market, where about half of all passenger EVs are sold. Total car sales in China declined the past two years amid a slowing economy, escalating trade tensions and stricter emission regulations. EV sales are forecast to fall to 932,000 this year, down 14 per cent from 2019, according to BloombergNEF.

Costly electric vehicles confront a harsh coronavirus reality

The economic crisis triggered by the Covid-19 pandemic has put the electric vehicle ambitions of Volkswagen and other major carmakers at risk Even before the crisis, carmakers had to contend with the downturn in China, the world’s biggest car market, where about half of all EVs are sold

The economic crisis triggered by the Covid-19 pandemic has put the electric vehicle ambitions of Volkswagen and other major carmakers at risk

Even before the crisis, carmakers had to contend with the downturn in China, the world’s biggest car market, where about half of all EVs are sold