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VW Faces $600M Hit for Ending Output of Sole US-Made EV
Company to Stop Making ID.4 at Plant in Chattanooga
Volkswagen AG’s decision to cease production of its sole U.S.-made electric model will cost the carmaker as much as $600 million in writedowns in the first quarter.
Europe’s largest automaker will take a charge equal to 60% to 75% of its original $800 million investment to retool the Tennessee factory that makes the model, a company representative said by phone April 16, confirming analyst notes following a pre-earnings call.
VolkswagenÌýsaidÌýlast week it would stop making the battery-powered ID.4 sport utility vehicle at its assembly plant in Chattanooga after EV demand cratered with the . U.S. sales of the modelÌýplummeted 96%Ìýin the first quarter.
Carmakers including General Motors Co. and Ford Motor Co. have taken writedowns worth billions of dollars after dialing back EV production and battery plans.
Excluding the charge, Volkswagen’s earnings before interest and taxes are expected to improve in the quarter from a year earlier, though executives did not say on the call whether its first-quarter margin would fall within its guided corridor of 4% to 5.5%, Bernstein analysts wrote.
The VW brand has long struggled in the world’s second-biggest car market. Its latest efforts to boost sales have been held back amid tariffs and a lineup lacking the rugged SUVs and pickups that consumers demand.
Volkswagen is due to report first-quarter earnings on April 30.
