Volkswagen is to cut electric car production at one of its biggest factories after “strong customer reluctance” led to far lower sales than expected.
The business is pausing work on electric models for six weeks at its plant in Emden, northwest Germany, and will lay off 300 of the 1,500 workers involved in making them.
The company blamed lower subsidies for buyers of the cars across Europe and higher inflation for a drop in consumer interest.
Demand for electric vehicles is running 30pc below the company’s forecasts.
Manfred Wullf, head of the Emden plant, said: “We are experiencing strong customer reluctance in the electric vehicle sector.”
While uptake of electric vehicles has been strong in the past few years, with demand for the cars outstripping supply, manufacturers fear that they are becoming less attractive owing to the extra expense of buying one – battery cars cost about £10,000 more than petrol-driven equivalents – together with a narrower gap between the price of electricity and petrol when filling up.
Customers were sold on a high upfront cost which could be recouped through cheaper charging. But Russia’s attack on Ukraine has pushed up natural gas prices, leading to spiralling electricity cost. Meanwhile petrol prices have eased in recent months, narrowing the advantage.
The UK industry has been lobbying hard for cheaper, more plentiful public charging for users who don’t have access to discounted overnight electricity from a home charger.
At Volkswagen, production for the new ID.7 saloon car will be pushed from July to later in the year
Volkswagen UK said: “The Volkswagen brand, like other car manufacturers, is currently seeing softening demand for electric cars. Reasons for this include: reduced subsidies, higher inflation and recent longer delivery times due to the shortage of parts.
“We are confident that demand for all-electric cars will pick up again as the year progresses. With the extensively revised ID.3 and the new ID.7, we continue to launch attractive new models.”
Volkswagen understands that it must join the price battle for electric cars and in March unveiled a prototype, the ID. 2all, costing less than £22,000 (€25,000) yet with a range of up to 280 miles.
Volkswagen boss Thomas Schäfer also committed to an even cheaper model costing less than £17,500.