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Auto manufacturer Volkswagen (VW) announced on Wednesday that it would be implementing further cost cutting measures in response to consistently low sales of electric vehicles (EVs).
According to the Daily Caller, Volkswagen’s profits plummeted by 64% in the third quarter of 2024, which resulted in the company’s stock price tumbling to its lowest level since October of 2010. As the largest automobile manufacturer in the world by overall sales, the company announced a series of cost-cutting measures to combat this decline, including shuttering at least three of its factories in Germany, reducing wages by 10%, and laying off thousands of employees.
“We’ve not forgotten how to build great cars, but the costs, specifically in our German operations and factories, are far from being competitive,” said Chief Financial Officer Arno Antlitz in a statement on Wednesday. “Things cannot continue as they are now.”
Attempts by multiple prominent auto manufacturers to produce and distribute EVs have been met with apathy by most consumers, as Americans overwhelmingly prefer to stay with normal, gas-powered vehicles rather than electric alternatives. Although there was initially an interest in EVs in 2022, when sales increased by 71%, such sales declined to growth rates of 50% in the first half of 2023, and then further declined to just 31% in the first half of 2024.
Volkswagen’s shuttering of three German plants would mark the first time in its 87-year history that it has done so. This particular measure was met with swift criticism from labor union leaders; Daniela Cavallo, the head of VW’s works council, warned that tensions could “soon escalate” as a result of the closures.
Commenting on the possibility of union strikes, Antlitz said “I’m confident that we’ll reach an agreement … but of course, I cannot rule out strikes.”
Other companies have suffered as a result of most consumers not buying into the push for electric vehicles. Ford Motor Company reported a loss of $1.2 billion in the third quarter of 2024, also driven in large part by expenses on their line of EVs which were resoundingly rejected by consumers.
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