Volkswagen making fewest cars since 1958 due to supply chain problems

Volkswagen says that their production in the Wolfsburg plant was just around 300,000 cars this year. And this is the lowest production value the company is making since 1958. The supply chain problems caused lower production last year with under 500,000 vehicle, but this year the numbers are decreasing even more.

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The plant is popularly known for making cars from Tiguan, Golf, and Seat brands. In the past decade, the factory was able to produce 780,000 vehicles every year. In 2018, Volkswagen told that they aim to boost its production to one million cars. Then by 2020, the supply chain problems led to producing just below 500,000 vehicles, and now the numbers reduced to 300,000 vehicles in 2021. First reported by Die Zeit, the chip crisis is setting the production even lower than expected. Unlike the current scenario, it was predicted that automakers are picking up sales, and would boost their production too.

Earlier Volkswagen stated that they would have a production shortfall. It was stated to be the result of the lack of semiconductors and the prediction was that this will continue till 2022. However, recently the company announced that discussions were underway to increase their competitiveness in the upcoming electric vehicle sector. The factory doesn’t fully produce electric vehicles yet.

Increasing competition

As new automakers are emerging in this electric vehicle era, the competition is also increasing. Volkswagen EV sales in Germany have been dominating. Recently Tesla almost finished the Giga Berlin factory and is expected to start manufacturing soon. Being a tough competitor for VW, the increasing competition needs to be addressed.

It is known that CEO Herbert Diess stated in the supervisory board meeting in September that the delay in transformation would cost them 30,000 jobs. Volkswagen spokesperson Michael Manske said, “There is no question that we have to address the competitiveness of our plant in Wolfsburg in view of new market entrants,” This was in reference to Tesla entering the European Market with a Giga factory. He further stated, “Tesla is setting new standards for productivity and scale in Grunheide,”

Regardless of the semi-conductor chip shortage, Tesla has managed to make 500,000 cars. Their production plants have been running successfully by almost reaching their goals. Recently VW’s Diess invited Tesla’s Elon Musk to Volkswagen’s executive meeting. He asked Musk about the leadership with which Tesla operates. There are some interesting things that came out of the meeting. The times to be changing as EV makers are taking a newer path towards making cars with more partnerships and alliances.