Volkswagen pauses electric Golf development, citing cost pressures it 'simply can't afford'

Iconic automotive giant Volkswagen has temporarily paused development work on the future electric ID. Golf, citing cost pressures and the need to secure reliable investments.

“The market environment remains very challenging – and one-off effects are impacting our results,” said David Powels, chief financial officer for the Volkswagen Brand & Brand Group Core.

“This makes it all the more important to consistently pursue our chosen course and further refine our priorities,” he continued in a statement last week. “We are improving our cost base and optimising working capital – while maintaining a high level of investment discipline.”

One of the “concrete measures” that Powels says will be taken to control its costs was to “temporarily pause development work for the future ID. Golf until we can reliably secure the necessary investments.”

According to a separate internal memo seen by Reuters, the decision to halt development was not an easy one.

“I know what the Golf means for Volkswagen and for Wolfsburg,” said Thomas Schaefer, ​CEO Volkswagen Passenger Cars. “That’s ​why this decision was really not an easy one for us.

“We simply can’t afford this work right now.”

Volkswagen Passenger Cars sold 2.24 million vehicles through the first nine months of the year, a 1.7 per cent decline over the same period a year ago, and though there was high demand for the brand’s battery electric vehicles (BEVs) in Germany, this was apparently “met with currently limited availability”.

“Our electric vehicles are attractive and demand is rising significantly,” said Powels. “At the same time, they are not yet reaching the margins of our combustion engine models – the growing share of BEVs is therefore currently increasing cost pressure even further.

“That’s why we are consistently working on product costs, economies of scale, and a competitive cost base to achieve the necessary profitability with electric models as well.”

These same pressures were evident across the Volkswagen Group’s financials, which posted an operating loss of €5.9 billion, its largest quarterly loss in more than a decade. Volkswagen pointed to weak sales in China, a write-down on its Porsche stake, and an increased share of lower-margin electric vehicles in overall vehicle sales.