Volkswagen Shares Wobble Amid Unstable EV Demand

Volkswagen shares fell on Wednesday after the company issued a profit warning and revealed it might close an Audi plant in Brussels. The automaker has revised its forecast for operating return on sales to a range of 6.5% to 7%, down from the previous 7% to 7.5%. 

Volkswagen’s stock was down 1.45% on Wednesday. The company is scheduled to present its second-quarter results on August 1.

The potential closure of the Brussels plant, employing 3,000 people, is driven by weak demand for the Audi Q8 e-tron, an all-electric model launched in 2019.

The automotive industry is facing a decrease in EV demand, especially for European brands, due to competition from discounted, state-subsidized Chinese vehicles. As a response, the EU has begun to apply provisional tariffs on EV imports from China.

Volkswagen estimates the cost of closing or repurposingthe site could impact its operating profit by up to €2.6 billion ($2.81 billion) in the 2024 fiscal year. Analysts view the potential shutdown as a significant positive step, suggesting the costs will not affect cash flow in the short term.

Volkswagen's overall deliveries declined by 3.8% in April-June to 2,243,700 vehicles delivered worldwide compared to the same period last year, with Audi negatively affecting the final statistics. Audi's performance contributed to this decline, with a year-on-year drop of 11.3% for the three months.