Europe's EV sector stalls amid factory halts and cancellations

Volkswagen halts plants as Germany withdraws EV subsidies

The European automotive industry is not just facing a downturn; it is dismantling itself piece by piece. Volkswagen has paused its electric car factories in Germany due to collapsing demand, SEAT’s PACO brand disappears, and Germany has scrapped purchase incentives for electric vehicles. Additionally, FIAT has temporarily halted production of the electric 500 due to lack of orders. Four blows to the same critical point.

According to observers, the sector’s response has always been the same: more models, more platforms, and promises that the turning point would arrive next quarter. That turning point never comes. Instead, there are production stops, cancelled IPOs, and a Chinese SUV leading registrations in Spain at 17,000 euros.

What is happening with Volkswagen’s factories

Volkswagen has not sold enough electric cars, and employees will pay the price through cuts. The situation is described as very critical. There is an irony here: according to one participant, the group had withdrawn its small electric urban cars—the Mii and Up—because demand was supposedly huge, aiming to sell ID models at double or triple the price for the same urban use. Now, demand is so low that production must stop.

This move has internal logic but external punishment. Customers seeking a small, cheap electric city car are left without products, while those appearing in dealerships cost as much as higher-segment cars. When supply narrows from above and budgets tighten from below, this is the result.

Why a 17,000 euro Chinese SUV leads sales in Spain

The best-selling car in Spain in both August and September was the MG ZS. For 17,000 euros, buyers get a 4.32-meter SUV with a 448-liter trunk, appealing design, and a seven-year warranty. Under the hood is a naturally aspirated 1,500cc engine with 106 horsepower, sufficient for a family.

The comparison with a Peugeot 2008 does not hold up, and that is the key point: the buyer saves about 6,000 euros, and salaries in Spain are not Swiss levels. The argument that European products are better clashes with an uncomfortable question: they may be better, but can an average family afford them?

Germany withdraws subsidies, leaving the market unsupported

The removal of German electric vehicle purchase subsidies leaves the sector without the crutch that supported many sales. The market must now stand alone, and early signs are not optimistic: electric car buyers reportedly regret their purchases, according to news shared in the debate.

Another anomaly appears in the small segment. Models like the Up, Mii, Arosa, or Twingo are barely marketed with combustion engines anymore—only the Aygo and i10 survive, according to one participant—and in some cases, combustion versions remain available in markets like Japan while disappearing here. Manufacturers, critics say, have lost their way.

The 500 km electric truck whose weight remains unclear

Mercedes Trucks has spent millions on an electric truck advertising approximately 500 kilometers of range. The problem, according to a participant, is that these 500 km are not empty: they are either at full load (40 tons) or half-load (32 tons), though certainty is lacking. With a fully loaded trailer, real-world range is unproven. The terrain of the test route is also unspecified.

The brand’s usual reference route is Stuttgart-Hamburg-Stuttgart. Stopping such a combination—truck, batteries, and loaded trailer—would require braking systems far different from passenger cars, as noted in the debate. Isolated range data tells only half the story.

Cancelled IPOs and the shift toward hybrids

Renault has cancelled the IPO of its electric division Ampere, and Volkswagen has done the same for its battery business. When the market refuses to fund promises, the next step is sharing costs: Renault and Volkswagen are negotiating joint development of an electric car under 20,000 euros to compete with Chinese brands.

Meanwhile, hybrids gain ground even in the most electrified markets, and Toyota, which never fully embraced the narrative, appears vindicated. The used car market also benefits: according to the debate, it is the direct beneficiary of this situation, including in Germany. This is no minor phenomenon: drivers are already planning to extend the life of their current cars until the end.

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The prediction in the debate is that recession will deliver the final blow to the electric whim, forcing market reorganization. Timing is difficult because between now and then lie stopped plants, accumulated R&D without return, and an unanswered question: if, as one participant claims, battery technology is in Asia, who manufactures here, with what margin, and for whom?