VW Slashes ID.4 Output in Tennessee Due to Weak Demand

• 160 Chattanooga workers to be furloughed as ID.4 output decreases.

• ID.4 U.S. sales fell 65% in Q2 2025, 42% YoY in Canada.

• VW maintains Atlas production and EV portfolio plans despite slowdown.

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Volkswagen of America is reducing production of its ID.4 electric crossover at the Chattanooga, Tennessee assembly plant due to lower-than-expected demand, resulting in the furlough of 160 employees starting in late October.

The company said the affected workers will receive 80 % of their base pay through a combination of unemployment benefits and supplemental pay, while continuing to receive full health and employment benefits.

Production cuts began yesterday, September 2. Volkswagen will assemble fewer ID.4 units per shift but stated that output of the Atlas and Atlas Cross Sport models, which are also produced at the Chattanooga facility, will remain unchanged.

The ID.4 has faced slowing U.S. demand, with sales dropping 65 % in the second quarter of 2025, contributing to a 19 % decline in the first half of the year, according to data from the Automotive News Research & Data Center. In Canada, sales collapsed by 61% in the second quarter of 2025.

The production adjustment comes just weeks before the scheduled expiration of the $7,500 federal tax credit for electric vehicle leases on September 30. Typically, this situation should have increased interest in the EV, at least temporarily, but such is not the case.

The ID.4 has faced operational setbacks in the past. In September 2024, Volkswagen halted production and issued a stop-sale on the model due to issues with door handle components.

Volkswagen began producing the ID.4 for the North American market in Chattanooga in 2022, shifting output from its Zwickau plant in Germany.

A company spokesperson said the decision was “market-driven” and “in no way changes our commitment to the ID.4, our growing EV portfolio or our commitment to our Chattanooga team.”

Source: Automotive News