Dive Brief:
- Volkswagen of America is ending production of the electric ID.4 SUV at its assembly plant in Chattanooga, Tennessee by mid-month, the company announced in a press release.
- The Chattanooga assembly plant will focus more on higher volume models that support sustained growth in North America, including the second‑generation Atlas SUV that will go into production in the summer and arrive at U.S. dealerships in the fall as a 2027 model.
- “The Chattanooga plant has been, and will continue to be, a cornerstone of Volkswagen’s strategy in the United States,” Volkswagen Group of America President and CEO Kjell Gruner said in a statement. “This strategic shift underscores the company’s commitment to Chattanooga and its workforce as we position the plant for long-term success and future product opportunities.”
Dive Insight:
The automaker said the U.S.-built ID.4 will still be available to customers into 2027 with current inventory levels. However, VW says a future version of ID.4 is currently planned for North America and details will be shared at a later date, per the release. The Tennessee plant also builds the Atlas and Atlas Cross Sport for the U.S. market.
In addition to boosting Atlas production in Tennessee to replace the ID.4, the automaker said it’s exploring the possibility of launching another new high-volume vehicle that’s “intended specifically to meet U.S. consumer needs.” Details will be announced at a later date, VW said in the release.
In February, the UAW announced a historic tentative agreement with the automaker to unionize roughly 3,200 workers at the Tennessee assembly plant.
Volkswagen said it informed workers and the local union of its updated production strategy, per the release. Hourly workers in ID.4‑specific roles will be transferred to other positions within the plant based on seniority and in consultation with the local union. VW also said it will offer an early retirement program for eligible employees.
Like other automakers, including Ford Motor Co. and General Motors, Volkswagen is navigating a challenging auto market combined with slowing EV demand, especially in the U.S.
In its 2025 vehicle sales summary published in January, the brand reported a year-over-year sales decline of 13% in the U.S. last year. The VW Group had cited the current market environment and tariff situation for the drop, and the combined fully electric sales in the U.S. of all of VW Group brands fell nearly 74% in Q4 2025 alone to 3,200 units.
Only 1,454 Volkswagen-brand EVs were sold in the U.S. in Q4 — although ID.4 sales were up 31.4% for the full year to 22,373 units.
Volkswagen is also dealing with a series of safety recalls for the ID.4. In January, the automaker issued two recalls for more than 44,000 ID.4s due to the risk of battery fires. The more urgent of the recalls for 670 ID.4s included a “park outside” warning immediately after charging due to battery fire risk. The recalls followed a multi-year investigation of battery fires in ID.4 models equipped with cells supplied by SK Battery America.
