Why is Volkswagen cutting ID.4 production just as US sales are surging? [Update]

Volkswagen is cutting production in Chattanooga, Tennessee, where the ID.4 electric SUV is built. Although the ID.4 was the third top-selling EV in the US earlier this year behind Tesla’s Model Y and Model 3, a company spokesperson tells us “cautious demand for EVs” is behind the adjustments.

Volkswagen cuts ID.4 production in the US

After sales fell by over 50% in the US last year after Volkswagen halted production and deliveries, the electric SUV made an impressive comeback in 2025.

The ID.4 was the third best-selling electric vehicle in the US in January, trailing only the Tesla Model Y and Model 3.

Volkswagen sold nearly 5,000 ID.4s in January alone, putting it on pace to sell about 60,000 by the end of 2025. A company spokesperson told Electrek that although “ID.4 remains in strong demand, we are adjusting production to align with a lower-than-expected EV adoption rate in the US.”

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The spokesperson added that the lower expectations are not specific to the ID.4 but to the entire US electric vehicle market.

Starting March 31, Volkswagen will return to a primarily two-shift production schedule. Meanwhile, the body shop for the ID.4 will still run on three shifts.

Volkswagen said in a statement, “This decision reflects the need for flexibility and a profitably-run business to support continued investment and growth in the US market.” The company is optimizing production across all sites, adding, “Given the currently cautious demand for EVs in the U.S., we are adjusting our production in Chattanooga accordingly.”

Although it didn’t directly say it, Trump’s tariffs on imports from Mexico and Canada are likely the biggest to blame.

Volkswagen said its vehicles made in North America are USMCA compliant, but it’s still expected to see the most damaging blow of German brands from the new tariffs.

Audi and Porsche are both primarily built in Europe, while Volkswagen brand vehicles in the US are likely imported from Mexico.

The spokesperson told us that VW is offering a “voluntary attrition program” with complete benefits, including severance packages, retirement options, and more.

Volkswagen said it remains “committed to our team members, our customers, and our presence in Chattanooga,” adding, “This change supports that commitment.”

The decision comes after last April’s historic decision, in which VW workers at the plant became the first in the South outside of the Big Three to join the Union since 1940.

On Wednesday, the UAW filed unfair practice charges against VW. In a statement, UAW president Shawn Fain said, “The UAW has notified the Trump Administration of Volkswagen’s unacceptable, anti-union, anti-worker, and anti-American conduct.”

In response, VW said the “unions claims in its filings from March 13 are categorically false.” The automaker said it “has negotiated with them for months regarding a shift reduction in Chattanooga.”

It has also “repeatedly educated them on the economics that have led to this difficult decision – shifting EV demand and an uncertain market.”

Electrek’s Take

As we keep saying, Trump’s tariffs do much more harm than good. Volkswagen is considering moving Audi and Porsche production to the US, but it only has until early April before the tariffs kick in.

Nearly every automaker has warned that added tariffs on its biggest trade partners will put the US further behind China and other emerging tech leaders.

Some automakers are already turning to China for smart EV tech (to sell globally) because it’s cheaper and easier to scale. And this is just the start. Other countries, like Australia, are now opening up to Chinese-made EVs and other tech. What’s next?