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

Volkswagen is slashing 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, the move suggests it may not last long.

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 said (via Reuters) that Volkswagen is reducing ID.4 production in Tennessee with plans to implement a two-shift schedule. The move comes as Volkswagen anticipates lower EV demand.

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Although the company didn’t directly say it, Trump’s tariffs on imports from Mexico and Canada are likely 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 added that VW is offering a “voluntary attrition program,” which includes benefits like a severance package, retirement options, and more.

Volkswagen said in a statement, “We remain 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.”

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?