Volkswagen is set to record write-downs of as much as $600m in the first quarter after deciding to halt production of its only US-manufactured EV, the ID.4, at its Chattanooga, Tennessee facility.
The impairment charge is expected to amount to between 60% and 75% of the company’s initial $800m investment to reconfigure the plant, according to a company representative cited by Bloomberg.
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Production of the ID.4 is scheduled to cease before the end of the month, with the site being repurposed to produce the next-generation Atlas model.
The decision follows a steep fall in demand for the electric SUV, with US sales dropping 96% in the first quarter after government subsidies were withdrawn.
The move comes as the group faces wider headwinds.
First quarter deliveries declined to 2.05 million vehicles from 2.13 million a year earlier, as stronger performance in Europe and South America was offset by weaker demand in the US and China.
Volkswagen has also faced ongoing challenges in the US market, where its line-up has lacked the SUVs and pickup trucks preferred by consumers, alongside pressures related to tariffs.
Setting aside the write-down charge, Volkswagen expects its earnings before interest and taxes to show year-on-year improvement in the quarter.
The development mirrors a broader trend across the automotive sector, where manufacturers including General Motors and Ford have reported multi-billion-dollar write-downs linked to reductions in EV output and battery investments.
For FY25, the group reported a 44.3% decline in earnings after tax to €6.90bn, despite revenue remaining broadly stable at €321.91bn ($379.22bn), down 0.8% year-on-year.
Operating result fell more sharply, dropping 53.5% to €8.86bn.
The decline in operating performance was attributed to US tariffs, costs tied to adjustments in the Porsche product strategy, as well as currency effects and pricing and mix pressures.
Amid falling profits and rising costs, the company last month outlined plans to reduce its workforce in Germany by 50,000 jobs by 2030.
Volkswagen is due to release its first-quarter earnings on 30 April.
