Volkswagen is cutting production of its ID.4 electric SUV at its Chattanooga, Tennessee plant after dealers were left struggling to clear lots. The pause, which begins in late October, will furlough about 160 workers, though VW says employees will receive 80% pay during the downtime. The company hasn’t said how long the cut will last, but insists the move doesn’t signal a retreat from EVs.
“This adjustment in no way changes our commitment to the ID.4, our growing EV portfolio or our commitment to our Chattanooga team,” VW told the Chattanooga Times Free Press.
Discounts Can’t Keep Pace
Sales weakness is the root of the slowdown. Kelley Blue Book reports that in July, ID.4s were moving at an average discount of $11,004 per car. Roughly $7,500 of that figure comes from the federal EV tax credit, which is set to expire at the end of September. Dealers appear to be rushing sales before the rebate runs out, assuming demand will soften further once the incentive disappears.
It’s not for lack of deals: Volkswagen has been offering some of its best lease terms yet, including an electrifying August lease offer on the 2025 ID.4. Despite added range and power for the latest model year, the car hasn’t been able to shake slowing showroom traffic.
The Bigger Picture
Volkswagen’s production slowdown comes just weeks after it celebrated selling its 1.5 millionth ID. EV globally. The milestone shows the scale of VW’s electrification push since 2020, but the ID.4’s U.S. struggles underscore how uneven the EV transition remains. Demand is softening, competition from Tesla and BYD is intensifying, and heavy discounting is eating into margins.
At the same time, VW is experimenting with new revenue streams. In the UK, it has begun testing controversial subscription services that lock additional horsepower behind a monthly fee. That might make sense in markets where EV adoption is more mature, but in the U.S., buyers are signaling that price and incentives still matter most.
VW
Why It Matters
The ID.4 is Volkswagen’s most affordable EV in the U.S. lineup, and its performance in the market is critical to VW’s long-term strategy. Pausing production highlights the risks of overestimating demand while also showing how dependent EV sales remain on incentives.
For customers, the ID.4 is now one of the strongest deals in the EV market, with heavy discounts making it more attractive than ever. But for VW, the bigger question is whether the ID.4 can recover once subsidies fade, or if it ends up as another cautionary tale in the EV shift.
