According to Electrek, Thomas Sch ä fer, CEO of the Volkswagen passenger car brand, issued the "final alarm" at a Volkswagen management meeting this week and called for a short-term freeze on expenses to control costs.

　　Last month, Volkswagen announced a new "Accelerate Forward" plan aimed at promoting long-term profitability and performance, which includes increasing Volkswagen's profit margin from around 3% to 6.5%. Sch ä fer pointed out that "over the years, our costs have been too high." Sch ä fer plans to cut expenses for the rest of this year as part of the company's broader cost reduction and efficiency enhancement plan.

　　After announcing the plan, Sch ä fer stated that "this plan is the top priority of the entire management committee." Volkswagen expects to increase profits by approximately $11.2 billion (10 billion euros) through the "Accelerate Forward" strategy. Volkswagen will focus on mass production models to simplify production, while reducing the number of versions per model to further optimize efficiency. For example, compared to the Golf 7, the new ID.7 has a 99% reduction in configuration options.

　　Image source: Volkswagen

　　However, Volkswagen's problem is not just about profit margins. Although Volkswagen Group's sales of pure electric vehicles increased by 48% year-on-year in the first half of this year, reaching 321600 units, sales of pure electric vehicles in the Chinese market have declined.

　　According to Manager magazine, Sch ä fer stated at this week's management meeting that approximately 40% of Volkswagen Group's revenue comes from China, but sales of pure electric vehicles in China decreased by 1.6% year-on-year in the first half of the year. More importantly, although Volkswagen's pure electric vehicle registration in other major markets is still increasing, many of them are based on old orders from last year or even 2021.

　　According to Handelsblatt, the reason for the demand problem of Volkswagen is the "Proxy pattern" of dealers when launching the "ID" series. This essentially helps to save sales costs, but limits the ability of dealers to increase or decrease prices. A Volkswagen sales representative said, 'Manufacturers cannot sell directly, and this drawback becomes apparent at this time.' He added that electric models are 'really too expensive'.

　　According to reports, the high backlog of orders from Volkswagen still masks low demand. Earlier this year, Oliver Blume, the CEO of Volkswagen Group and Porsche, stated that he did not intend to join the price war sparked by Tesla. However, unlike Tesla, Volkswagen's electric vehicle models did not generate significant profits. Nevertheless, Volkswagen has compromised in the Chinese market and introduced a limited time discount of ID.3.

　　Looking ahead, Volkswagen may launch cheaper, more basic and smaller battery models, such as the ID2 full Concept car. The starting price of ID2 full Concept car is less than 27000 dollars (25000 dollars)