Layoffs. Factory closures. Declining sales. Turning to upstart new partners in America and China to figure out how to make the cars of the future. Any way you want to look at it, the once-mighty Volkswagen Group had a hard 2024 pretty much everywhere it sells cars—electric or otherwise. And 2025 doesn’t look like it’s going to be much better. What gives?
That kicks off this Monday edition of Critical Materials, our morning roundup of technology and mobility news. Also on our agenda today: another Trump era begins, and the U.S. government escalates its probe into crashes that may be related to Ford’s BlueCruise hands-free driving assistance tech. Let’s jump in.
30%: Volkswagen’s Laundry List Of Problems
Volkswagen was the so-called “traditional” car company that kicked off the race to go all-electric. In penance for its diesel-cheating sins about a decade ago, it vowed to one day break up with internal combustion entirely, and much of the rest of the industry followed suit. For about a thousand reasons, from battery costs to labor costs to software challenges and beyond, that goal has proven far more difficult than expected.
Now, for 2025, the Volkswagen Group itself has no new EV launches planned, as Bloomberg notes today. The ID. Buzz van is pretty new in the U.S., but our ID. 7 sedan remains unfortunately MIA. The ID.2, a kind of Polo-style electric subcompact, may be revealed this year but it’s likely set for a 2026 launch. The Scout Motors models won’t go on sale until 2027. And the electric successor to the Golf is now set for 2029, and I’m rather skeptical that car will stay all-electric at the rate things are going.
Granted, there are important new VW Group electric products really hitting the road in force this year, like the Audi Q6 E-Tron and Porsche Macan EV. But the VW conglomerate seems to be in a bit of a holding pattern with the EVs it has and whatever’s coming next—hopefully with lower costs and fewer of the software headaches it’s suffered so far. And arguably the biggest challenges face the core VW brand too.
That’s a problem in Europe in particular where VW’s brands are getting undercut hard by new competitors from China, Bloomberg reports.
The manufacturer’s deliveries risk slumping again because its namesake VW brand doesn’t have a new electric car coming in 2025, with key products pushed back amid delays developing software. The problems are starkest in China, where manufacturers led by BYD Co. are dominating with affordable electric and hybrid models. In the US, where President-elect Donald Trump is threatening tariff hikes, VW still doesn’t offer any pickup trucks popular among American consumers.
“For the next year or so, VW is forced to sell old technology to new customers,” said Matthias Schmidt, an automotive analyst based near Hamburg. “That’s going to be difficult.”
Volkswagen is still profiting handsomely from its popular combustion-engine models, but its bet on fully electric vehicles isn’t playing out as planned. Sales are stagnating in Europe and slumping in the US as customers are turned off by waning subsidies and patchy charging infrastructure. The manufacturer has contributed to the malaise by introducing its first electric models years later than planned and with glitchy software.
In China, a key profit driver for Volkswagen, the market for luxury EVs failed to take off, hurting the prospects of models made by its upmarket brands including Audi’s Q8 e-tron and Porsche AG’s Taycan. In the mass market, VW is struggling to compete with BYD, Nio Inc. and Xiaomi Corp., whose aggressively priced plug-in cars boast large screens and sophisticated voice-recognition technology. The manufacturer also doesn’t offer any range-extended EVs that have become popular in the world’s biggest auto market.
A bigger challenge for VW in the U.S. is its lack of hybrid options. Even if American buyers aren’t warming up to all-electric cars at the rate the auto industry once hoped, EV interest is helping with a hybrid sales boom and Toyota in particular is reaping the benefits from that. VW does sell hybrid models elsewhere in the world, of course, and the company says American buyers will get them someday, just not yet.
Ultimately, as that Bloomberg story notes, this is a product problem: “It’s good to cut costs, but it’s also about finding ways to make your products sell better,” one analyst said. And that ship will take a while to turn around.
60%: The Trump 47 Era Could Impact EVs As Soon As Today
Photo by: InsideEVs
Speaking of the U.S.: at noon today, the most EV-friendly administration yet will be replaced with one that seems dead-set on walking back the policies aimed at building an eventually mostly-electric new car market. Donald Trump is about to be back in office and he has said he has big plans for his first day on the job.
Potential plans for day one, according to ABC News, include:
Declaring a national emergency on the U.S.-Mexico border
Rescinding any DEI (diversity, equity and inclusion) or gender-related directives from the Biden administration
Designate cartels as foreign terrorist organizations
Repeal rules on electric vehicles (which Trump to ABC News in an interview on Saturday)
Offset limits for offshore drilling on federal land
Emphasis mine on those two items because they will potentially have the greatest impact on the auto industry. Shutting down the U.S.-Mexico border in some capacity, or implementing stiff tariffs on Mexican-made cars and parts, could have a profound effect on auto prices. And we’ll see what happens with regard to things like EV tax credits or emissions rules—some of those things may take longer, or an act of Congress, to walk back.
Meanwhile, Vice President J.D. Vance and Tesla CEO/quasi-government advisor Elon Musk reportedly met with Chinese Vice President Han Zheng ahead of the inauguration. The trio “discussed a range of topics including fentanyl, balancing trade and regional stability,” Vance’s team said.
Do you think that the auto industry was part of their discussions?
90%: Ford BlueCruise Faces Upgraded Safety Probe
Photo by: Ford
Ford BlueCruise 1.3 Review
Ford’s hands-free BlueCruise automated driving assistance system is something we’ve found impressive in our testing, but far from perfect. No automated driving assistance system is there yet. And BlueCruise-equipped Ford EVs have been involved in at least two known fatal accidents, leading to a probe by the U.S. National Highway Traffic Safety Administration (NHTSA.)
Now, NHTSA is turning up the heat, Reuters reports:
The regulator said it is upgrading the probe to an engineering analysis, covering vehicles between the 2021-2024 model years. Engineering analysis is a required step before the NHTSA could demand a recall.
The BlueCruise system uses a camera-based driver monitoring system to determine driver attentiveness and is used on 97% of U.S. and Canadian highways with no intersections or traffic signals.
The technology was introduced in model year 2021 and is currently available in a select range of Ford and Lincoln vehicles.
In April, the National Transportation Safety Board (NTSB) opened separate investigations into the two Mach-E crashes, including a Feb. 24 crash of a Honda CR-V in Texas and a March 3 accident in Philadelphia.
NHTSA has investigated the safety of several automated driving assistance systems, most notably among them Tesla’s Autopilot and Full Self-Driving. But it could have its work cut out as more examples of this technology become common.
100%: What Are Your Predictions For The Trump Era?
Photo by: InsideEVs
I think there’s a non-zero chance that Trump will end up cutting some deal with China that could open the doors to their auto industry selling cars in America, albeit with caveats, like perhaps requiring them to be made stateside.
Either way, the EV sector is about to be in for a very different few years. How do you see this going down?
Contact the author: patrick.george@insideevs.com
