Volkswagen: chip supply remains a major challenge, but plans to increase car production

Volkswagen (Volkswagen), the world's second-largest carmaker, said on Wednesday that it would decide on the exact location of the new electric vehicle plant by the end of March, and chip shortages are expected to persist this year, but the company still plans to increase overall production in the second half of 2022.

Volkswagen said last year that it would build a state-of-the-art electric car factory near its headquarters in Wolfsburg, Germany, to enhance its competitiveness. Notably, Tesla, its electric car competitor, has also set up a factory near Berlin.

The plant, which is part of Volkswagen's flagship Project Trinity project, is expected to begin mass production from 2026, will be equipped with Level2+ 's autopilot system and has the technical space to upgrade to Level4. Volkswagen has high hopes for the plant as it prepares to stop selling fuel cars in Europe from 2035 in an effort to expand its electric car business globally.

Previously, Volkswagen put forward the market goal of "more than doubling the market share of pure electric vehicles in the European market by 2030, and pure electric vehicle sales are expected to account for more than 70% of the brand's European car sales." it is hoped that in the same period, pure electric vehicles in the United States and China will account for more than 50% of the brand's total sales, making it a global leader in electric vehicle production.

Volkswagen shares fell in the last quarter of 2021, but have rebounded recently. On Wednesday, the company's shares rose slightly to 188.14 euros from 187.8 euros ($213.81) at the start of trading after the news.

The Volkswagen Labor Commission said Volkswagen produced 330000 fewer cars at its Wolfsburg plant last year than planned because of a shortage of chips.

The carmaker said in early February that night shifts on some production lines at the Wolfsburg plant would be cut because of chip shortages. Volkswagen delivered 452900 battery electric vehicles last year, an increase of 95.5 per cent over 2020.

Despite chip supply challenges, Herbert Diess, the company's chief executive, said in a separate statement on Wednesday that he hoped to increase production in the second half of the year, as deliverable orders for the Volkswagen high-end car brand were sold out throughout 2022 and orders for its truck business were plentiful.

"the chip supply situation is improving and we see opportunities for further production, especially in the second half of this year," Diess said.