Volkswagen will halt production of its ID.4 electric SUV at the Chattanooga, Tennessee, facility beginning in late October. The company informed the workers at the plant on Tuesday.
According to The Chattanooga Times Free Press, the production pause will result in approximately 160 employees being placed on furlough. Volkswagen spokesperson Michael Lowder stated that the affected employees will receive 80% of the base pay and will continue to receive the benefits.
The report states that production of the ID.4 at Volkswagen’s sole U.S. facility was reduced earlier this week and will be fully suspended by the end of October. As an initial step, 80 production workers have already been placed on temporary leave.
Michael Lowder described the decision as ‘market-driven,’ noting that the company is scaling back production in response to declining demand. Sales of the ID.4 dropped by 65% in the second quarter, with fewer than 2,000 units sold between April and June—down sharply from nearly 5,700 during the same period in 2024.
Despite ranking as the third best-selling EV in the U.S. in January, the ID.4 lost access to the $7,500 federal EV tax credit soon after, contributing to its ongoing sales challenges.
To offset declining sales, Volkswagen has introduced steep lease incentives for the ID.4, reducing monthly payments to as low as $129, making it the most budget-friendly EV lease option in the U.S.
Volkswagen has yet to clarify the duration of the production halt. The automaker attributed the move to a ‘challenging environment,’ following a 29% drop in U.S. sales during the second quarter. In that period, VW sold 1,992 ID.4 units and 564 ID.Buzz models. The Golf R was the only model to record a year-over-year sales increase.
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