VW is considering closing some of its production facilities in Germany and has informed its employees that they may be laid off after July 2025. As the company moves toward electrification and decarbonization, it appears that VW management has decided that restructuring is inevitable in order to compete with the growing presence of inexpensive Chinese-made BEVs in the global market.

In addition to China, which is promoting BEVs as a national policy, the U.S. is also providing massive financial support for domestic production of BEVs and batteries through the Inflation-Reduction Act (IRA). In contrast, production costs in the EU remain high, and in response to the VW crisis, German and EU policy makers announced a series of measures in September 2024 to rebuild the industrial base in the region and prepare to compete in the global market.

As the world continues its decarbonization race, it is becoming more difficult every year for global OEMs to keep their production bases in Japan. Japanese policy makers are also required to fundamentally rethink their energy strategies and provide firm guidelines to support the auto industry in a stable manner. In Japan, such topics were hardly discussed in the recent presidential election debate, and the questioners and others talked about trivial matters with little sense of crisis.