Volkswagen drops all-electric ID.4 in the US in pivot back to gas SUVs

Volkswagen has announced that it will cease production of its all-electric ID.4 model at the Chattanooga, Tennessee factory. This decision comes as the German automaker redirects its efforts toward high-volume gasoline-powered vehicles, particularly the upcoming Atlas SUV. As of now, U.S. customers can still purchase the ID.4 until existing inventory is depleted, which Volkswagen projects will last until 2027. This marks a significant shift, as the company, along with other traditional automakers, has scaled back ambitious plans to transition from gasoline-powered vehicles to electric models. Despite some electric vehicles (EVs) gaining popularity, overall demand has not met the optimistic forecasts set by these manufacturers. The reduction of the $7,500 federal tax credit last year has further hindered demand, particularly for higher-priced electric models, leading consumers to seek out more affordable used EVs or lower-priced alternatives. Launched in 2020 with a starting price around $45,000, the ID.4 initially received positive reviews but faced challenges, particularly with its software. A refresh in 2023 revitalized interest, resulting in a brief sales surge. However, sales figures have been inconsistent. In 2023, ID.4 sales peaked at over 37,000 units, only to plummet by 55% the following year. Although sales began to recover in 2025, increasing by 31% to 22,373 units, they still fell short of previous highs. On a global scale, Volkswagen reported delivering approximately 382,000 all-electric vehicles worldwide in 2025, a slight decrease of 0.2%. Looking ahead, Volkswagen has plans for new models at the U.S. factory, with the launch of the second-generation Atlas set for the 2027 model year. Production is expected to begin this summer, and the vehicle will be available in dealerships this fall. A company spokesperson assured that many employees currently involved in ID.4 production can transition to roles related to the Atlas. Moreover, the company is offering early retirement buyouts to some workers. Despite stepping back from the electric vehicle market for the moment, Volkswagen remains committed to the U.S. market. The company is exploring new products tailored to meet American consumer preferences, likely focusing on the development of a more affordable compact SUV. Volkswagen Group of America’s President and CEO, Kjell Gruner, emphasized that the Chattanooga plant will continue to be central to the company’s strategy in the United States, hinting at a potential future return of an affordable electric vehicle for U.S. consumers.