The Volkswagen Group has surprised the industry by reducing production at one of its electric vehicle (EV) plants as the company faces buyer reluctance towards its EVs, revealed by the head of one of its unions for workers to the German media.

The union told the North West newspaper, “We are experiencing strong customer reluctance in the electric vehicle sector.”

The union also stated that production of EV models was outpacing sales by 30 percent, while production of internal combustion engine (ICE) models, including the Volkswagen Passat (which has been discontinued in Malaysia), will continue unaffected at the plant.

Also read: After 20 years and 3 generations, the VW Passat gets discontinued in Malaysia

Industry analysts suggest that the growth of the EV market is not keeping pace with the influx of new electric models and increased production capacity.

Morgan Stanley analysts predict a slowdown in European EV demand due to ongoing cuts in government subsidies, as reported by Reuters. They also anticipate that traditional car manufacturers, including Volkswagen Group, may delay or slow down their announced EV plans.

Also read: Volkswagen to set up EV battery plant in Indonesia as demand grows

In response to the situation, a Volkswagen statement acknowledged the current softening demand for electric cars, attributing it to reduced subsidies, higher inflation, and longer delivery times caused by parts shortages.

However, the company expressed confidence in a future resurgence in demand as the year progresses. Volkswagen plans to launch the revised ID.3 and the ID.7, believing these new models will reignite interest in EVs.

Also read: Skoda takes over development of TSI engines as Volkswagen focuses on EVs