Volkswagen said Thursday that it would stop producing electric cars at its Tennessee factory this month to focus on manufacturing a large, gasoline-powered sport utility vehicle.
The German company joins several other carmakers in scaling back plans for electric vehicles after Congress eliminated tax credits for the cars, causing sales to plunge. Under President Trump, federal policy has sharply shifted in favor of vehicles powered by fossil fuels.
Volkswagen said it would stop producing the ID.4, an electric sport utility vehicle, at the factory, in Chattanooga, and concentrate on making a new version of the Atlas S.U.V.
Workers who build the ID.4 will be offered other jobs at the plant, Volkswagen said, adding that an unspecified number would be offered early retirement.
“The Chattanooga plant has been, and will continue to be, a cornerstone of Volkswagen’s strategy in the United States,” Kjell Gruner, chief executive of Volkswagen Group of America, said in a statement.
General Motors, Ford Motor, Stellantis and Honda are among the major carmakers that have slowed their electric vehicle plans, including delaying new models after sales fell short of expectations.
Volkswagen sold only about 250 ID.4s in the United States in the last three months of 2025, after the tax credit expired, a decline of more than 60 percent from a year earlier.
However, there are signs that sales of electric vehicles could rebound because of soaring gasoline prices caused by war in Iran. From the end of February to the end of March, searches for used or new electric vehicles rose 25 percent on Cars.com, the online car shopping site said Thursday.
Not all carmakers are rolling back their electric vehicle plans. Toyota will increase the number of electric models available in the United States to four from one. Hyundai has said it remains committed to producing electric vehicles in the United States and said last week that sales of its most popular electric vehicle, the Ioniq 5, jumped 13 percent in March.
Volkswagen said it will offer a new version of the ID.4 in the United States, but declined to say when it would go on sale and whether it or another electric vehicle will be made in Chattanooga. The carmaker said it has produced enough ID.4s to meet demand at least until 2027.
Volkswagen also sells the ID.Buzz, an electric minivan, in the United States but that vehicle is made in Germany. The company’s luxury brands, Audi and Porsche, sell several imported electric models in the United States.
Jack Ewing covers the auto industry for The Times, with an emphasis on electric vehicles.
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