Volkswagen Sells Xinjiang Plant Amid Shift to Electric Vehicles #

Volkswagen has sold its plant in Xinjiang, citing economic reasons. The plant, located in Urumqi, had ceased producing combustion engine vehicles in 2019 and operated as a distribution center thereafter. The automotive giant acknowledged the pressure to expedite the transformation of its production network due to a decreasing demand for combustion engine vehicles and rising electric car sales, which could account for 45% of all car sales in China this year.

The plant was part of a joint venture, and its sale involved a transaction with a subsidiary of Shanghai Lingang Economic Development Group. Although no sale value was disclosed, the decision comes amidst ongoing allegations against China of human rights abuses in the region. Volkswagen, despite facing criticism for its presence in Xinjiang, stated that there were no signs of forced labor at the plant, both from audits and executive visits.

In parallel with these developments, Volkswagen is facing intense competition in China’s automotive market as local manufacturers increase their production and sales of electric vehicles. The company is also experiencing challenges domestically; it announced plans to close at least three factories in Germany, resulting in significant layoffs, marking a first in its longstanding history.