As sales of electric vehicles decline, Volkswagen is scaling back the expansion of its battery factories

Volkswagen will first wait and see how demand for electric cars develops before building all six battery factories planned so far. Thomas Schmall, VW's chief technology officer, told a German newspaper that “building battery cell factories is not an end in itself” and that the goal of 200 GWh of lithium-ion cells by 2030 is not set in stone.

It's a bit simplistic to say that all new technology conforms to the now infamous Gartner hype cycle, but it's hard not to think of this zigzag when talking about electric cars. After years of hearing OEMs' lofty goals of all-electric models and an end to internal combustion engines, Tesla's exploding valuation sparked investor interest in electrification, and for a while, everything just spiraled out of control.

But the promised drop in battery prices never materialized, and in the U.S., electric cars are still more expensive, at least for first-time owners. The initial hype and limited availability of new models led dealers to cram the cars and trucks they could get with high markups, further alienating potential customers. And now that those markups and inventory shortages are largely a thing of the past, interest rates have skyrocketed.

All of this makes it hard not to believe that we are in a valley of disillusionment, and automakers are responding accordingly. Both General Motors and Ford have already moderated their electrification plans, now planning more hybrids and fewer electric vehicles.

For VW, the previous target of 200 GWh by 2030 from six factories (via a new subsidiary called PowerCo) could now be just 170 GWh of capacity from three already announced plants in Valencia, Spain, Ontario, Canada and Salzgitter, Germany. If necessary, the Spanish and Canadian battery factories could be expanded to meet the additional demand, Schmall said.

This battery news follows another sign of declining confidence in electric vehicles at VW. Last week, it was announced that the company had delayed plans for the successor to the ID.4, which may now not be in showrooms until 2032.