Volkswagen will cease electric vehicle production at its Chattanooga, Tennessee plant this month, shifting focus to a new gasoline-powered SUV. The move follows the expiration of federal tax credits that drove a 60% sales drop for the ID.4 model last year. Volkswagen sold only 250 ID.4s in the U.S. in Q4 2025 after credits ended, compared to robust sales earlier. Workers building the ID.4 will be offered other roles or early retirement. Chattanooga remains a cornerstone for Volkswagen's U.S. strategy, though no future electric models will be made there.

The shift reflects broader industry retrenchment, with GM, Ford, Stellantis, and Honda also scaling back EV plans due to weak demand. Rising gasoline prices from Iran-related conflicts offer some hope for EV rebounds, but Volkswagen declined to specify when a new ID.4 version might return or where it would be built.