BERLIN, April 14 (Reuters) - Volkswagen is expected to take a hit to first-quarter earnings from the decision to end production of its ID.4 electric SUV at the German carmaker's Tennessee plant,
Volkswagen to Book Q1 Charge After Stopping ID.4 EV Production in Tennessee
Volkswagen Faces Financial Impact from Chattanooga Plant Decision
First-Quarter Earnings Hit Expected
BERLIN, April 14 (Reuters) - Volkswagen is expected to take a hit to first-quarter earnings from the decision to end production of its ID.4 electric SUV at the German carmaker's Tennessee plant, analysts said on Tuesday after a call with management.
Details of the Financial Charge
Volkswagen will book a charge equivalent to 60% to 75% of its original $800 million investment to retool the Chattanooga plant to produce the model, Bernstein analysts said.
Confirmation and Impact on Operating Earnings
A Volkswagen spokesperson confirmed that Bernstein's calculations were correct.
Excluding the writedown, the group's operating earnings would increase year-on-year in the first three months of the year, according to Bernstein.
Long-Term Benefits and Market Context
Volkswagen would also benefit beyond the first quarter "from no longer selling this unprofitable vehicle", the analysts said.
Reasons Behind Production Halt
Volkswagen announced on April 9 that it would end ID.4 production in Chattanooga this month, citing a challenging time for the U.S. electric vehicle market.
Industry-Wide EV Production Adjustments
Automakers have scaled back or cancelled production of EVs after the federal government last fall ended the use of a $7,500 tax credit towards the purchase of an EV.
(Reporting by Rachel More; Editing by Jamie Freed)
