Volkswagen pulls the plug on direct-to-consumer EV sales in Europe

Volkswagen Group is eyeing a shift in its electric vehicle sales strategy. The company wants to abandon its Tesla-inspired direct-to-consumer (DTC) sales model in major European markets, apparently due to complexities and slow adoption of EVs.

Volkswagen acknowledged the challenges of operating both DTC sales for EVs and traditional retail operations for internal combustion engine vehicles in a recent press release. "Given challenging framework conditions, we will have to reevaluate if our current agency model for all-electric vehicles delivers the best possible customer experience," stated Marco Schubert, Volkswagen Group board member responsible for sales.

Volkswagen's potential move marks a departure from the trend set by Tesla, which has successfully implemented a DTC model, bypassing traditional dealerships and selling cars directly to consumers through its own stores and online platform. Many legacy automakers, including Volkswagen, have attempted to emulate Tesla's approach in the highly regulated European auto market.

Volkswagen's current DTC model for EVs involves partnerships with dealers who earn a fixed margin without incurring marketing or inventory costs. This model has been in place since 2020 and applies to Volkswagen, Audi, Skoda, and Volkswagen commercial vehicles in France, Germany, Poland, Spain, and the UK.

Volkswagen's Cupra brand will be the only one to continue with the DTC model across Europe. The exception is Ireland, where all Volkswagen vehicles, regardless of their powertrain, will be sold directly to consumers.

The shift comes as Volkswagen goes through a major restructuring to reduce costs and streamline operations. The company has announced plans to close three factories in Germany, a first in its 87-year history. Additionally, Volkswagen intends to cut tens of thousands of jobs and reduce wages for 10% of its remaining workforce.

The restructuring also includes efforts to accelerate production and development processes, with the goal of shortening project development cycles. Volkswagen is also closing its Audi plant in Brussels, Belgium, where it currently manufactures the Audi Q8 e-tron. The closure, scheduled for February 28, 2025, will result in the loss of approximately 3,000 jobs.

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