In the production line, semi-assembled cars suspended by large spreaders are circulating. Volkswagen's Dresden plant is known as the "transparent factory" and will be transformed into a technology research center in the future. Affected by weak market demand and high U.S. tariffs, the auto giant decided to stop vehicle production at its Dresden plant. The plant was commissioned in 2001.
On Tuesday, the last car will roll off the assembly line at Volkswagen's Dresden plant in Germany. This is the first time that the 88-year-old automaker has closed its vehicle production plant in Germany.
As early as last year, Volkswagen issued a production cut warning. At that time, the company was facing weak demand in Europe and its largest market, China. At the same time, high tariffs imposed by the United States further dragged down its sales in the United States.
After 24 years of vehicle production, the Dresden plant will be transformed into a research center focusing on areas such as artificial intelligence, robotics and chip design. This base, named "Transparent Factory" because of its full-body glass curtain wall, will be jointly operated by Volkswagen, the Saxony state government and the Technical University of Dresden in the future.
Thomas Schaefer, CEO of the Volkswagen brand, said in a statement: "Closing the complete vehicle production line of the transparent factory with a history of more than 20 years is by no means an easy decision. However, from an economic perspective, this move is completely necessary."
Volkswagen has reached an agreement with the union committee representing local employees in Germany: the existing 230 employees at the Dresden plant can choose to receive severance pay, apply for early retirement, or be transferred to other sites within the group.
The Dresden plant, opened in 2001, initially produced the Phaeton luxury sedan, then moved to production of the electric Golf hatchback and, in recent years, the ID.3 pure electric vehicle. The last car to roll off the assembly line on Tuesday is a red ID.3 GTX model, which will be signed by factory employees and permanently displayed in the factory, which is still open to visitors.
The tariff policy introduced by U.S. President Trump has dealt a heavy blow to Volkswagen. The company said its $1.5 billion loss last quarter was partly attributable to the cost of the tariffs, and it expects tariff charges to exceed $5 billion for the full year. At the same time, sales in China's high-end car market have declined, which has also put pressure on the performance of Volkswagen's Porsche brand.
To make matters worse, Volkswagen has recently been involved in the geopolitical game surrounding the Dutch company NXP Semiconductors. Although NXP is headquartered in the Netherlands, it is actually controlled by the Chinese company Wingtech Technology. The Dutch government briefly took over the company, causing global car companies to worry about chip supply shortages, until control returned to Wingtech Technology.
Volkswagen's plight is a microcosm of Germany's overall economic situation. The German economy shrank in succession in 2023 and 2024, before stagnating in 2025. However, ING economist Carsten Brzeski pointed out in a report that German industrial production has recently shown "preliminary signs of bottoming out and stabilizing."