Major Setback for EV Chip Factory in Germany as Wolfspeed and ZF Hit Pause

A planned €3 billion ($3.2 billion) electric vehicle microchip factory in Germany has been put on hold, dealing another blow to the country’s EV manufacturing ambitions, according to The Guardian.

Slowing EV Demand Cited as Key Factor

The US-based Wolfspeed and German auto supplier ZF have postponed their joint venture to build what was dubbed the “world’s largest, most advanced” silicon carbide components factory.

The primary reason? A disappointing slowdown in electric vehicle demand that’s sending ripples through European manufacturing.

“With our improved productivity, coupled with the currently forecasted slower ramp of the EV marketplace, we believe we have the capacity we need for the foreseeable future,” stated a Wolfspeed spokesperson.

Project’s Ambitious Origins

The factory, planned for Ensdorf in western Germany’s Saarland region, was announced in February 2023 with much fanfare. German Chancellor Olaf Scholz had celebrated it as part of a “return of the industrial revolution” to Germany. The project would’ve created up to 1,000 jobs and received €515 million ($553 million) in government subsidies.

Broader Industry Impact

The setback comes amid a series of challenges facing the German auto industry. Volkswagen is currently considering factory closures as it struggles with its EV transition plans. Meanwhile, Intel has delayed work on two major chip factories in Magdeburg, and ZF announced plans to reduce its German workforce by 25% – cutting over 13,500 jobs by 2028. A ZF spokesperson confirmed it was Wolfspeed that made the decision to delay, putting their planned €170 million ($182 million) contribution on ice.

EVXL’s Take

This development reflects broader challenges in the EV industry’s growth trajectory. While the temporary slowdown is concerning, it’s important to remember that Volkswagen and other major manufacturers remain committed to their long-term electrification strategies. The chip factory pause might actually help prevent overcapacity as the market matures and demand patterns become clearer.

What are your thoughts on how this delay might impact the European EV supply chain? Share your perspective in the comments below.​​​​​​​​​​​​​​​​