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Volkswagen (VWAGY) Mulls Closure of Audi Plant in Brussels
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Volkswagen AG (VWAGY - Free Report) is contemplating the closure of an Audi plant in Brussels due to weak demand for the Audi Q8 e-tron, an all-electric model launched in 2019. Consequently, the company has revised its forecast for operating return on sales to a range of 6.5-7%, down from the previous estimate of 7-7.5%.
Automakers are grappling with declining demand for EVs, with European brands particularly challenged by a surge of affordable and state-subsidized EVs from China. In response, the EU has begun imposing provisional tariffs on Chinese EV imports.
If Volkswagen proceeds with the plant closure, it would be the first since the 1988 shutdown of its Westmoreland County, PA facility. The potential closure or repurposing of the Brussels site could cost the company up to $2.81 billion in operating profit for fiscal 2024.
Volkswagen has also experienced a decline in global vehicle deliveries. It sold 2,243,700 units from April to June, down 3.8% from the year-ago period. Audi's sales dropped 11.3% year over year in this quarter. Deliveries in China fell sharply by 19.3%, while there was a 5.1% increase in Western Europe and a 10.8% rise in North America.
In a separate development, VWAGY has obtained the rights to produce solid-state batteries developed with QuantumScape, a U.S. startup that develops solid-state lithium metal batteries for electric cars. The German automaker plans to incorporate this technology into more of its vehicles.
Pending technological advancements and royalty payments, Volkswagen's battery unit, PowerCo, will be licensed to mass-produce these batteries based on QuantumScape technology. It can manufacture up to 40 gigawatt-hours (GWh) annually, with an option to double this capacity to 80 GWh, enough to equip around one million vehicles each year.
Solid-state batteries, which can store more energy than current liquid electrolyte batteries, are expected to accelerate the transition to EVs by addressing limited-range concerns. Volkswagen and QuantumScape aim to scale up this technology for integration into a series of Volkswagen Group vehicles, superseding their 2018 joint venture to co-manufacture batteries.
The consensus estimate for SZKMY’s 2025 earnings suggests year-over-year growth of 2.09%. EPS estimates for 2025 and 2026 have improved 38 cents and 15 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXL’s 2024 sales and earnings suggests year-over-year growth of 3.05% and 544.44%, respectively. EPS estimates for 2024 have moved up 2 cents in the past 60 days. The same for 2025 has moved up 20 cents in the past 30 days.
The Zacks Consensus Estimate for HMC’s 2025 sales and earnings suggests year-over-year growth of 0.73%. EPS estimates for 2025 have improved 9 cents in the past 60 days.
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Volkswagen (VWAGY) Mulls Closure of Audi Plant in Brussels
Volkswagen AG (VWAGY - Free Report) is contemplating the closure of an Audi plant in Brussels due to weak demand for the Audi Q8 e-tron, an all-electric model launched in 2019. Consequently, the company has revised its forecast for operating return on sales to a range of 6.5-7%, down from the previous estimate of 7-7.5%.
Automakers are grappling with declining demand for EVs, with European brands particularly challenged by a surge of affordable and state-subsidized EVs from China. In response, the EU has begun imposing provisional tariffs on Chinese EV imports.
If Volkswagen proceeds with the plant closure, it would be the first since the 1988 shutdown of its Westmoreland County, PA facility. The potential closure or repurposing of the Brussels site could cost the company up to $2.81 billion in operating profit for fiscal 2024.
Volkswagen has also experienced a decline in global vehicle deliveries. It sold 2,243,700 units from April to June, down 3.8% from the year-ago period. Audi's sales dropped 11.3% year over year in this quarter. Deliveries in China fell sharply by 19.3%, while there was a 5.1% increase in Western Europe and a 10.8% rise in North America.
In a separate development, VWAGY has obtained the rights to produce solid-state batteries developed with QuantumScape, a U.S. startup that develops solid-state lithium metal batteries for electric cars. The German automaker plans to incorporate this technology into more of its vehicles.
Pending technological advancements and royalty payments, Volkswagen's battery unit, PowerCo, will be licensed to mass-produce these batteries based on QuantumScape technology. It can manufacture up to 40 gigawatt-hours (GWh) annually, with an option to double this capacity to 80 GWh, enough to equip around one million vehicles each year.
Solid-state batteries, which can store more energy than current liquid electrolyte batteries, are expected to accelerate the transition to EVs by addressing limited-range concerns. Volkswagen and QuantumScape aim to scale up this technology for integration into a series of Volkswagen Group vehicles, superseding their 2018 joint venture to co-manufacture batteries.
Zacks Rank & Key Picks
VWAGY currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the auto space are Suzuki Motor Corporation (SZKMY - Free Report) , American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) and Honda Motor Co., Ltd. (HMC - Free Report) . While SZKMY and AXL sport a Zacks Rank #1 (Strong Buy) each, HMC carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for SZKMY’s 2025 earnings suggests year-over-year growth of 2.09%. EPS estimates for 2025 and 2026 have improved 38 cents and 15 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXL’s 2024 sales and earnings suggests year-over-year growth of 3.05% and 544.44%, respectively. EPS estimates for 2024 have moved up 2 cents in the past 60 days. The same for 2025 has moved up 20 cents in the past 30 days.
The Zacks Consensus Estimate for HMC’s 2025 sales and earnings suggests year-over-year growth of 0.73%. EPS estimates for 2025 have improved 9 cents in the past 60 days.