Volkswagen is dropping the all-electric ID.4 in the U.S. to return to a gas-powered SUV

Volkswagen will no longer produce the all-electric ID.4 at its US factory in Chattanooga, Tennessee, as the German automaker shifts its resources to full-size vehicles like the upcoming gas-powered Atlas SUV.

The company said Thursday that US customers will be able to purchase the ID.4 while current inventory runs out. Volkswagen said it expects US inventory to last until 2027.

Volkswagen, along with other legacy automakers, has backed away from once-ambitious plans to shift its portfolios from gas-powered cars to battery-electric cars, trucks and SUVs. Although some electric cars have been a hit, demand has not met the high expectations that automakers had. The elimination of the $7,500 federal tax credit last year has increased demand, especially for higher-priced models.

Electric cars continue to sell, but price-conscious consumers are turning to either used electric cars or lower-priced cars. Volkswagen began production of the mid-priced ID.4 in 2020, with a price tag of around $45,000. The car received a warm reception, but then struggled, especially with its software. But an update in 2023 has given it new life and a boost in sales.

However, overall, sales results were mixed. VW ID.4 sales in 2023 exceeded 37,000 and then fell by 55% the following year. Sales recovered in 2025, rising 31% to 22,373, but failed to reach the level reached two years earlier.

Globally, Volkswagen said earlier this year that demand for electric vehicles is holding up; Volkswagen reported in January that it delivered about 382,000 fully electric vehicles worldwide in 2025, down 0.2%. Apparently this was not enough to retain the ID.4.

Volkswagen said it plans to bring future models to the US factory. The launch of the all-new second-generation Atlas for 2027 is key to this effort, according to Volkswagen. The Atlas is expected to begin production this summer and will be available in dealers this fall.

A company spokesperson told TechCrunch that there are enough roles in the Atlas regions that ID.4 production staff can move into. The company also offers the possibility of early retirement for some workers.

The company appears committed to the American market, but not one that includes an electric car at the moment. Volkswagen said it is exploring new products for the US manufacturer that will be designed specifically to meet the needs of US consumers and “in line with the new focus on full-size vehicles. Speaking of companies, one can imagine that this will be a more affordable compact SUV.”

Kjell Gruner, President and CEO of Volkswagen Group of America, said that the Chattanooga plant has been and will remain a cornerstone of Volkswagen’s strategy in the United States.

VW claims it will also bring a future version of the ID.4 to the North American market, but didn’t provide a timeline or other details. If VW brings back an electric car to US consumers, it will likely be affordable.