Volkswagen, Hit by Tariffs, Reports $1.5 Billion Loss and Warns of Chip Shortage

Volkswagen said on Thursday that it lost $1.5 billion in the third quarter because of President Trump’s tariffs and the company’s shift away from electric vehicles at Porsche, but it remained on track to meet its financial targets for the year, provided it can secure the semiconductors it needed to power its vehicles.

The Volkswagen Group, which includes Audi, Volkswagen and Porsche among its 10 brands, has been ensnared in the standoff between the United States and China over Nexperia, a Dutch company that makes basic microchips that Volkswagen and other European automakers depend on for systems like windshield wipers, blinkers and warning lights.

Failure to resolve the dispute could inflict further losses on Volkswagen and Germany’s other automakers at a time when falling demand in China and the increase in U.S. tariffs, which has jumped to 15 percent from 2.5 percent in August.

For decades, Germany relied on its booming auto industry to provide jobs and generate revenue that helped to earn it the moniker of “the engine of Europe.” But figures posted by the German statistical office on Thursday made clear that the troubles extended beyond the automakers, as the German economy failed to grow from July to September, compared with the previous three months.

Analysts warned that the crisis raised by the dispute over Nexperia reflected an overall downgrading of the once powerful industry.

“Current fears of production stops in the German automotive industry as a result of Chinese export controls on microchips are one of too many reminders that German industry is no longer dictating the rules of the game, and instead, merely lies at the receiving end,” Carsten Brzeski, an economist at ING bank, wrote in a note.