The city was practically totally destroyed. Without infrastructure wouldn’t it have just been some pile of rocks on the Volga? Why did the axis not just set up shop a few miles down the river after destroying the city?
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The name itself. Stalin was not going to let them take the city named after him. It was symbolic
The soviets needed to control the Volga river in order to transport goods (mostly oil) from the Caucasus, north to the main railway connection at Moscow, and then from there to its army.
The Germans wanted to capture the Caucasus (mostly for oil), and then push the Red Army to the other side of the Volga river.
So here is a little historical misconception. In popular imagination, the battle for Stalingrad was a grueling affair. But by the time the Germans had actually pushed passed the defenders to the south and west of the city, they had already suffered the majority of the casualties (not counting the eventual surrender). Before the first snow, the casualty figured were already trending downwards and the Wehrmacht even planned to capture Leningrad as well before winter set in. So the plan was to capture the final 10-25% of the city, and then sit tight for the winter. By summer 1943, the oil would start to flow and new offensives could begin.
But Stalingrad was at the edge of German logistical capacity. The railroad bridge going from West into the city had been destroyed during the fighting, so the Germans had to cart in supplied with Horses, mules and precious few trucks. So it was decided to ‘demobilize’ the 6th army. I.e they decided to eat the horses in order to reduce the supply need for fodder.
So as the battle drags on, the 6th army cannot really retreat. They must clear out the city and consolidate. But the Red army clings on, and every week they cling on the Germans must keep pushing their failing logistics to send guns, ammo and fuel. They cannot build up for winter. They cannot repair the bridge, because that would mean sending construction equipment instead of artillery shells. So their only choice is to keep fighting, to try and push the Soviets to the other side of the river.
And then the encirclement operation begins. And to hammer the point home. The Germans cannot move.
I imagine there was some element of sunk cost fallacy. This would make it harder to do the rational thing and walk away.
Both leaders were making decisions for ideological not rational reasons.
Hitler invaded the Soviet Union as a ‘Vernichtungskrieg’, a war of annihilation. Stalin was fighting an existential war to defend the motherland and prevent the destruction of communist ideology. In a speech shortly after the invasion, Stalin said “if the Germans want a Vernichtungskrieg, they will get it”.
It was a war led by two dictators with absolute power and unquestionable authority. It was inevitable that they’d go all-in against each other somewhere, and that place ending up being Stalingrad.
Hitler’s strategy was to hold the Ukraine for food, and the area south of Stalingrad (i.e. Baku, etc.) for the oil, in order to both starve out the Soviet Union and fuel/feed his war machine. Holding Stalingrad would have given them a pretty good strategic point to defend against future attacks from while they rebuilt their forces. Stalingrad is also a front line far enough away from the oil and food that it would have been difficult (but not impossible) for the Soviet Union to do long range bombing of those areas.
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