VW will cut staffing at key German EV plant

BERLIN -- Volkswagen is cutting back planned staffing at its all-electric plant in Zwickau, Germany and adjusting shift work due to "market conditions."

The factory is VW Group's largest EV plant in Europe with an annual production capacity of 300,000 vehicles. It builds full-electric cars on the automaker's MEB platform including the VW ID3, Audi Q4 e-tron and Cupra Born, as well as bodies for Bentley and Lamborghini.

VW had planned to give permanent employment to 540 staff hired in recent years on limited contracts but says it is no longer able to do so for 269 of those staff.

"Volkswagen continues to be 100 percent convinced of the path to electromobility ... however, in light of the current market conditions we can not extend 269 contracts which will run out shortly after a 12-month duration," a company spokesperson said on Thursday.

VW is having a tough time selling enough mostly made-in-Germany electric cars to challenge Tesla's global dominance.

Lackluster economic growth as well as higher energy, living and borrowing costs in Europe have weighed on demand for its ID fleet of EVs.

Orders from corporate clients — which account for around 70 percent of the IDs built at the plant — have been plummeting since a federal subsidy for battery-powered company vehicles expired this month, a source said.

About 10,700 staff work at the Zwickau plant, where VW has spent 1.2 billion euros ($1.29 billion) converting the production lines to electric vehicle production.

VW is now facing increasing competition from Tesla and a growing array of Chinese automakers, as well as dampened demand in the European EV market due to high inflation and cuts to subsidies.

VW is following Tesla, BMW and others in exporting an EV from lower-cost China to Europe. Its Cupra brand has announced plans to produce the Tavascan SUV at a factory in Anhui. Built on the same hardware and software platforms as the ID series, the model is due to hit the European market in 2024.

It remains unclear how the competitive landscape for Chinese-made cars develops after the European Union on Wednesday said it’s launching an investigation into Chinese EV subsidies to ward off a flood of cheap imports.

Bloomberg contributed to this report