Volkswagen Group plans to end production at its Dresden plant in Germany amid a cost-cutting drive by CEO Oliver Blume, sources told Automotive News Europe sister publication Automobilwoche.
The plant, where 6,500 VW ID3 battery-electric hatchbacks were produced last year, will continue to operate in some capacity, and its roughly 300 workers will get other tasks, according to Automobilwoche sources.
Blume is aiming to lift returns at the VW brand to 6.5 percent for a 10 billion euros ($10.7 billion) increase in profit by 2026.
The annual operating cost of the Dresden facility is between 60 million to 70 million euros, and ending vehicle production would save around 20 million euros a year, a source told Bloomberg.
A VW spokesperson declined to comment on speculation.
The Dresden factory opened in 2002 to build high-end models such as the VW Phaeton. It has no body manufacturing, paint shop or pressing plant.
VW calls the plant "Glaeserne Manufaktur" (German for transparent factory). It has glass walls so customers can watch the final stage of vehicle assembly. The plant is regarded as an architectural gem and has been used as a backdrop for events, ceremonies, concerts and operas.
VW is competing with more profitable carmakers such as Stellantis in the transition to electric cars. In Europe, the VW brand's mainstay market, consumers are feeling the strain from higher living costs amid a surge interest rates.
Bloomberg contributed to this report