Volkswagen AG is cutting temporary workers at its main electric-vehicle factory in Germany after the phaseout of a subsidy in the country caused demand for its EVs to drop.
(Bloomberg) — Volkswagen AG is cutting temporary workers at its main electric-vehicle factory in Germany after the phaseout of a subsidy in the country caused demand for its EVs to drop.
The manufacturer plans to let go nearly 300 people at the Zwickau plant when their contracts expire in October, according to people familiar with the matter.
The fate of around 2,000 additional temporary staff remains uncertain, the people said, declining to be named because a final decision hasn’t been made yet. Corporate orders that accounted for some 70% of VW-branded EVs made in Zwickau have been plummeting since aid for electric company cars expired this month, one of the people said.
Volkswagen is having a tough time selling enough mostly made-in-Germany electric cars to challenge Tesla Inc.’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.
The German manufacturer hired around 2,700 temporary workers at the facility near the Czech border to meet expected surging EV demand. But the falling corporate demand has clouded the prospects for workers at the facility, which makes the ID.3, ID.4 and ID.5 models.
A spokesperson for Volkswagen declined to comment.
Volkswagen declined 1.6% as of 10:49 a.m. in Frankfurt.
The automaker is following Tesla, BMW AG 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.
Read more: EU Escalates China Tensions With Probe to Ward Off Cheap EVs
Germany is gradually reducing support also for private buyers over the coming months, raising the cost of the ID models that are already more expensive than similar offerings from Stellantis NV and Renault SA.
DPA first reported on the potential job cuts. VW had planned to eventually churn out as many as 330,000 vehicles annually in Zwickau, making it one of Europe’s largest such factories.
–With assistance from Craig Trudell.
(Updates with VW shares in 7th paragraph.)
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