Volkswagen’s German battery plant to remain at half capacity amid cost pressures By Reuters

BERLIN (Reuters) – Volkswagen’s ( ETR: ) battery subsidiary PowerCo will for now build only one of two planned production lines at its Salzgitter plant in Germany, its works council said, as the sector adjusts to a slowdown the demand for electric vehicles.

The group’s chief technology officer, Thomas Schmall, showed a slide at a staff meeting on Thursday outlining plans for a single production line at the plant with a total capacity of 20 gigawatt hours, a works council spokesman said .

The factory has space for two lines, but only one is under construction, with plans for a second pending.

“This is a clear declaration of war on plant staff,” the spokesman said, as workers feared the second line could be abandoned as part of a wider cost-cutting drive at the company.

A series of staff meetings have been held at the carmaker’s factories this week after it made a bombshell announcement on Monday, threatening to close factories and scrap job guarantees at its Volkswagen brand, saying it has only 1- 2 years to “turn things around”.

Volkswagen previously said the Salzgitter plant would gradually expand capacity to 40 gigawatts per year, but did not provide a timeline. A PowerCo spokesman said the company still plans to start production at Salzgitter in 2025 as planned.

“Further expansion of production capacity will be conducted flexibly and in line with demand,” the spokesperson added.

The three plants announced by PowerCo in Salzgitter, Valencia in Spain and Ontario, Canada have a combined capacity of up to 170 gigawatt hours.

Schmall told German newspaper FAS last month that factories in Spain and Canada could be expanded, but it remains to be seen whether that will happen.