Volkswagen AG's VWAGY PowerCo battery subsidiary has decided to operate its Salzgitter plant in Germany at half its planned capacity. This decision comes in the wake of financial pressures and a dip in the demand for electric vehicles.
What Happened: The company's technology chief, Thomas Schmall, announced during a staff meeting that only one of the two planned production lines at the plant will be constructed. The plant, which has space for two lines, will now have a reduced capacity of 20 gigawatt hours, Reuters reported on Friday.
Employees voiced their fears about the second line being permanently abandoned as part of a larger cost-saving strategy at Volkswagen. This news follows the company's startling revelation earlier this week about potential plant shutdowns and job cuts, stating it has a narrow window of 1-2 years to "turn things around."
See Also: Trump Shaken By Kamala Harris, Says Anthony Scaramucci But Calls Him An Adaptive Guy: 'He'll Find The Right Tool To Strike At Her'
Despite the cutbacks, a PowerCo spokesperson assured that the company will commence production at the Salzgitter plant in 2025 as planned.
"The further expansion of production capacities will be driven forward flexibly and in line with demand," the spokesperson clarified.
Why It Matters: This decision by Volkswagen comes on the heels of Tesla CEO Elon Musk questioning Volkswagen's proposed $5 billion investment in Rivian Automotive. Musk had expressed skepticism about where the German automaker would source the funds for this investment, especially considering reports of potential factory closures in Germany.
Price Action: Volkswagen closed at $11.20 on Thursday in the OTC and was trading 2.50% lower in the after-hours, according to Benzinga Pro.
Read Next:
Mark Cuban Says Kamala Harris Is Simply Doing What Trump Did In 2016: 'It's Her Party. She Gets To Set The Rules'
Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
Market News and Data brought to you by Benzinga APIs