VW Plans to Boost Electric-Car Production in Germany

(Bloomberg) -- Volkswagen AG may expand electric-car production at higher-cost factories in Germany, according to people familiar with the matter, to ensure plants have enough workload and avoid clashes with powerful labor unions.

VW plans to boost battery-vehicle production at Zwickau in Eastern Germany beyond 100,000 vehicles annually and might add e-cars in Emden, said the people, who asked not to be identified as the talks aren’t public. VW has repeatedly idled Emden for some days because of waning demand for the mid-size Passat sedan. The plan potentially raises the bar on efforts to offer more affordable battery vehicles than Tesla Inc. without eroding profits.

At a later stage, the German manufacturer may start making electric vans in Hanover, the people said. A VW spokesman declined to comment.

The deliberations are part of the world’s biggest carmaker’s annual investment planning set to be mapped out during a supervisory board meeting at the end of next week. The decisions will mark the first on future budgets since Herbert Diess became chief executive officer in April. Labor unions are a powerful presence at major German companies, where worker representatives make up half of the supervisory board. At VW, about 45 percent of some 634,000 employees globally are located in its home state.

The Zwickau site could be expanded to make 300,000 electric vehicles, Frankfurter Allgemeine Zeitung reported Tuesday, beyond a plan for 100,000 electric cars in 2020. The Passat, ranking fifth of VW’s best-selling vehicles last year, will cease production in Germany altogether by 2022, Hannoversche Allgemeine Zeitung said.

In China, VW has selected two factories to start electric-car production in 2020. Battery-powered cars could also be produced at its only U.S. plant in Chattanooga. Plans in Europe face added urgency as lawmakers prepare stricter emission limits.

More Agile

Diess, 60, has pushed to make the manufacturer more agile to master the industry’s generational shift toward electric and self-driving cars that’s disrupting the traditional business of producing and selling autos. In August, he foreshadowed significant software and digital investments and acquisitions.

VW’s revamp has also made it more open toward cooperation projects to share costs in a turnaround from previous efforts. Talks with U.S. peer Ford Motor Co. to collaborate on light commercial vehicles and other projects are set to be discussed at the Nov. 16 board meeting, according to the people.

Ford Chief Financial Officer Bob Shanks last month told Bloomberg News collaboration “isn’t limited in any way whatsoever, whether it’s different types of technology, product segments or geography.”

A broader tie-up with Ford has triggered concern among German unions that some light commercial vehicles could move to cheaper sites owned by Ford in Eastern Europe.

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