(Bloomberg) —
Volkswagen AG Chief Executive Officer Herbert Diess warned of more output cuts because of the chip crisis at its main factory in Wolfsburg amid rising tensions over how to make the world’s biggest car plant fit for the electric age.
While VW has made progress managing the global components bottleneck, the situation at its German headquarters remains challenging, Diess said Wednesday during a workers assembly.
“Wolfsburg is particularly hard hit by the semiconductor situation,” the CEO said according to a prepared speech. “Capacity adjustments are therefore necessary, also in the medium term.”
Talks over how to keep Wolfsburg competitive in the shift to battery-powered cars has seen tensions rise between Diess and union leaders. The CEO last year hinted at possible job cuts to keep pace with Tesla Inc. as the electric car leader plans to ramp up output at its first European factory near Berlin this year.
READ MORE: VW Plots New German Electric Car Factory to Counter Tesla
VW should place its planned new electric-vehicle plant — which is supposed to produce about 250,000 EVs annually — at the main Wolfsburg site or at least very close to it to help protect jobs, labor leader head Daniela Cavallo said at the same event. She also called for compensating staff for the planned cuts to night shifts, a move that’s expected to reduce the pay of some 5,000 workers.
Warning System
Diess said the company has introduced an early-warning system on chips and its engineers have identified some 150 technology alternatives to replace missing semiconductors.
“We’re seeing opportunities to further increase production, particularly in the second half of the year,” he said.
VW’s Wolfsburg plant is expected to produce some 570,000 vehicles this year, Cavallo said. Last year, output plummeted by 330,000 vehicles in part because the group favored production of higher-priced models at other locations.
“Those were your choices, that’s your responsibility,” Cavallo said in comments addressed to top management. “That’s why you owe your colleagues compensation.”
(Updates with CEO comment in seventh paragraph. A previous version of this story corrected the day in the second paragraph.)
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