The German car giant is set to shed 269 people at the Zwickau plant when their 12-month contracts wind up.

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And there is uncertainty around the future of 2000 workers, according to reports.

Corporate orders for the electric vehicles (EVs) have fallen off after a phaseout of a government subsidy, reports Bloomberg.

Sales of VW’s EVs have fallen-off in recent years as Tesla Inc expands. Sluggish economic growth, higher energy bills and price inflation have all combined to dampen demand for VW’s EV range.

The German manufacturer has invested €1.2 billion ($1.3 billion) at Zwickau in recent years and hired thousands of staff.

VW’s share price is down 8% this year. The company is now attempting to break-in to the lucrative but highly competitive Chinese EV market.

A spokesperson for VW said: “Volkswagen remains 100% convinced of the path to electric mobility.

“The Zwickau location plays a central role in this.”