VW suspends work on electric Golf as retrenchment hits HQ

By Christina Amann and Rachel More

BERLIN, Oct 30 (Reuters) - Volkswagen is suspending development work on the all-electric Golf at its Wolfsburg headquarters, as sweeping cost cuts at the embattled automaker reach one of its flagship future models.

"I know what the Golf means for Volkswagen and for Wolfsburg. That's why this decision was really not an easy one for us," said Thomas Schaefer, CEO of the German group's volume brands, in a memo seen by Reuters on Friday.

"We simply can't afford this work right now," he added.

The move highlights the financial pressure facing Europe's biggest carmaker as it pushes ahead with plans to cut 100,000 jobs and close up to four German plants.

Volkswagen on Thursday reported its largest quarterly loss in more than a decade and renewed calls for stakeholders, including powerful labour unions, to back the restructuring programme.

Wolfsburg, a towering plant in the group's industrial heartland of Lower Saxony and a symbol of Germany's automaking heritage, faces a €300 million ($336 million) shortfall against its cost-cutting target, according to the memo.

The plant is not among those threatened with closure, but Volkswagen's German operations are under growing pressure to reduce costs.

Tensions have escalated with union IG Metall, which is considering strikes from January 1.

Workers' anger has also been fuelled by a decision at the group's Audi brand to invest $4 billion in a new US plant, announced at a campaign event for US President Donald Trump before receiving board approval.

Volkswagen's works council said suspending development work on the ID. Golf would not delay the model's launch and pledged to make up the lost time.

"However, the freeze on spending for preliminary work on the ID. Golf is yet another sign of how strained the group's financial situation is," the works council said in an emailed statement shared with Reuters.

The ID. Golf is one of the first vehicles planned for Volkswagen's next-generation SSP software architecture, a group-wide platform designed to reduce complexity and lower production costs.

Already delayed from an original 2026 launch target, the platform is central to Volkswagen's efforts to build more competitive EVs as Chinese rivals expand in Europe.

($1 = 0.8930 euros)

(Reporting by Christina Amann and Rachel More. Editing by Mark Potter)