The manufacturer plans to lay off nearly 300 employees at its Zwickau plant when their contracts expire in October, according to people familiar with the matter. The fate of about 2,000 additional temporary workers remains uncertain, people familiar with the matter said. The company declined to be named as a final decision has not yet been made.

Volkswagen is having trouble selling enough German-made electric cars to challenge Tesla Inc’s global dominance. Weak economic growth in Europe and rising energy, living and borrowing costs are weighing on demand for its ID electric vehicle fleet.

The company employs about 2,700 temporary workers at its Zwickau plant near the Czech border to meet an expected surge in demand for electric vehicles. But orders from corporate customers, which account for about 70% of the IDs produced at the plant, have been plummeting since federal subsidies for battery-powered company vehicles expired this month, one of the people said.

A Volkswagen spokesman declined to comment.

Meanwhile, Volkswagen is following in the footsteps of Tesla, BMW and others in exporting electric vehicles to Europe from lower-cost China.Its Cupra brand has announced plans to produce Tawaskan SUV A factory in Anhui. The model is built on the same hardware and software platform as the ID series and is expected to hit the European market in 2024.

It’s unclear how the competitive landscape for Chinese-made cars will develop after the European Union said on Wednesday it would launch an investigation into Chinese electric car subsidies in a bid to stem a flood of cheap imports.

Germany is also set to gradually reduce support for private buyers in the coming months, raising the cost of ID models that are already more expensive than similar offerings from the Stellantis NV and Renault SA.

The possible layoffs were first reported by the DPA. Volkswagen had planned to eventually produce 330,000 cars a year in Zwickau, making it one of the largest such plants in Europe.

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