Volkswagen's $2 bln Trinity electric vehicle plant in doubt

A technician attaches a Volkswagen logo to a car, at the production line for electric car models of the Volkswagen Group, in Zwickau, Germany, April 26, 2022. REUTERS/Matthias Rietschel

HAMBURG, Nov 17 (Reuters) - Volkswagen (VOWG_p.DE) Chief Executive Oliver Blume is reviewing whether to stick to a plan to build a new plant to assemble its Trinity electric vehicles (EV) or to use its existing Wolfsburg factory, a source told Reuters on Thursday.

Volkswagen, the world's second-biggest carmaker, had planned to start building the 2-billion-euro ($2.06 billion) factory in 2023 and produce its flagship electric sedan there from 2026, with a view to accelerating the manufacturing process.

Manager Magazine reported earlier on Wednesday that Blume was considering delaying production of the new model until 2030 and abandoning plans to launch it on the Scalable Systems Platform (SSP), which is intended eventually to replace all other platforms.

Two sources close to negotiations refuted this to Reuters, saying the carmaker would assemble Trinity on the SSP, but they questioned whether a new factory was necessary.

A separate software platform, the E3 2.0, which was supposed to be incorporated into Trinity, has been delayed from 2026 to 2029, Manager Magazin reported.

In a letter published on an employee portal, software unit Cariad's Chief Executive Dirk Hilgenberg said the company was giving itself more time on the 2.0 platform but did not provide a new timeframe.

Cariad declined to provide further details.

"We are taking the opportunity to look at all projects and investments and check their viability," Volkswagen Group Chief Executive Oliver Blume said in a separate letter to staff.

The company, which earlier this month delayed its planning round scheduled for November citing "changing economic realities", was evaluating its plans for software and platforms and would then determine projects for each brand, he said, adding it was too early for concrete statements.

Volkwagen's supervisory board in March approved 2 billion euros ($2.07 billion) for the Trinity factory, with construction due to start in spring 2023.

If confirmed, the changes could improve Volkswagen's free cash flow but would risk delaying electrification plans and crucial product launches, Bernstein analyst Daniel Roeska said in a research note. He said a capital markets day was needed in the near future to clear up plans for investors.

Volkswagen's capital markets day is planned for the second quarter of next year.

($1 = 0.9648 euros)

Reporting by Jan C. Schwartz Writing by Madeline Chambers and Victoria Waldersee; Editing by Hans Seidenstuecker, Miranda Murray and Barbara Lewis

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