Volkswagen has halted development work on the electric Golf at its Wolfsburg site as the group extends cost-cutting measures to a planned next-generation model.

A memo seen by Reuters said the Wolfsburg facility in Lower Saxony faces a €300m ($336m) gap against its savings target.

The site is not among the factories being considered for closure, although Volkswagen’s German operations are under pressure to reduce expenditure.

Thomas Schaefer, chief executive of Volkswagen’s volume brands, acknowledged the significance of the Golf to the company and the Wolfsburg plant.

“I know what the Golf means for Volkswagen and for Wolfsburg. That's why this decision was really not an easy one for us. We simply can't afford this work right now”, Schaefer was quoted as saying.

Volkswagen’s works council said the suspension of development activity for the ID. Golf would not postpone the vehicle’s launch, stating that the lost time would be recovered.

“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 due to be among the first vehicles manufactured using Volkswagen’s SSP software architecture, a group-wide platform intended to reduce complexity and manufacturing costs.

The platform was initially planned for 2026 but has been delayed.

Volkswagen is carrying out a restructuring plan that includes 100,000 job cuts and the potential closure of up to four German factories.

Tensions with IG Metall have also risen, with the union considering strike action from 1 January.

Last week, Volkswagen reported a €5.8bn operating loss in the third quarter, above analyst predictions.

For the nine months to the end of September, the company recorded a €0.1bn operating profit, compared with €5.4bn during the same period of 2025.