Just over five years since then-chancellor Angela Merkel visited Zwickau in eastern Germany to inaugurate Volkswagen’s first electric vehicle-only factory, hailing it as a “flagship” for the industry’s transformation, workers are bracing themselves for a much gloomier shift.

Production at the plant is set to be slashed as part of a compromise struck in December between Europe’s largest carmaker and its powerful works council and union IG Metall. The deal eliminated the threat of lay-offs until 2030 and factory closures in Germany, but VW will halve its production capacity, leaving factories such as Zwickau to compete for future investments.

Arno Antlitz, chief financial officer of VW group, told employees in January that in the future “we will only invest in competitive plants. Germany cannot be an exception.”