Volkswagen to turn Dresden factory into innovation hub

While not yet officially confirmed, the German business publication Handelsblatt reports, citing multiple sources familiar with the matter, that Volkswagen Sachsen, the state of Saxony, and the Technical University (TU) Dresden have signed a letter of intent for the future use of the Transparent Factory in Dresden from 2026.The decision to end vehicle production at the Transparent Factory was announced in December 2024 as part of the so-called ‘Christmas Peace’ labour agreement. Following months of negotiations and several rounds of strikes, the company had agreed with IG Metall to cut 35,000 jobs by 2030 and reduce production capacity by 700,000 vehicles, officially without closing any plants. Under the agreement, the Osnabrück plant was to be sold (though no deal has yet been reached), and production at the Transparent Factory was to cease by the end of 2025—a deadline that is now approaching. However, it was agreed that the Dresden site would not be completely shut down but would instead explore “follow-up use.” Since then, however, the matter had largely faded from public discussion.With the apparently signed letter of intent, this “follow-up use” is now taking concrete form, although no final contract has yet been concluded. Handelsblatt writes: “The plan is to establish an innovation hub with a seven-year term, designed to combine cutting-edge research and knowledge transfer in forward-looking technology fields. Under this model, VW would become a research partner of TU Dresden and commission projects from the university.”Works meeting scheduled for 4 DecemberAlthough the current agreement is not yet legally binding, a final agreement appears to be only a matter of time. A works meeting for employees of the Transparent Factory is reportedly planned for Thursday, 4 December, where VW Sachsen management, brand CEO Thomas Schäfer, and group works council chairwoman Daniela Cavallo are expected to address the workforce.If the innovation hub does indeed materialise, VW would fulfil its commitment to a follow-up use for the site. However, one challenge remains: the hub will require different qualifications than those needed for vehicle production. Recently, 205 employees assembled 6,000 ID.3 units per year. At the end of September, VW Sachsen informed the State Chancellery that it could offer employment prospects to only 135 employees. According to the Handelsblatt report, citing company sources, many Dresden employees have already accepted severance or early retirement packages.However, based on the current status, around 60 employees who are not needed in the innovation hub and have not accepted any offers will remain. The VW employment guarantee also applies to Transparent Factory employees until 2030. “If no tasks are found, employees may, in the worst case, have to stay at home with continued pay,” the article states; a scenario management is naturally eager to avoid. Discussions are reportedly also underway about transferring employees to other VW factories.Another point on which the three partners have not yet fully agreed is financing. While TU Dresden is expected to rent nearly half of the space, it remains unclear who will cover the costs of converting the automotive plant into an innovation hub—one-time costs of around €50 million are under discussion.VW originally built the Transparent Factory to produce its flagship model, the Phaeton, in an exclusive environment. Later, the facility, designed as a prestige project, also assembled Bentley vehicles. From 2017 to 2020, the e-Golf rolled off the line in Dresden, and since 2021, the ID.3 has been produced there.handelsblatt.comThis article was first published bySebastian Schaalfor electrive’s German edition.