Volkswagen is suspending development of the all-electric Golf at its Wolfsburg plant, saying the factory has fallen short of cost targets.

“I know what the Golf means for Volkswagen and for Wolfsburg. That’s why this decision was really not an easy one for us,” said Thomas Schaefer, head of VW Group’s VW, Skoda and Seat/Cupra volume brands.

“We simply can’t afford this work right now,” Schaefer said in an internal memo. Wolfsburg faces a €300 million ($336 million) shortfall against its cost-cutting target, according to the memo.

The development pause highlights the financial pressure facing VW Group as it pushes ahead with plans to cut 100,000 jobs and close up to four German plants to address the threat from Chinese competition and falling demand in key markets.

Factories in Emden and Zwickau are making progress on cost-cutting, according to Schaefer’s memo. Those two sites are those threatened with closure, along with VW’s van factory in Hanover and Audi’s Neckarsulm plant. Wolfsburg is not facing closure.

VW plans to retool the Wolfsburg plant to build the battery-powered Golf, which is expected to be called the ID Golf. The EV is expected to launch in 2030. It will be one of the first vehicles planned for VW’s next-generation SSP software architecture, a group-wide platform designed to reduce complexity and lower production costs.

Production of the combustion-engine Golf is scheduled to move to Mexico in 2027.

Tensions over the restructuring plan have escalated with union IG Metall, which is considering strikes from Jan. 1. Workers’ anger has also been fuelled by a decision at the group’s Audi brand to invest $4 billion in a new U.S. plant, announced at a campaign event for President Donald Trump before receiving board approval.

VW’s works council said suspending development work on the ID Golf would not delay the model’s launch and pledged to make up the lost time.

“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.

VW Group on Oct. 29 reported an operating loss of €5.9 billion ($6.59 billion) for the third quarter, its largest quarterly deficit since the fourth quarter of 2015, when the automaker booked major one-off charges related to its diesel emissions-cheating scandal.