Volkswagen is cutting back planned staffing at its all-electric plant in Zwickau, Germany and adjusting shift work due to "market conditions", a spokesperson said on Tuesday.

The carmaker had planned to give permanent employment to 540 staff hired in recent years on limited contracts but was no longer able to do so for 269 of those staff.

"Volkswagen continues to be 100% convinced of the path to electromobility ... however, in light of the current market conditions we can not extend 269 contracts which will run out shortly after a 12-month duration," the spokesperson said.

Around 10,700 staff work at the plant, which produces six electric vehicle models from three of the Volkswagen Group brands.

Volkswagen had announced in 2018 it would spend 1.2 billion euros ($1.29 billion) converting the plant to electric vehicle production, keeping the workforce stable despite EVs requiring less labour than combustion engine cars via increasing output.

But the German carmaker is now facing growing competition from Tesla and a growing array of Chinese automakers, as well as dampened demand in the European EV market due to high inflation and cuts to subsidies.

(Reporting by Victoria Waldersee, Editing by Friederike Heine)