Volkswagen shares recover after EV production cut reports

(Reuters) - Shares in Volkswagen inched higher on Wednesday, recovering slightly from a selloff the day before when the automaker played down reports it will cut EV output in Germany over the next two weeks because of lower than expected demand.

Volkswagen "expects the trend in BEV (battery electric vehicle) orders, which already improved in May, to gradually stabilise in the coming months," spokesperson Christopher Hauss told Reuters.

Following reports by news agency dpa-AFX of a production cut, Volkswagen shares fell 2% on Tuesday.

On Wednesday, they were trading at 122 euros ($133.30) up 1% from the previous closing price

Volkswagen is confident that capacity utilisation at the Emden plant will increase again with the market launch of the ID.7 at the end of the year, Hauss said.

However, some analysts said the reported production cut indicates the European EV market is not growing fast enough to support all the new EV models and planned extra capacity.

Volkswagen's EVs compete with German and Chinese-made vehicles from Tesla and a growing array of Chinese automakers.

"Reducing the number of temporary staff and cancelling a shift signals that VW is not expecting this to improve in the short term," Stifel analyst Daniel Schwarz said.

Morgan Stanley said it expects a slowdown in European demand for EVs after cuts to subsidies and that other traditional car manufacturers will slow down or defer their announced EV plans by many quarters or even years.

"Our EV forecasts for Ford and GM are a fraction of management targets by mid-decade", analysts at the investment bank say.

($1 = 0.9152 euros)

(Reporting by Paolo Laudani; editing by Barbara Lewis)