June 28 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 dpaAFX 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.

Volkswagen39;s EVs compete with German and Chinesemade 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…