Melissa Eddy

The Swedish battery manufacturer said it would eliminate jobs and seek partnerships as it grapples with competition from China.

A week after it announced it was considering closing factories in Germany, the automaker said it was exiting a labor contract that protected workers from layoffs.

BERLIN — Volkswagen told union leaders Tuesday that it was ending a labor agreement that protected workers from layoffs, a week after the automaker said it was considering closing factories in Germany amid slumping sales and rising costs.

BYD, which leads China’s electric vehicle sector, is constructing a plant in Hungary while its Chinese rivals expand through joint ventures in Europe.

The European Union is expected to support wielding tariffs on electric vehicles made in China, seeking to prevent unfair competition.

Weeks after Europe imposed additional tariffs on electric vehicles made in China, the country’s car companies were defiant at France’s leading auto event.

The tariffs, some as high as 45 percent, are intended to to protect Europe’s automotive sector, but they could escalate a trade war with China.

Germany’s biggest automaker said its profit dropped 42 percent in the third quarter, as union leaders warned that workers were ready to walk out over a wage dispute.

Europe’s new tariffs on Chinese electric vehicles could drive up costs for European consumers while stoking tensions with China over trade practices.

Despite an openness to cross-border mergers, Germany has pushed back against talk of the Italian lender UniCredit’s acquiring Commerzbank.