By Victoria Waldersee

BERLIN (Reuters) -Porsche SE, Volkswagen's top shareholder, on Friday warned it may write down the value of its stake in Europe's top carmaker by up to 20 billion euros ($21 billion), in the latest sign of how VW's cost crisis has shaken investor faith in the carmaker.

The German carmaker is suffering from high costs, fierce Asian competition and a prolonged bitter conflict with powerful unions over plant closures and wage cuts.

Porsche SE, which owns 31.9% of Volkswagen's equity and 53.3% of its voting rights, said it expects to write down the value of the holding by 7 billion to 20 billion euros.

Based on Volkswagen's current market capitalisation, the stake is worth around 14.3 billion euros.

The carmaker, in the midst of tense negotiations with unions over cost cuts at its German operations, was unable to complete its financial planning for the year, forcing Porsche SE to rely on analysts' expectations for its forecasts.

Porsche SE, the holding firm of the Porsche and Piech families, said it also expects an impairment of 1 billion to 2 billion euros on its 12.5% stake in luxury carmaker Porsche AG.

Porsche SE said the impairments were rough estimates, citing a "market environment with further increasing uncertainties, lower demand than originally expected on various markets and increasing geopolitical tensions and protectionist tendencies".

It now expects its group result after tax in 2024 to be "significantly negative", withdrawing its forecast of 2.4 billion to 4.4 billion euros but still expecting to distribute a dividend for the financial year.

Volkswagen's dividend, one of the most important cash sources for Porsche SE, is set to fall to 6.75 euros from 9 euros last year according to LSEG estimates after the carmaker's earnings in the first nine months of 2024 were down by a third from a year ago.

Unions are pressuring Volkswagen management to cut its dividend further to reduce costs, but the CFO said last week the automaker was committed to a payout ratio of at least 30% of earnings after tax.

Analysts have warned the combination of pricing pressure, lower dividends from China joint ventures and committed investments will likely leave Volkswagen with a free cash flow close to zero in coming years, boding badly for Porsche SE's financial stability.

($1 = 0.9534 euros)

(Reporting by Victoria Waldersee; Editing by Christoph Steitz, Louise Heavens and David Gregorio)