Volkswagen Cuts Jobs During Transition to Electric Vehicles

Volkswagen is forging ahead with a transformative cost-saving drive as it prepares to pivot toward the electric vehicle market. The German automotive giant has unveiled a comprehensive plan to save 10 billion euros ($10.9 billion), but the path ahead is not without its challenges.

The brand’s leadership has issued a stark warning about the company’s current financial status: high costs and low productivity are threatening Volkswagen’s competitiveness. The harsh reality was laid bare during a recent meeting at the company’s headquarters in Wolfsburg, where brand chief Thomas Schaefer painted a concerning picture of the issues facing VW.

“With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand.”

Thomas Schaefer, VW brand chief, via Reuters

To remedy the situation, Volkswagen is kicking off group-wide measures aimed at boosting efficiency as it transitions to electric vehicles. Its first course of action is implementing a cost-cutting scheme within the VW brand, which is presently under negotiation with its works council.

Staff reductions are part of the plan, but not in the traditional sense. Rather, “the company had previously said it planned to take advantage of the ‘demographic curve’ to reduce its workforce, having pledged that it would not carry out dismissals until 2029.” To keep in line with this promise, strategies like agreements on partial or early retirements will be employed, according to human resources board member Gunnar Kilian.

“We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don’t need for good results.”

Gunnar Killian, VW human resources board member, via Retuers

However, it’s not all about workforce reduction. The company plans to save the majority of the targeted 10 billion euros through other avenues. By the end of the year, the plan’s granular details will be determined, but it’s clear that internal efficiency is a focus.