Volkswagen Chief Executive Oliver Blume told staff the group may need to cut about 50,000 more jobs to close a cost gap with rivals, a memo that for the first time effectively confirms the automaker is working toward as many as 100,000 reductions worldwide.
The memo, seen by Reuters and Bloomberg, followed a supervisory board meeting last Thursday at which labor representatives blocked a restructuring plan said to include the job cuts and the possible closure of four German factories.
Blume tied the figure to a cost disadvantage of about 20% versus comparable companies, writing that reaching parity implied what he called a “theoretical deduction” of another 50,000 positions on top of the 50,000 already agreed.
The Two Layers of Cuts
The company had agreed with unions in late 2024 to cut 50,000 jobs in Germany by 2030 across the group, including its Audi and Porsche brands, in what was framed as a socially responsible program of voluntary departures and early retirements.
That baseline is already advancing, with more than 28,000 binding departure agreements signed across Volkswagen, Audi, Porsche and the Cariad software unit by the group’s June annual meeting, and the German workforce set to shrink by 19,000 by the end of this year.
The second layer is the contested one, first reported by Manager Magazin in late June, which put the potential total at as many as 100,000 positions, roughly 15% of a global workforce that stood at 667,164 in 2025.
Besides the job cuts, the German giant is planning the closure of four plants and a cut of about 15% to planned investment.
The Board Rejection
Blume presented the plan to the supervisory board in Wolfsburg on Thursday, where labor representatives blocked it, according to people familiar with the talks.
The structure of the board makes such resistance decisive, because employee representatives hold half its seats under Germany’s co-determination rules, and the state of Lower Saxony, Volkswagen‘s second-largest shareholder, has signaled it will oppose closures alongside the unions.
In its own statement after the meeting, Volkswagen made no mention of job cuts or plant closures, announcing instead that it would further reduce production capacity and gradually halve its model lineup, measures analysts said fell short of resolving the company’s problems.
The memo to workers followed what Reuters described as angry calls from staff for management to explain itself, and Blume struck a conciliatory note, writing that not everything had been settled and that further meetings would follow.
The Plants in the Crosshairs
The four sites Blume named are central to Volkswagen‘s electric strategy rather than aging combustion lines, which sharpens the stakes of any closure.
Blume wrote that the company still could not confirm competitive use cases for the plants at Emden, Hanover, Zwickau and Neckarsulm into the 2030s.
Emden assembles the ID.4, ID.7 and ID.7 Tourer, the cars that anchor Volkswagen‘s mainstream electric range, while Hanover builds the battery-powered ID. Buzz alongside the Transporter and Multivan.
Zwickau ranks among the group’s principal electric-vehicle plants, retooled years ago to build battery models, though it has been reduced from five planned electric models to one.
Neckarsulm is Audi‘s base for the A5, A6, A8 and e-Tron GT, though the A8 flagship ends production this year, leaving the site’s longer-term workload uncertain, and Wolfsburg, the group’s historic headquarters and largest plant, is not among the four.
Defense as an Escape Hatch
Volkswagen has signaled it would rather repurpose plants than close them, an approach that has become a formal plank of its overcapacity strategy.
Brand chief executive Thomas Schäfer confirmed at the Financial Times Future of the Car summit in London, which EVattended, that defense-sector partnerships rank among the active fixes for European overcapacity, casting outright closures as a last resort.
Blume has repeatedly floated military transport as a fit for underused sites such as Osnabrück, where the company is in talks with Israel’s Rafael Advanced Defence Systems to build Iron Dome components, a deal that would preserve all 2,300 jobs at a plant otherwise due to end vehicle production next year.
The other option Blume has raised is building China-focused Volkswagen models at underused German sites, a way to fill capacity without new closures.
The China Problem Underneath
The pressure driving the cuts traces most directly to China, for years Volkswagen‘s most profitable market.
The group was knocked off the top of the Chinese market by BYD in 2024 and slipped to third behind Geely in 2025, as foreign automakers’ combined share fell to 32% from 57% in 2020, according to AlixPartners.
That erosion has now reached Europe, where Chinese brands including BYD, Chery, SAIC and Leapmotor doubled their combined share through May from a year earlier, pressing into the group’s home market with cheaper, software-rich models.
The financial toll showed in the group’s 2025 results, when net profit fell 44% to about 6.9 billion euros and operating profit dropped 53% to 8.9 billion euros, cutting the operating margin to 2.8%, with US tariffs adding 2.9 billion euros in costs.
Blume has said the company’s decades-old model of building cars in Germany and exporting them no longer works, and Volkswagen shares fell to 16-year lows as the plan reached the board.
The Rivian Angle
The restructuring carries a wrinkle for the US market, because Volkswagen is now the largest shareholder in Rivian.
A third $1 billion tranche of the German group’s investment this year lifted its Rivian stake to 15.9%, surpassing Amazon for the first time since the EV maker’s 2021 debut, as part of a software partnership worth up to 5.8 billion dollars.
The joint venture, which licenses Rivian’s zonal architecture and software to Volkswagen, is central to the group’s cost and technology plans, with the entry-level ID.1 due in 2027 among the first models to use the stack, making the health of the German parent a matter of consequence for the American startup.
Blume framed the memo as the start of a negotiation rather than a decision, writing that further meetings would work toward the best solutions.
