Volkswagen is facing an existential crisis, with up to 100,000 jobs at risk and several plants on the chopping block as it struggles to compete with China's electric vehicle (EV) giants in the rapidly evolving global market. The potential overhaul, which could be debated at a supervisory board meeting next month, marks a significant escalation from previous job cuts announced by the German automotive giant.
While Volkswagen has kept mum on the reports of drastic cost-cutting measures, a spokesperson acknowledged the industry's challenges in adapting to changing consumer preferences and rising competition from agile Chinese rivals. These competitors have made substantial inroads into the European market with their EVs and plug-in hybrid vehicles, putting pressure on traditional carmakers like VW to adapt.
The latest proposals reportedly include closing four German factories – an Audi site in Neckarsulm and Volkswagen plants in Hanover, Zwickau, and Emden – as part of a broader strategy targeting cost reductions of approximately £9.49 billion (€11 billion). Chief executive Oliver Blume's plans aim to address the financial burdens facing the company, including tens of billions of euros annually due to factors like tariffs, intensifying competition, and stagnating or declining markets.
The automotive industry is undergoing a profound transformation, with Volkswagen at its centre. The current business model – developing cars in Germany, producing them in Europe, and exporting globally – is no longer sustainable, according to the company's spokesperson. As global demand shifts towards EVs, traditional carmakers must adapt or risk being left behind.
Despite these challenges, Volkswagen has shown some resilience in China, the world's largest auto market. In the first two months of 2026, it reclaimed car sales dominance through its joint ventures with FAW and SAIC, holding a combined 13.9% market share in passenger vehicles ahead of local EV leader BYD. However, BYD's ambitious plans to become the world's largest automotive company within five years pose a continuous threat to Volkswagen's market position.