Volkswagen is in the middle of the most sweeping transformation. Squeezed by fierce Chinese competition, a slower-than-expected shift to electric vehicles, weak European demand, and rising tariffs, Europe's largest carmaker is tearing up its old playbook. The headlines look painful, tens of thousands of jobs at risk, factories facing closure, a major technology partnership scrapped, but underneath the disruption sits a company moving with unusual speed to reposition itself for the next decade. The question is no longer whether Volkswagen will change, but whether the scale and pace of that change can actually work.
The pressures behind this restructuring are not abstract. Volkswagen's 2025 annual report showed net profit collapsing by nearly half, a slump the company attributes to a combination of forces: rising US and global tariffs, intensifying competition from Chinese automakers, weak demand in core European markets, and a transition to electric vehicles that has moved more slowly and expensively than planned.
A company spokesperson put it bluntly: "The world has fundamentally changed in recent years. Over the past twelve months, the situation has deteriorated further." Management argues that the old model, designing cars in Germany, building them in Europe, and exporting them worldwide, simply no longer works for every brand in the portfolio, making structural change unavoidable rather than optional.
According to Manager Magazin, Volkswagen's Board of Management has spent months building a far-reaching plan that could see as many as 100,000 jobs cut worldwide and four German plants, including sites in Hanover, Zwickau and Emden, as well as the Audi facility in Neckarsulm, placed at risk of closure.
Volkswagen has not confirmed the exact numbers, but a company spokesperson acknowledged that "far-reaching" change is coming, pointing to tariffs, intensifying global competition and deteriorating market conditions as the forces behind the overhaul.
Crucially, this isn't happening in a vacuum. More than 37,000 job terminations have already been contractually agreed across the group, with roughly 27,000 employees set to leave voluntarily by the end of this year alone.
Volkswagen is also simplifying its sprawling corporate structure. The company has agreed to sell a 51 percent stake in Everllence, its marine engine and clean-energy technology unit, to US private equity firm Bain Capital for €7.4 billion, in a deal that reportedly drew a competitive bidding war against rivals CVC and EQT.
Finance chief Arno Antlitz framed the move as part of a deliberate effort to "drive forward the transformation" of the group and build more competitive, more financially flexible structures.
Importantly, the deal protects workers: compulsory redundancies at Everllence's five German sites have been ruled out until the end of 2030, and Volkswagen plans to retain a 49 percent stake in the business for the medium term. Rather than a fire sale, this looks like a calculated step to free up capital while preserving jobs and long-term influence, the kind of balanced trade-off that can help fund the broader turnaround.
Volkswagen is also taking a hard look at where its technology bets have fallen short. Bild reports that the company is set to end its autonomous driving partnership with Bosch, after internal assessments found the jointly developed system, intended to deliver hands-free "Level 2++" driving in cities, had not kept pace with competitors like Tesla and Chinese manufacturers. Roughly €1.5 billion was invested in the partnership.
Rather than retreating from autonomous driving altogether, Volkswagen plans to pivot: sourcing hardware and software from new third-party suppliers while building more capability in-house. That shift signals a company willing to cut its losses on an underperforming approach and redirect resources toward technology that can genuinely compete, rather than continuing to fund a partnership that wasn't delivering.
Taken together, these moves tell a coherent story. Volkswagen is shedding excess complexity, raising capital through targeted divestitures, renegotiating its workforce through voluntary and contractually agreed departures, and rebuilding its technology strategy around what actually works. None of this is painless, and unions, works councils and political leaders across the spectrum have voiced strong opposition to the scale of the job cuts.
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