Published on 6/26/2026
Volkswagen’s plan to cut jobs and rearrange its factories in Germany is turning into a broader indicator of what European car companies are suffering. Chinese competition is putting pressure on European producers, especially with the growth of the electric and hybrid car industry, the decline in the share of gasoline and diesel, and the high cost of production on the Old Continent.
The Financial Times revealed that Volkswagen is considering cutting up to 100,000 jobs and ending production in 4 German factories, in a significant acceleration of the cost-reduction program of the largest car company in Europe, which may affect about one in every 6 workers in the group, which includes about 625,000 jobs around the world.
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According to the newspaper, the plan includes ending production at Volkswagen’s factories in Emden, Zwickau and Hannover, in addition to the Audi factory in Neckarsulm, with details to be presented to the company’s supervisory board on July 9.
Volkswagen had agreed at the end of 2024 with worker representatives to reduce jobs and production capacity in Germany, and the Financial Times said that the company had already drawn up a plan to cut 50,000 jobs by 2030 and reduce its manufacturing capacity in the country by about 500,000 cars, before American tariffs, the conflict in the Middle East, and the deteriorating situation in China prompted it to consider broader measures.
What the newspaper reported angered workers’ representatives, as the head of the Volkswagen Works Council, Daniela Cavallo, the head of the IG Metall union, Christiane Benner, and the head of the union in Lower Saxony, Thorsten Grüger, said that they would oppose such plans “with full force” if the management went ahead with them.
Competition and its speed
Volkswagen reported, in the results of the first quarter of 2026, that its revenues fell 2% to 75.7 billion euros ($86.3 billion), and that the operating result fell 14.3% to 2.5 billion euros ($2.9 billion), with an operating margin of only 3.3%.
Volkswagen’s Chief Financial and Operating Officer, Arno Antellis, said that the company reduced general expenses by about one billion euros ($1.1 billion) in the first quarter, but the operating margin before special items remained “very low” at 4.3%, stressing that duties were imposed, that competition in China is increasing, and that Chinese companies are exporting their competitive pressure to Europe.
Volkswagen’s data shows that the problem is not related to electricity alone, but rather the location and speed of competition. The group’s global deliveries declined 4% in the first quarter to 2.05 million cars, with growth in Europe and South America, compared to a 15% decline in China and 13% in North America.
The group’s global deliveries of fully electric cars declined by 7.7% in the first quarter to 200,000 cars, despite their increase in Europe by 11.5% to 176.4 thousand cars, while in China they fell by 63.8% to 9.4 thousand cars and in the United States by 80.1% to 4 thousand cars.
In 2025, Volkswagen delivered about 8.98 million cars globally, a slight decrease of 0.5%, while its deliveries of fully electric cars increased by 32% to 983 thousand cars, but the group’s deliveries in China fell by 8% to 2.69 million cars, and deliveries of electric cars in the Chinese market decreased by 44.3%.
China in the European market
The Financial Times reported that Chinese manufacturers accounted for about one in every 10 new cars sold in the region during the first five months of the year.
Data from the European Automobile Manufacturers Association show that fully electric cars accounted for 20% of the European Union market until May 2026, compared to 15.3% a year ago, while hybrid cars accounted for 37.8%, and the share of gasoline and diesel combined fell to 30.1% from 38%.
The European Union recorded 950.5 thousand fully electric cars in the first five months of 2026, with strong growth in Italy, France and Germany. Plug-in hybrid cars also increased to 460.2 thousand cars, raising their share to 9.7% of the market.
The International Energy Agency’s report indicates that China produced 16 million electric cars in 2025, about 20% more than its domestic demand, which pushed Chinese electric car exports to double to exceed 2.5 million cars, while electric cars represented more than 35% of Chinese car exports, compared to about 20% a year ago.
In the European Union, electric car production increased by 30% in 2025 to about 3.2 million cars, but imports rose by about 35% to more than 900,000 cars, about 60% of which came from China, according to the International Energy Agency.
The European Commission imposed final countervailing duties on imports of battery electric vehicles from China as of October 30, 2024, after an investigation concluded that China’s electric vehicle value chain benefits from government support that threatens to harm European Union producers.
The European Commission says the automobile industry supports 13 million jobs in Europe and contributes about 7% of the EU’s GDP.
The European Automobile Manufacturers Association says the sector provides 13.2 million direct and indirect jobs in Europe, including 2.4 million jobs in manufacturing.
At its annual meeting this month, Volkswagen said its plan to 2030 focuses on reducing complexity, reducing excess capacity, strengthening regional responsibility, simplifying the group structure and improving operational efficiency, with the goal of achieving an operating return on sales between 8% and 10% by 2030.
Volkswagen sold the Everlens ship engine unit to the American private equity firm Bain in a deal that generated proceeds of 7.4 billion euros ($8.4 billion), as part of CEO Oliver Blume’s drive to simplify the group and focus on its core automotive business.
Blume told shareholders that Volkswagen wants to become more solid and competitive, and that the coming years will be decisive in transforming the company, while the group said that the environment has changed due to geopolitical tensions, high trade barriers, and intense competition, and that markets that are not growing require cost control.
Cost and product
Volkswagen faces a Chinese production system that has a huge volume of batteries, electric cars, and supply chains, which gives Chinese companies greater ability to maneuver prices, especially in small and medium electric models that the European market needs.
Volkswagen says that its electric deliveries in Europe are strong, as more than 70% of its global sales of fully electric cars in 2025 came from Western Europe, amounting to 719.4 thousand cars, an increase of 64.6% on an annual basis, but this European success does not compensate for the pressure in China and the United States and does not solve the cost problem in Germany.
The group is betting on new models in Europe and China, including a family of urban electric cars in Europe and locally developed electric models in China, but first-quarter data show that the wait for the arrival of these models came while Volkswagen’s electric deliveries in China were falling by more than 60%.
