Volkswagen is set to close at least three factories in Germany, marking a historic first for the automaker. Thousands of layoffs and significant pay cuts are anticipated, alongside the potential abolition of a long-standing employment protection agreement.
Chairwoman of VW's works council, Daniela Cavallo, stated that all German plants are affected, indicating widespread upheaval within the company. While VW has not explicitly linked these closures to its slow transition to electric vehicles (EVs), the impact of this delay is clear.
Germany's automotive sector is grappling with declining sales and fierce competition from Chinese EV manufacturers offering high-quality vehicles at lower prices. The situation is exacerbated by the end of Germany's EV subsidy program, which has hindered growth in electric vehicle sales.
Despite the challenges, Germany's powerful works councils may mitigate some job losses through political and labor actions. However, for legacy automakers like VW, the path forward lies in developing competitive EVs to withstand the storm of competition.