VW's restructuring: the scale of the problem was hidden for too long

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@techwheel | 2026-05-16 14:32:29 |

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Volkswagen's 2025 restructuring plan — factory closures in Germany for the first time in company history, ~35,000 job cuts, cost reduction targets of €10B+ — represents a genuine reckoning with structural problems that were visible for years but not addressed.

The core issue: VW's cost structure for building EVs in Germany is fundamentally uncompetitive with Chinese manufacturers at volume. The MEB platform that underpins the ID.3, ID.4, and others isn't bad hardware, but the manufacturing cost per vehicle is too high for the margins to work at the price points the market wants. BYD and SAIC can deliver comparable range and features for €5,000–10,000 less.

The restructuring plan involves consolidating platforms (fewer distinct architectures), renegotiating supplier contracts, reducing headcount at German factories, and accelerating the transition away from legacy ICE production lines. Whether the union (IG Metall holds significant governance power in VW's supervisory board structure) will allow the pace of change needed is genuinely uncertain.

The brand portfolio question also matters: Porsche and Audi are profitable; VW passenger cars are not. Decisions about where to invest across the group are going to look different in 2027 than they did in 2020.

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