Volkswagen, the German carmaker, plans to cut up to 100,000 jobs from its workforce of approximately 630,000 employees. The company has faced challenges from Chinese electric vehicle (EV) manufacturers and is preparing to reduce its workforce further after trimming thousands of positions last year. The VW Supervisory Board approved the proposal for an additional 50,000 job cuts on September 2, 2026.
Volkswagen's workforce is significantly larger than its competitors, employing about 60% more workers than Toyota, 140% more than Stellantis, and nearly 240% more than Ford. This large headcount, once a symbol of the company's strength, has become a burden as it struggles to adapt to the competitive landscape. The company also plans to close four factories in Germany, although the board did not agree to implement this immediately.
Analysts attribute Volkswagen's workforce size to its strategy of controlling more production stages than competitors, leading to higher labor costs. Meghan Ostertag, an analyst at the Information Technology and Innovation Foundation, noted that factory expenses in Germany can be significantly higher than those of competitors. Additionally, Volkswagen's aggressive acquisition strategy has complicated operations, making it challenging to integrate various brands and supply chains.
Despite surviving the 2015 Dieselgate emissions scandal, Volkswagen has faced difficulties transitioning to electric vehicles, which has affected sales, particularly in China, a key market that accounts for a third of its total sales. Analysts compare Volkswagen's situation to that of U.S. automakers in the 1960s and 1970s, who were slow to adapt to market changes.
In contrast, Toyota operates with nearly half as many workers by utilizing suppliers and automation. Matthias Schmidt, an auto industry analyst, highlighted the influence of trade unions and the state of Lower Saxony, which holds 20% of Volkswagen's voting rights and has historically pressured the company against layoffs.
Analysts suggest that Volkswagen may need to implement deeper reforms beyond the proposed job cuts to secure its future. Ostertag recommended increased investment in automation to enhance competitiveness against leaner firms like BYD. The company has begun investing in robotics and digital upgrades for EV production and plans to introduce a sub-€20,000 EV next year.
The German government is supporting domestic EV battery plants to reduce reliance on Chinese imports, while the European Union is advancing the Industrial Accelerator Act to boost competitiveness against Chinese firms. The EU has imposed tariffs on Chinese-made EVs, although these are lower than those in the U.S.
Historian Niall Ferguson warned that Europe must respond more aggressively to China's subsidies for EV makers, while economist Moritz Schularick suggested that Volkswagen could face acquisition by a Chinese car maker if it does not adapt. This article was originally published on July 7, 2026, and updated to reflect the VW Supervisory Board's support for the restructuring plan.