VW to cut jobs as electric car plans speed up
Volkswagen announced that it will make job cuts as it accelerates its manufacturing of less labour-intensive electric cars amid a challenging market that is applying pressure on profit margins.
Volkswagen warned that it will have to make job cuts as it accelerates the manufacturing of less-labour-intensive electric cars in the coming years in a move that will help the carmaker offset sliding profit margins brought on by a myriad of headwinds.
On Tuesday, the German carmaker said that it plans to produce around 70 new electric models by 2028 – instead of the 50 it previously planned – with the group looking to be completely a carbon neutral business by 2050.
‘Volkswagen will change radically,’ Volkswagen CEO Herbert Diess said. ‘We are taking on responsibility with regard to the key trends of the future – particularly in connection with climate protection.’
VW aims to put diesel emissions scandal in rearview mirror
The carmaker is looking to put itself at the forefront of the industry’s shift to zero-emissions in the wake of its 2015 scandal that saw the company forced to pay US authorities $2.8 billion in fines for rigging its diesel-powered vehicles with a cheat device to circumvent emissions tests.
‘The targets of the Paris Agreement are our yardstick,’ Diess said. ‘That is how we will be making our contribution towards limiting global warming.’
However, the company admitted that in order to bear the level of investment needed for it its ‘electric offensive’ it is forced to make improvements in efficiency and performance across the group.
VW must get lean to achieve green future
Investments made at its factories to retool them in preperation for the company's electric makeover, combined with currency fluctuations and an industry slowdown in sales led to a decline in profit margins across its VW, Skoda, Audi and Porsche brands in 2018.
Declining margins forced the company to align executive pay and bonuses more closely to profitability and will see the carmaker reduce it headcount across the group as the business moves closer to an electrically driven future.
‘The reality is that building an electric car involves some 30% less effort than one powered by an internal combustion engine,’ Diess added. ‘That means we need to make job cuts.’
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
