Volkswagen boss wants to close European factories

Volkswagen last closed a factory in 1988. The company's boss, Oliver Blume, is, however, considering closing plants in Germany, in a move that will face a lot of understandable opposition from unions.

VW is facing a lot of EV competition from China, and the slowing demand for EVs hasn't helped it either. With these challenges in mind, Blume may do what many of his predecessors were too afraid to - put plant closures on the table.

Even if he does that, the chance of succeeding is quite slim - labor representatives make up half of VW's supervisory board, where decisions about production sites require two-thirds approval. There might be an out - the law on the matter specifies that the two-thirds majority is needed for "construction and relocation of production facilities".

VW management could argue that a closure is neither of those, and union representatives will definitely counter-argue that a closure is akin to a relocation from the point of view of the affected workers.

Things are also complicated because, due to VW's complicated history, the German state of Lower Saxony still retains a 20% voting share and can block key decisions like this.

VW is currently behind schedule on a €10 billion cost-cutting program while also investing $5 billion in Rivian and $700 million in its partnership with Xpeng. All of these investments need to be funded from somewhere, and of course the cost cutting achieved by shutting down high-cost plants in Germany could help immensely. But only if it does actually pan out. We'll let you know how it goes.

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