Volkswagen, Europe's largest automaker, is grappling to stay competitive in the electric vehicle market. The CEO of Volkswagen brand cars, Thomas Shafer, recently declared, "We are no longer competitive," as the company announced additional job cuts. As the automotive industry undergoes a seismic shift towards EVs, Volkswagen is working tirelessly to remain in the race against formidable competitors like Tesla.
With the rapid rise of EVs, Volkswagen finds itself struggling to adapt to the new realities. During a staff meeting, Thomas Shafer highlighted the critical issues faced by the company, including high costs and low productivity, which are eroding its competitiveness in the market. These challenges have prompted Volkswagen to take bold steps to secure its future in the EV landscape.
To address its financial woes, Volkswagen introduced a cost-cutting program in June aimed at saving $11 billion by 2026. This program is pivotal for the company, as it seeks to boost its brand returns from the current 3.6% to 6.5% over the next three years under the leadership of CEO Oliver Blume.
Gunnar Kilian, a member of the HR board, emphasized the need to shed excess baggage within the company, advocating for the elimination of duplicated processes and unnecessary burdens on resources. These efficiency measures, along with the reduction in staff, are expected to help Volkswagen regain its competitive edge.
Volkswagen's woes are compounded by various factors. High inflation rates, increasing interest rates, and the end of EV subsidies in Germany have put the company in a tough spot. Additionally, market leaders in the EV sector, such as Tesla and BYD, are intensifying competition in Volkswagen's core markets.
Despite Volkswagen's claims of lower-than-expected demand for EVs, Tesla's Model Y is poised to become the best-selling vehicle in Europe this year, underlining the challenges Volkswagen faces in adapting to the EV revolution.
Volkswagen recognizes the urgency of its situation and is taking steps to reinvent itself in the EV era. While job cuts are a significant part of the strategy, the majority of cost-saving measures will come from other avenues, with Volkswagen set to reveal further details by the end of the year.
Volkswagen's struggles reflect the broader challenges faced by traditional automakers. With the industry moving towards electrification at an unprecedented pace, companies like Volkswagen must adapt swiftly and efficiently to secure their place in the future of automotive industry.
VW has been crying wolf for a while now, according to the company the demand for EVs is gone while the Chinese automakers are flooding the EU market. Those two statements, clearly contradicting themselves, are simply designed to buy some time for the company. It lobbied the EU and as a result, we have the anti-subsidy inquiry.
The truth is, that Volkswagen would be better off focusing on streamlining its operations. Rather than accusing everyone around for its misfortunes, it should focus on what it used to do best - make cars that people can afford.