Volkswagen Announces Job Cuts and Electric Investment

On Wednesday, German automaker Volkswagen announced a plan to cut up to 7,000 jobs by 2023 in order lower total operating costs by 5.9 billion EU (about $6.6 billion USD).  

Volkswagen is the largest automaker in Europe, so this announcement certainly is not a welcome one. This is particularly true since the car company has been scrutinized over a diesel emissions cheating scandal, in 2015.  At the same time, the company wants to invest 19 billion EU over the next five years towards the development of cleaner electric vehicles as well as elcectromobility technology. 

Fortunately, most of the announced job cuts are expected to be done through retirement option offers.  For example, analysts estimate that approximately 11,000 Volkswagen employees will become eligible for retirement in 2019.  Concurrently, though, the company also wants to add roughly 2,000 jobs to aid in the research and development efforts. 

As a matter of fact, Volkswagen Group said it has plans to increase the number of electric models over the next ten years, from 50 to 70. In addition, they also plan to manufacture 22 million electric cars—across its many brands—by 2028. These brands include Audi, Porsche, and Skoda. This is a pretty dramatic increase from an earlier 15 million units estimate.  Volkswagen has also said it might consider investing in battery manufacturing, in Europe. 

According to Volkswagen chief operating officer Ralf Brandstatter, Volkswagen needs to improve efforts that address the challenges the company will certainly face over the next few years.  He also adds that these changes will evolve the company to be more suited for the digital and electric era. 

Indeed, carmakers all over the world are beginning to come to terms with the revolutionary transition that will see the end of the internal combustion engine era.  Fortunately, some carmakers have already set goals to sell more electric vehicles and hybrids in order to stay in front of this transition.  

Awareness of this transition has forced carmakers to look at their operations differently. As such, many now seek to share costs related to futuristic development.  For example, BMW and Mercedes-Benz-owner Daimler have already formed strategic partnerships towards developing automated functionality and autonomous driving. Accordingly, Ford and Volkswagen has also announced their plan to work together on the next generation of cars. 

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