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Big trouble in the EU car markets as Volkswagen announces closure of 3 manufacturing plants in Germany and sacking 10,000 employees.


‘Brutal’ results for VW turn political in Germany

Germany’s top carmaker faces a financial bloodbath — and that means trouble for the government.

“Automakers have gone big into EVs and government policies are supporting that, but behind the scenes, China was making these vehicles. While the cost of EVs is higher and higher, China is selling them for $15,000,” said Rebekah Young, an economist with Scotiabank who studies the EV sector.

“There is huge uncertainty on the rate of transition to EVs. There are a lot of headwinds, a lot of wage pressures for all automakers,” she said.
I don't doubt this will be framed in some sectors as "look what the EV transition is doing to the auto industry." And it's true that pivoting to batteries and software is proving endlessly more costly and difficult than when automakers like VW assumed they could pull it off about a decade ago now. But for most companies, the playbook goes like this: finance those expensive EV and battery investments with strong sales of the current gas-powered cars. It's how General Motors is, perhaps ironically, paying for its EV transition with Escalades and Silverados.
But in VW's case, the entire European new car market has shrunk amid rising costs, people aren't buying EVs there after subsidies disappeared and the competition is both cheaper and better than ever. If it's not moving its current metal, then Anlitz is right: it can't invest in the future. And that isn't an option.
What is an option is aggressive cutting to make labor and factory costs more competitive across the board, which is one of VW's biggest challenges. Yet that's going to be a horrible situation for the actual workers at VW's various brands, thousands of whom could lose good-paying, highly protected jobs with great benefits.