The automaker wants "around 20" electric cars on the road by 2025.
Volkswagen is the latest manufacturer to announce an “acceleration” to previously established restructuring plans. In this case, the automaker isn’t talking about layoffs, at least not yet. Instead, VW plans to drastically reduce powertrain configurations for the European market. As a consequence, some models will likely disappear as well.
We’d love to share specific information on what this entails, but VW doesn’t have anything more to offer at this time. In a press release (available below), the company explained that engine/transmission combinations with low demand will be cut in the forthcoming model year. Furthermore, the release goes on to say the cut should have “corresponding positive effects on the complexity of production and the supply chain.” We interpret that as meaning fewer powertrain options will lead to fewer models, thereby simplifying the process. Also, VW opens its announcement by straight-up saying its model portfolio would be streamlined.
“We must force the pace of our transformation and become more efficient and agile,” said Ralf Brandstätter, VW’s chief operating officer. “We cannot let up in our efforts and must realize further substantial improvements. What we have achieved so far is still not enough.”
What’s the end-game for VW in this move? The company has a bold plan to offer upwards of 20 electric cars by 2025, and it will take a significant technological investment to get there. In fact, VW’s plan calls for investments over $12.5 billion (€11 billion) in e-mobility, digitalization, autonomous driving, and mobility services. More than $10.2B (€9B) of that is directed solely at electrification, so yeah, the company is looking to spend a lot of cash in the very near future. Dropping low-selling powertrain combos and models will help, and though there’s isn’t a specific mention of job cuts or layoffs, the release does say that “administration processes will become even leaner.”
Both General Motors and Ford have made headlines recently for similar circumstances. GM is poised to lay off 15 percent of its salaried workers, and similar layoffs could be in store at the Blue Oval.
Volkswagen brand to speed up operating return
The Volkswagen brand is to significantly improve its earnings performance in the coming years in order to finance investments in future technologies from its own resources. To this end, the model portfolio is being streamlined and the number of variants reduced. At the same time, productivity at the plants is to be increased and the platform orientation for vehicle production extended. Optimizing material costs is to contribute significantly to achieving the target return – without detracting from product substance. Administration processes will become even leaner. “We must force the pace of our transformation and become more efficient and agile. We cannot let up in our efforts and must realize further substantial improvements. What we have achieved so far is still not enough,” said Ralf Brandstätter, the brand’s Chief Operating Officer responsible for day-to-day business.