Key facts
- Volkswagen is considering closing four German plants and cutting up to 100,000 jobs.
- Lower Saxony Premier Olaf Lies proposed building China-developed models in Germany to stabilize capacity and jobs.
- Lower Saxony holds a 20% voting stake in Volkswagen.
- Volkswagen faces significant competition from Chinese EV makers and U.S. tariffs.
- Labor unions and works councils are strongly opposing proposed job cuts and plant closures.
Volkswagen is facing significant pressure to restructure and cut costs, with reports indicating potential closures of four German plants and up to 100,000 job losses globally. In response, Lower Saxony Premier Olaf Lies, representing a major shareholder with a 20% voting stake, has proposed that Volkswagen build models developed in China at its German facilities. This move, he stated, could help stabilize factory utilization, preserve jobs, and foster innovation within Germany.
Lies's suggestion comes as Volkswagen grapples with intense competition from Chinese electric vehicle manufacturers, anticipated U.S. import tariffs, and dwindling demand in Europe, which the company has described as unsustainable for its current business model. The premier had previously floated the idea of producing cars for the Chinese market in Germany after a visit to China in April.
Adding to the internal discussions, Volkswagen's subsidiary Porsche is reportedly exploring the possibility of shifting production of its Cayenne SUV from Slovakia to its Leipzig plant in Germany to improve capacity utilization. Meanwhile, labor unions and works councils, including IG Metall, have vowed to strongly resist any plant closures or compulsory redundancies, referencing a late-2024 union deal that already outlined around 50,000 job losses in Germany by 2030 and prohibited compulsory redundancies until the end of that year.
Volkswagen's workforce stood at approximately 657,400 at the end of the first quarter. In the first quarter of 2026, the company reported a 14% drop in operating profit to 2.5 billion euros and a 2.5% decrease in revenue to 75.7 billion euros. U.S. import tariffs are projected to cost the company around 4 billion euros this year.