Volkswagen is facing another major round of job cuts as the German automaker tries to absorb the growing cost of doing business in a global auto market increasingly shaped by U.S. tariffs, weaker demand and intense competition.
The automaker’s supervisory board has approved plans for a further workforce reduction of around 50,000 positions worldwide as part of its Future Plan 2030. This comes on top of roughly 50,000 job cuts already agreed across the group, potentially bringing the total planned workforce reduction to around 100,000 positions.
The company has described the latest restructuring as the most significant transformation in its 89-year history. The plan includes management cuts, a flatter corporate structure and efforts to simplify its operations.
Volkswagen has not specified exactly how the newly announced job cuts will be divided among countries, brands or individual facilities. However, the company has acknowledged that it needs to reduce its global production capacity.
Its German factories currently have excess capacity of around 500,000 vehicles a year. Four plants, in Emden, Zwickau, Hannover and Neckarsulm, face an uncertain future because Volkswagen does not currently have secured production plans for them in the early 2030s. The company is considering alternative uses for those facilities.
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The automaker is already feeling the impact of tariffs on vehicles entering the U.S. market, one of the key markets Volkswagen is trying to expand in. Volkswagen builds about 200,000 vehicles at its U.S. plants, but it also imports roughly 240,000 vehicles from Europe each year and another 287,000 from Mexico. Those imports are subject to tariffs, adding to the company’s costs at a time when profits are already under pressure.
Volkswagen reported about 2.9 billion euros, or roughly $3.4 billion, in tariff expenses for 2025. The company could face between $4.7 billion and $5.8 billion in tariff-related costs this year, according to recent investor discussions.
That pressure is now spilling into Volkswagen’s workforce.
The company is also planning to significantly reduce the number of models it offers. Volkswagen wants to cut its model lineup by about 50% by 2035, focusing on fewer vehicles and reducing the costs associated with maintaining a large portfolio.
The workforce reduction comes after Volkswagen has already been shrinking its operations in Germany. The company employed around 275,000 people in the country in 2023. By June 30, 2026, that figure had fallen to approximately 254,000.
But tariffs are only one part of Volkswagen’s problem.
The automaker is also being squeezed by Chinese manufacturers that have rapidly expanded their presence in electric vehicles. Companies such as BYD and Geely have become increasingly competitive, putting pressure on established manufacturers that once dominated major markets.
China is particularly important for Volkswagen because it has historically been one of the company’s biggest markets. However, domestic Chinese manufacturers have been gaining market share while offering increasingly competitive electric vehicles, forcing Volkswagen to rethink its strategy.
The company has also struggled with the cost of its transition to electric vehicles. Volkswagen had planned to expand its EV business in the United States, but changes to federal support for EVs under the Trump administration have added uncertainty to those plans. The company stopped producing the ID.4 for the U.S. market in April.
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The result is a difficult balancing act for Volkswagen. It needs to invest heavily in new technology and electric vehicles while cutting costs, reducing excess capacity and dealing with higher expenses caused by tariffs.
Volkswagen CEO Oliver Blume said the company plans to invest hundreds of billions of euros in the coming years to strengthen its brands and make them more competitive.
The restructuring affects a group that includes Volkswagen, Audi, Porsche and Lamborghini, making the scale of the changes significant beyond its core Volkswagen brand.
Investors initially reacted positively to the announcement. Volkswagen shares rose sharply following news of the restructuring, reflecting expectations that the company could become leaner and more competitive.
For workers, however, the transformation points to another difficult period ahead. Volkswagen’s latest plan shows how tariffs, changing consumer demand, the shift toward EVs and the rise of Chinese automakers are no longer separate challenges for the global auto industry. They are increasingly combining to force some of the world’s biggest carmakers to rethink how many vehicles they build, where they build them and how many people they need to employ.