VW can't pass the EV bill on to workers or taxpayers

Who pays when a carmaker misses a technology shift: the people on the line, the shareholders, or everyone else through the tax bill? Volkswagen is now forcing Germany to answer, and none of the three candidates comes out looking comfortable.

The latest headlines say VW plans to cut another 12,000 jobs at its core brand by 2030, which t-online describes as "sozialverträglich", a term we read as meaning without forced layoffs. Reports also say the board wants a publicly funded transfer company to help manage the reductions. IG Metall rejects that as restructuring at taxpayers' expense. Talks are reportedly set to start November 24 in Emden. We only have snippets on the 12,000 figure, so treat the details as reported, not confirmed.

The backdrop is heavy. In early September, VW's supervisory board approved a plan with a further 50,000 cuts, bringing the total to 100,000, about 15% of its staff, according to The Guardian. On September 30 the company terminated nearly all of its in-house collective agreements. IG Metall now demands that this be reversed by the end of October, and strikes become legal from January 1.

Taxpayers shouldn't underwrite a plan that isn't finished

IG Metall's argument has a hard number behind it: shareholders received 2.6 billion in dividends in June, per the union. Asking the public to fund the exit door while that money flows out is a bad look, and we think it's a bad principle too. Public money for retraining is defensible when a whole region is hit by a shock. It is much harder to defend when the company chose its own pace and still pays out.

There's a fair counterpoint. Chinese competition and tariffs are real: CNBC reports that Blume said tariffs on vehicles from Europe went from 2.5% to 15% in two years. But that explains why the bill is large, not why the public should pick it up.

Workers have already paid, and labor cost isn't the culprit

The union says German employees have contributed 1.5 billion euros a year since the end of 2024, with no raise for about two and a half years, less profit-sharing and more intense work. Its sharpest point is arithmetic: the group's labor cost ratio fell from 17.5% in 2021 to 15.2% in 2025, and halving in-house wages would make cars only about 5% cheaper. That's the union's own reading of VW's annual report, so it's advocacy, but the logic holds up. You can't cut your way to a competitive small EV.

Going back to the table less than two years after the December 2024 deal, when job security through 2030 was traded for sacrifice, also corrodes trust. Terminating those agreements while the "Future" deal still bars operational layoffs looks, in our view, like a negotiating tactic that could cost more than it saves. A strike season would be an expensive way to find out.

The missing piece is the product, and everyone seems to know it

Even Gröger, IG Metall's lead negotiator, says the board should invest in cars people want to buy and markets where VW can grow, adding that "you don't win a single customer with layoff lists." Analysts are more generous about the September plan: Deutsche Bank called it a "fundamental breakthrough," while warning that execution remains key. Halving the model portfolio by 2035 and a "three-figure billion sum" of investment are promises, not proof.

The structural diagnosis from Carmignac's Kevin Thozet is blunt: "China has too many cars. Europe has too many factories." Some German plants were built around first-generation electric sedans whose demand has weakened. That's an overcapacity problem, and shrinking is probably unavoidable. The question is whether shrinking comes with a pipeline that justifies the survivors.

Our verdict

The EV pivot has a human bill, and VW is trying to split it badly. Workers have paid a lot, shareholders have paid little, and taxpayers are being invited to cover the gap. A credible deal would need management and capital to carry more of the load, a transparent link between each cut and a specific model or plant commitment, and public support only for retraining that is tied to real labor-market needs. Until VW shows the cars, the cuts will read as retreat, not strategy.