Volkswagen Faces Existential Crisis: BYD Takeover Speculation and Boardroom Showdown Over 100,000 Job Cuts

VW faces up to 100,000 job cuts and potential plant closures as BYD takeover speculation highlights its severe struggles in China and shrinking margins.

The unthinkable has been floated in Germany's normally staid economic circles. Moritz Schularick, president of the Kiel Institute for the World Economy, has suggested that Chinese rival BYD could stage a takeover of Volkswagen as the Wolfsburg giant's crisis deepens. Volkswagen's management was swift to dismiss the scenario as baseless speculation, but the mere mention underscores the scale of the carmaker's troubles. The old model of developing cars in Germany and exporting them globally no longer works, the board concedes — an era is over.

That era's twilight will be defined on Thursday, when the supervisory board votes on the most radical restructuring plan in Volkswagen's history. CEO Oliver Blume is pushing a package that would eliminate up to 100,000 jobs — roughly 15% of the worldwide workforce of 660,000 — and could shutter four German plants: Emden, Zwickau, Hannover and the Audi factory in Neckarsulm, which together employ some 44,000 people. A job guarantee protecting those sites until 2030 may be torn up, potentially costing the company an estimated €1 billion in penalties. The model lineup would also be slashed from 150 variants to fewer than 100, and the core VW brand might be spun off to improve operational efficiency.

Investors are already voting with their feet. The stock closed the last trading week at €75.00, down roughly 29% since the start of the year, and the market cap has more than halved since Blume took the helm in 2022, now standing at around €37 billion. The chart looks ugly — the shares are trading 20% below their 200-day moving average, and the relative strength index has slipped to 35.8, deep into nearly oversold territory. With volatility running at 32%, the ride has been brutal for shareholders. One analyst kept a Buy rating but slashed the price target from €130 to €120, reflecting the mounting headwinds.

The epicenter of the crisis remains China, where Volkswagen's sales collapsed from more than 4 million vehicles annually to just 2.69 million last year. For decades the region was the company's most profitable market; today it is its biggest drag. BYD, the very rival now whispered as a potential buyer, has been squeezing Volkswagen out of the very territory the German carmaker once dominated. To complicate matters further, US tariffs are estimated to cost the group €5 billion a year, while the operating margin has shriveled to around 3%. Volkswagen is exploring ways to sidestep EU tariffs on Chinese-built EVs by importing models such as the ID. Era 9X — vehicles developed in China — into Europe.

Internal sentiment reflects the gravity. An anonymous survey of top managers found that 80% described the current situation as critical. If the supervisory board blocks the restructuring plan on Thursday, Blume has threatened to call an extraordinary general meeting to force the measures through against worker resistance. Even Porsche, VW’s trophy subsidiary, is preparing to cut up to 4,000 jobs, mainly in administration and management. The board faces a stark choice: approve the biggest overhaul in Volkswagen's history or trigger an open confrontation that could reshape the company’s governance.