Volkswagen Faces Twin Crises: €1.5 Billion Alliance Failure and Potential 100,000 Job Cuts

Volkswagen board to weigh 100,000 job cuts, model cull, and external tech sourcing after €1.5B Bosch partnership failure; stock near oversold.

All eyes in Wolfsburg are fixed on next Thursday. On July 9, Volkswagen’s supervisory board will convene to decide the fate of the carmaker’s turnaround strategy, with a possible 100,000 job cuts on the table and a broken technology partnership already costing €1.5 billion. The stock managed a 2.60% bounce on Friday to close at €75.00, but that modest recovery belies the depth of the challenges ahead.

The most visible casualty of the restructuring so far is the autonomous driving joint venture with Bosch. Launched in 2022, the project aimed to build a shared software platform, but Volkswagen pulled the plug on the cooperation effective July 1, 2026. Despite pumping €1.5 billion into the alliance, measurable progress failed to materialise – the technology simply was not competitive. Chief executive Oliver Blume has now shifted course, opting to buy external hardware and software for automated systems rather than rely on in-house development.

That strategic reversal is just one element of a far broader cost-cutting drive. The board will debate a plan to slash up to 100,000 jobs worldwide – roughly 15% of the total workforce – and reduce the model range from 150 to fewer than 100 variants. The goal is to lift the operating return on sales from its current paltry 3% to a more sustainable level. German media have reported that the carmaker is also considering price increases to shore up margins, though no official decision has been confirmed.

Speculation about the fate of the Dresden factory, the so-called “Gläserne Manufaktur”, has been rife, especially after Chinese rival BYD overtook Volkswagen in global electric vehicle sales last year with 4 million units. But Blume flatly denied that the plant is up for sale, insisting that a complete disposal to BYD is not on the cards. The VW law and the company’s ownership structure block any full takeover by Chinese interests. Nevertheless, Blume acknowledged that partnerships could be a sensible way to fill underutilised capacity.

To sidestep the European Union’s stiff tariffs on Chinese-built EVs – which can reach 35.3% for pure-electric models – Volkswagen is exploring importing cars originally developed in China, such as the electric SUV ID. Era 9X equipped with a range extender. Lower Saxony’s premier, Olaf Lies, has even proposed building such hybrid models directly in Europe to safeguard plants like Emden.

Far from the boardroom, the product line-up is also being pruned. Since July 5, 2026, Volkswagen has stopped selling the Golf with a diesel engine in Britain, citing a collapse in demand for self-igniting powertrains on that market. Investors will be watching closely to see how much further the model rationalisation will go.

On the technical side, the stock remains under severe pressure. After hitting a year low of €69.20 on July 1, the shares have recovered only marginally. The relative strength index stands at 35.8, suggesting the market is approaching oversold territory – a condition that attracted some bargain hunters on Friday. Yet the discount to the 200-day moving average is still around 20%, and the year-to-date loss amounts to 29.31%. If the supervisory board fails to deliver a convincing austerity plan next week, the support at €69.20 could give way, opening the door to further declines. The market is not waiting for promises; it wants a concrete roadmap.