Volkswagen’s Twin Crisis: A €1.5 Billion Software Blunder and a Boardroom Showdown Over 100,000 Jobs

Volkswagen shares recover to €72.28 but face software deal collapse, up to 100,000 job cuts, and potential CEO showdown with labour over restructuring plan.

Volkswagen shares clawed back to €72.28 on Thursday, a tentative recovery from a 52-week low of €69.20 touched just a day earlier. The bounce, however, masks a deepening corporate crisis. Over the past 48 hours, two seismic developments have collided: the collapse of a billion-euro software partnership and an unprecedented power struggle between management and labour that could culminate in an extraordinary general meeting.

The automaker confirmed today that its Cariad subsidiary and Bosch have formally dissolved their “Automated Driving Alliance”. Volkswagen had poured roughly €1.5 billion into the venture, which aimed to develop an in-house autonomous-driving solution. With European development costs now deemed prohibitive, management is shifting strategy. The company is considering importing vehicles developed in China – specifically, the new ID. Era 9X model, potentially to be assembled at the Zwickau plant in Germany. Asian development expenses are expected to be far lower.

The financial strain is undeniable. First-quarter 2026 operating profit slumped 14.3% to €2.5 billion, while revenue slipped 2% to €75.7 billion. The operating margin contracted to 3.3%, down from 3.7% a year earlier. The group still targets a full-year margin of 4.0%-5.5%, but intensifying competition and geopolitical headwinds make that goal increasingly elusive.

To shore up cash, Volkswagen is reviewing a portfolio of prestige assets. Discussions include selling Audi’s stake in FC Bayern Munich, Porsche’s holding in VfB Stuttgart, and even the outright disposal of Lamborghini and Ducati. The group’s overall investment budget has been slashed to €130 billion.

The most explosive issue, however, is personnel. Internal reports outline a new “Zielbild 2030” vision that envisions cutting up to 100,000 jobs worldwide – double earlier estimates. Four German factories are on the chopping block: Hannover, Zwickau, Emden, and Audi’s Neckarsulm plant. Works council chief Daniela Cavallo and IG Metall have vowed “bitter resistance”. The problem for CEO Oliver Blume is that labour representatives and the state of Lower Saxony hold a powerful blocking minority on the supervisory board.

According to insiders, Blume is prepared to escalate. If the board fails to endorse the restructuring plan at its scheduled meeting on 9 July 2026, he may call an extraordinary general meeting to appeal directly to shareholders. Such a move would represent an open rupture with the workforce.

The market is pricing in maximum uncertainty. Volkswagen stock closed Wednesday at €70.58, a hair’s breadth above the year’s nadir. The shares have shed 33.48% since January and trade more than 25% below the 200-day moving average of €94.41. Yet the relative strength index has plunged to 20.1 – deep into oversold territory (below 30). Analysts at Jefferies maintain a “Buy” rating with a reduced target of €120, praising the “consistent restructuring course” despite the turmoil.

External pressures compound the domestic drama. US tariffs are estimated to cost the group €4 billion annually, and sharply higher fuel prices are damping demand for combustion-engine vehicles. The 30-day annualised volatility on Volkswagen stock has soared to 28.33%, signalling that the shares will remain on a knife-edge until the 9 July board meeting delivers – or fails to deliver – a clear way forward.