Volkswagen Bets on Battery Plants and an Electric Tiguan While Labor Talks Loom

Volkswagen sees 2026 operating return on sales at no more than about 1%, as it plans three LFP battery joint ventures and an electric ID. Tiguan.

Volkswagen is trying to write two stories at once. One is a technology story: a fresh model offensive, three battery joint ventures and a self-declared commitment to European manufacturing under the banner "For Europe." The other is a cost story, and it is the one currently setting the share price.

The Wolfsburg group has picked electromobility, battery technology, software, artificial intelligence and energy systems as the pillars of that push, framing the effort as a bid to strengthen industrial competitiveness, regional supply chains and domestic jobs. Management has begun the hard part of the overhaul at the same time, serving notice on several company-level collective agreements effective December 31, including the pay and framework accords. The employment guarantee running through the end of 2030 sits outside that move and remains intact. Talks with IG Metall have opened and are set to resume in the second half of October.

Three plants, one partner, a trimmed stake

On the industrial side, subsidiary PowerCo and Gotion High-tech agreed in late September on three joint ventures to build lithium-iron-phosphate (LFP) cells and cathode material, sited in Valencia, Šurany and Kenitra. Volkswagen simultaneously struck binding terms to sell a 5.3% stake in Gotion, a transaction still subject to regulatory approval; the group intends to keep a significant holding once it closes.

A model swap with a long runway

Product news is stacked into the coming weeks. Volkswagen has scheduled multiple events and brand press conferences around the Paris Motor Show from October 11, and has flagged a world premiere for the fully electric ID. Tiguan in early October. The model is due to reach the market in early 2027 and will gradually absorb the roles played by the ID.4 and ID.5, while the combustion and hybrid Tiguan variants stay on sale alongside it.

The numbers behind the caution

None of this has calmed the market. Roughly two weeks ago the company slashed its guidance for the 2026 financial year, with the operating return on sales now seen at no more than about 1%. The downgrade reflects a write-down on Porsche, heavy restructuring charges and headwinds in China. A separate blow landed about a week ago: a possible worldwide recall of some 2.86 million group vehicles over corrosion concerns on the steering.

The stock closed Friday at EUR 67.60, just 0.6% above its 52-week low of EUR 67.22, and is down 35% since the start of the year. Special items of around EUR 10 billion — including the Porsche impairments and provisions for job cuts — weigh on the picture, and the shares have shed 7.1% since the guidance cut while the recall headlines have knocked off a further 6.1%.

Analysts are split on what comes next. Michael Raab of Kepler Cheuvreux downgraded the stock to "Hold" from "Buy" on September 21, pointing to reduced earnings visibility beyond the current financial year. Stephen Reitman of Bernstein Research kept a "Market-Perform" rating and a EUR 100 price target on September 22, arguing that Volkswagen is holding its own in Europe against Chinese rivals better than many had feared, even as he flagged the Seat brand as comparatively weak.

The next hard data point arrives October 29, when the group publishes its interim report for the first nine months of the year.