Volkswagen Picks Britain's Wayve Over Nvidia as Labor Chief Disputes Blume's Account of Contract Cuts

VW taps Wayve for automated driving software, plans 1,000 Cariad job cuts and the ID. Tiguan, as shares sit near a 52-week low.

Volkswagen's push to reshape its software and model lineup is colliding with an unusually public leadership spat over cost-cutting, leaving investors to weigh a bold technology pivot against a share price that is scraping the bottom of its 52-week range.

At the center of the dispute is the dismissal of ten collective agreements, including provisions covering working hours and vacation, which the company announced on Wednesday. Chief executive Oliver Blume justified the move by citing the need for salary reductions and an end to the 35-hour week, and floated longer weekly hours without extra pay. Speaking on The Pioneer podcast, Blume maintained that the employee side had also called for the step.

Works council chief Daniela Cavallo rejected that account outright, saying the remarks further damaged already frayed trust. According to IG Metall, only a review clause was activated in 2024, prompted by the lack of clarity over the fate of four endangered plants. The termination of the agreements by management came afterward. Plant closures and sweeping job cuts remain under discussion at the group.

A strategic pivot in self-driving software

While the labor standoff simmers, Volkswagen has made a directional call on the software that will underpin future generations of self-driving cars. Following comparative testing, the Wolfsburg-based automaker opted to partner with British AI startup Wayve, which prevailed over several rivals, including U.S. semiconductor group Nvidia. A final contract has yet to be signed, according to industry sources, but it is becoming clear that Volkswagen intends to source core software for higher levels of automated driving from the London firm.

Wayve relies on a system built from camera data and end-to-end deep learning. By its own account, the company dispenses with hard-coded behavioral rules and detailed 3D maps. Founded in 2017, the startup has raised roughly USD 2.8 billion across several funding rounds. Its backers and development partners include Mercedes as well as Nissan and Stellantis. Nvidia, too, holds a stake in the London startup and is expected to keep supplying Volkswagen with processors.

For the automaker, the move marks a realignment in software development. It follows the end of the joint development partnership between group subsidiary Cariad and supplier Bosch. The existing shared software will continue to be used, but at higher levels of automation the group is seeking to join forces with specialized partners to shorten development times.

Cariad faces deep cuts

Integration of the software into vehicles will stay with Cariad. The unit's autonomous driving division employs about 1,200 people. At the same time, the software arm faces substantial cutbacks: Cariad plans to shed 1,000 positions from a total workforce of more than 4,000, and subsidiary Vaiva, with roughly 160 employees, is to be closed.

A parallel generational change is taking shape on the model side. On October 9, the core brand will present the fully electric ID. Tiguan, with market launch planned for early 2027. The model is to replace the existing ID.4 and ID.5 lines while being offered alongside the combustion and hybrid versions of the Tiguan. The step marks a repositioning in a key segment: more than 8.3 million Tiguan vehicles have been built historically, whereas ID.4 and ID.5 together have delivered just over 950,000 units since 2021. Technical details on powertrain, battery and charging capacity have not been disclosed ahead of the presentation.

Analysts split as the stock hugs its low

The strategic moves have largely failed to register in the markets. The preference shares closed Friday at EUR 67.60, leaving the stock down 35 percent since the start of the year and just 0.6 percent above its 52-week low of EUR 67.22.

Analysts are signaling caution about the coming restructuring. UBS remains neutral, noting that the long-term margin target of around 9 percent by 2030 looks hard to reach in its base case. Jefferies, by contrast, reiterated its buy rating on the stock. Investors hoping for clarity on the future direction and planned model cycles are looking to a strategy presentation scheduled for October 12 in Paris.