Volkswagen Rewires Battery Supply and Model Lineup as Margins Hit a Wall

VW locked in three battery JVs with Gotion, signaled an electric Tiguan and opened labor talks, as shares closed at EUR 67.60 near a 52-week low.

Volkswagen is pressing ahead with a sweeping overhaul of how it builds cars and where it sources their batteries, even as the financial picture darkens. The Wolfsburg group has locked in a trio of battery joint ventures, signaled the arrival of an electric Tiguan, and opened a new round of labor talks — all while its shares scrape the bottom of a 52-week range.

Three joint ventures, one trimmed stake

Under an agreement dated September 28, Volkswagen Group, its in-house battery unit PowerCo SE and China's Gotion High-tech will establish three separate joint companies. The ventures will turn out LFP battery cells and cathode material at plants in Valencia, Spain; Šurany, Slovakia; and Kenitra, Morocco. The partners also plan to pool procurement and sales efforts across Europe.

As part of the same arrangement, Volkswagen signed a binding deal to offload 5.3 percent of its holding in Gotion. The group will keep a meaningful stake once the transaction closes.

Paris as a stage

The battery pacts sit alongside a broader push to shore up its European base. On Thursday, ahead of an industry gathering in France, Volkswagen unveiled its "For Europe" initiative, pledging to strengthen European supply chains and safeguard future-proof jobs. Investment will concentrate on electric mobility, battery technology, software and artificial intelligence.

A political and media exchange is set for Paris on October 11, followed the next day by the Paris Motor Show, where the Volkswagen, Audi, Škoda, CUPRA and Volkswagen Commercial Vehicles brands will roll out new models.

Back home, the company confirmed the October debut of the ID. Tiguan, with the model's actual market launch slated for early 2027.

Contracts on the table

Labor relations form the other front. On Wednesday, management gave notice on several collective agreements effective December 31, 2026, while explicitly exempting the future collective agreement that guarantees job security. Revision talks have already begun, with further sessions with IG Metall scheduled for the second half of October.

A warning that reset expectations

These moves are unfolding against a sharply weaker backdrop. In mid-September, Volkswagen cut its full-year 2026 guidance, projecting revenue of roughly EUR 315 billion and an operating margin of up to 1 percent. The company had previously targeted a margin of 4.0 to 5.5 percent.

Management blamed restructuring costs, a tough market in China and a non-cash write-down of about EUR 6 billion on Porsche. Sentiment took a further hit roughly a week ago when Germany's KBA federal transport authority ordered a recall over a potentially corrosion-prone steering screw.

Analysts trim their targets

The revisions have rippled through brokerages. On September 21, Kepler Cheuvreux's Michael Raab downgraded the stock from "Buy" to "Hold" and cut his price target to EUR 80 from EUR 92, citing the reduced valuation headroom after the profit warning. That same day, DZ Bank's Michael Punzet lowered his fair value to EUR 73 from EUR 75, keeping a "Hold" rating and pointing to the reduced margin forecast for the year and more demanding targets through the end of the decade.

A stock near its floor

The market has taken notice. The shares are down 35 percent since the start of the year, and on Friday they closed at EUR 67.60 — barely above the fresh 52-week low of EUR 67.22 touched during the session. Investors will get a fuller read on October 29, when Volkswagen publishes its interim report for the first nine months.