Volkswagen's October Gauntlet: Contract Terminations, Battery Alliances and a Share Price Near Its Floor

VW closed at €68.12, down 34% year-to-date, as it terminates collective agreements and plans three battery joint ventures with Gotion.

Volkswagen has picked an awkward moment to ask its stakeholders for patience. With the stock languishing barely above its 52-week low, the Wolfsburg-based automaker is simultaneously tearing up labor agreements at home and stitching together cross-border battery partnerships abroad — a two-track strategy that leaves little room for error in the weeks ahead.

A Share Price Under Persistent Pressure

The equity closed Monday at €68.72, bringing its year-to-date decline to 34%. By Tuesday it had slipped further to €68.12, a daily loss of 0.9%, leaving the stock just 1.6% above its 52-week trough of €67.02. The market's caution reflects a company caught between long-term ambition and near-term friction.

Labor Talks Set for the Second Half of October

That friction is most visible on the industrial relations front. On September 30, Volkswagen AG formally terminated several company-level collective agreements, effective December 31, 2026. Notably, the Zukunftstarifvertrag — the future-oriented agreement that includes job security provisions — was explicitly excluded from the move. Existing rules remain in force for now, a deliberate step to allow orderly negotiations.

The IG Metall union counts ten agreements affected by the termination, including the framework collective agreement. Talks over the future bargaining architecture are scheduled to begin in the second half of October. The union submitted its demands roughly a week ago, and both IG Metall and the works council have vowed to resist the company's approach. Employee representatives also pushed back firmly last Friday against remarks by CEO Oliver Blume concerning co-determination and the workforce, demanding viable prospects for German sites rather than one-sided cost reductions.

Volkswagen justified the terminations by pointing to geopolitical tensions, rising trade barriers and intensifying competition — particularly from Chinese manufacturers.

Battery Joint Ventures Take Shape

While those tensions play out domestically, the group is pressing ahead with industrial partnerships designed to shore up its electric future. On September 28, Volkswagen Group, its battery subsidiary PowerCo and China's Gotion High-Tech agreed to establish three joint ventures aimed at producing battery and cathode material in Spain, Slovakia and Morocco.

Under the arrangement, Gotion will invest approximately €1.1 billion for a 49% stake in a cell factory in Valencia, with PowerCo retaining a 51% majority. Volkswagen also agreed to sell a 5.3% portion of its existing stake in Gotion, though it will keep a meaningful holding once the transaction closes. All agreements remain subject to regulatory approval.

The cooperation spans sites in Valencia, Šurany and Kenitra and is intended to build a regional European supply chain for cathode material and LFP battery cells. Management frames the effort as a way to cut technological dependencies and lower electrification costs — part of the broader "For Europe" initiative and the 2030 future plan, which prioritizes electric mobility, battery technology, software and artificial intelligence. No new financial guidance accompanied that announcement.

Recall Adds to the Operational Burden

Layered on top of these structural challenges is a costly recall. Roughly two weeks ago, Volkswagen launched a worldwide campaign covering 2,159,054 vehicles, according to media reports. Germany alone accounts for 895,832 of the affected cars, based on figures from the Kraftfahrt-Bundesamt. The defect involves potential corrosion on a steering gear mounting bolt, which could break and cause steering failure. The models involved span the Volkswagen, Audi and Seat brands.

Analysts Stay Cautious, Calendar Stays Full

Analysts are approaching the upcoming reporting season with restraint. Tim Rokossa of Deutsche Bank Research cut his price target for Volkswagen on September 29 to €105 from €115, while keeping a "Buy" rating. He cited structural challenges in the Chinese market and suggested the third-quarter earnings season is unlikely to shift the prevailing industry narrative.

Investors will get several chances to reassess the story this month. Volkswagen Group hosts an investor update in Paris on October 12, followed by a virtual preliminary conference call on the third quarter on October 13. The full interim report for the first nine months — covering January through September 2026 — lands on October 29, offering the clearest picture yet of how transformation costs and operational setbacks are weighing on group earnings.