Volkswagen Scraps Autonomous Driving Alliance, Slashes 5,500 Management Roles in Sweeping Restructuring

Volkswagen ends €1.5B partnership with Bosch/Cariad, cuts management from 21,500 to 16,000, and targets €50B savings by 2031, affecting up to 140,000 jobs.

Volkswagen is pulling the plug on its "Automated Driving Alliance" with Bosch and Cariad, a cooperation that cost roughly €1.5 billion. Instead of developing its own hard- and software for autonomous driving, the carmaker will now buy these technologies externally. The decision has drawn sharp criticism from the works council, which views the handover of future-critical know-how as risky.

The shift is part of a broader corporate overhaul that targets an operating return on sales of 9 percent by 2031. To get there, the company plans to cut its global management ranks from about 21,500 to 16,000, flattening the hierarchy into a four-level model. The breakdown of the remaining positions: 400 top managers (Level?1), 1,200 executives (Level?2), 3,600 managers (Level?3) and 10,800 team leaders (Level?4). Volkswagen explicitly allows for demotions to increase structural flexibility.

Alongside the headcount reduction, executive compensation is being redesigned. Starting in 2027, the individual bonus component will rise from 13–17?percent of total variable pay to 35?percent. In turn, the long-term variable portion drops from 50–60?percent to 40?percent. The new system will evaluate managers on three pillars: target achievement, personal behavior and impact. A star-based rating scheme will differentiate performance, and the company is considering a separate "savings bonus" to reward efficiency gains.

German production sites face intense pressure. For the supervisory board meeting on July?9,?2026, management is expected to present far-reaching cost?cutting plans. Globally, between 100,000 and 140,000 jobs could be affected. Plants in Hannover, Zwickau, Emden and the Audi site in Neckarsulm are particularly exposed: they will initially receive no new model allocations. To improve capacity utilization, Volkswagen is exploring the possibility of building China?developed vehicles in Europe. The ID.Era?9X, developed with SAIC, is a concrete candidate, while additional models on the CSP platform are not expected before late?2027.

The overarching cost target is €50?billion in savings by 2031. Investment spending will drop by roughly 15?percent to just over €130?billion. Product range complexity is being slashed: the number of models will be cut by half, and variants by up to 75?percent. On the brand side, Seat may lose its independence, while Cupra is set to be expanded as a growth brand.