Volkswagen announces its electric future

Roman Schwartz
March 15, 2019

Volkswagen announced this week a plan to eliminate up to 7,000 jobs at its namesake brand.

"The current year will be a key year for the transformation of the brand", according to VW, which expects its new savings program to increase profits by 5.9 billion euros (6.6 billion USA dollars) from 2023.

The company is pivoting to electric vehicles as it seeks to comply with new limits on carbon dioxide emissions in Europe, and a push by China for more low-emission vehicles.

The VW Group insisted redundancies would not be necessary and the cuts would be achieved by not replacing workers as they retire. Return on sales for VW's namesake brand past year fell to 3.8% from 4.2% because of higher spending on future electric models and production bottlenecks triggered by stricter emission rules in Europe.

The company plans to become the world's biggest producer of electric cars by 2025, with the VW brand alone aiming to build more than 20 models on the group's electric vehicles platform. VW says the move will help ensure profitability as the company transitions to the electric and autonomous vehicle era.

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Volkswagen released full earnings today after pre-releasing earnings in February, when it said its 2018 group operating profit came in at €13.92 billion.

At least for now, any jobs cuts will be voluntary. Further measures will include lowering material costs and lifting productivity at its factories by 5 percent to achieve an operating profit margin of 6% in 2022. He also urged a draft labor pact on retraining employees for software and digital operations, Osterloh told Bloomberg in an emailed statement.

VW will start producing the first model of its all-electric ID vehicle range toward the end of this year.

"Given the interest in the I.D. family shown by our dealers, I think it is possible that the launch edition will already have sold out before we unveil the I.D.in September", stated Jürgen Stackmann, Volkswagen's board representative for sales, in the conference.

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