After reporting a 44% loss in earnings, Volkswagen announced a layoff of 50,000 workers in Germany. This represents over one sixth of the total VW jobs in the country and is unprecedented. VW reacts to the crisis not by investing but by cost-cutting.
The two main factors in the VW crisis are a drop in sales in export markets (from tariffs in the U.S.,and it is not clear why in China) and the Green Deal. Porsche, part of the VW Group, was especially hit by a combination of both.
Porsche naively adopted the EU Green Deal policy, with a very aggressive electric strategy: by 2030, the majority of sales were to be electric, and new electric platforms and battery technology were planned. When it became clear that electric cars were not selling, the management woke up and extended the life of the combustion engine models. Too late: investments had already been made. Now Porsche had to invest additional money in “old” technologies. This meant special costs of around €3.1 billion for the conversion, plus new investments for combustion engine and hybrid models.
