Off the Wagen

The Volkswagen Ripple Effect: job cuts, electric supply, and EU legal action

Volkswagen will build its own battery and electric motor plants in Germany, aiming to supply 3 million batteries a year by 2025. The company has asserted that a quarter of its vehicles will be electric, as well. VW’s upper management has said its shift toward electric and self-driving cars is expected to create 9,000 jobs in Germany alone.

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Exposure of a deceptive emissions scandal turned Volkswagen’s world upside-down. Now, it is taking steps to right the ship and plan for the future.—Reuters photo

The other side of these developments is the 30,000 job cuts the company announced it will make. “Nevertheless, several analysts deemed the cuts too small. In the wake of VW’s diesel emissions crisis, the company has put aside $19 billion to pay for fines, damages and repairs following the admission last year that it had cheated on regulations in the U.S.,” TheStreet‘s Doron Levin wrote November 21.

vw2The company has begun to move past the highly publicized emissions scandal Levin speaks of (which surfaced in September 2015) and has a strong enough legacy and branding to have continued success, according to most experts. The question now is, at what expense? The job cuts mentioned above could affect workforce in its home country as well as outside of it…and the scandal is still sending ripples through Europe as recently as Thursday morning, when the European Union announced it would take legal action against the governments of Germany, Luxembourg, Spain, and Portugal for not policing Volkswagen’s emissions reports properly.

Beneath the surface, the company is still a dynamic force of strategy and development. According to a recent Bloomberg report, VW is “neck-and-neck with GM and Toyota on deliveries and sales but has a far bigger workforce”…even when accounting for the most recent job cuts. It has certain excesses it can cut to open up space for more profitability, because the actual Volkswagen brand has virtually none following the scandal. Profits will have to come from its umbrella of brands—which includes Audi and Porsche—and planning for the future. Quirky service center perks are likely to be downsized, while the company also intends to be very active in the ride-sharing sector.

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