VW's Audi to Cut 10% of its Workforce to Fund Shift Towards Electric Vehicles
Volkswagen's luxury brand Audi announced that is is cutting around 10% of its workforce in a cost cutting move as the company shifts towards producing more electric vehicles.
Global automakers like Audi are experiencing a sales decline, especially in key markets like China, and must prepare for the future by investing more in the development of electric vehicles.
Audi said it would slash up to 9,500 jobs representing 10.6% of its total staff by 2025, saving 6 billion euros ($6.61 billion). However, as Audi and its parent Volkswagen begin producing more electric vehicles, up to 2,000 new jobs will be created primarily in the areas of electric mobility and digitalization.
"The company must become lean and fit for the future, which means that some job profiles will no longer be needed and new ones will be created," Audi said in a statement.
The group said the cuts, which would also include management positions, would take place along the demographic curve through employee turnover and early retirement programs and help it reach a profit margin of 9-11% to lessen the impact of the layoffs.
According to Reuters, Audi agreed to extend an employment guarantee which rules out forced layoffs for employees until the end of 2029, something which had been a sticking point in discussions between management at Audi and labor representatives.
"We have reached an important milestone: The jobs of our core workforce are secure," said Peter Mosch, chairman of the general works council of Audi. "The extension of the employment guarantee is a great success in difficult times."
The agreement between management and workers sees annual production capacity at Audi's German factories in Ingolstadt and Neckarsulm at 450,000 and 225,000 respectively.
The Ingolstadt plant is the Audi Group's largest production facility, producing the Audi A3, Audi A4, Audi A5 models. Audi produced 491,262 vehicles there in 2018. Audi is also the region's biggest employer, with over 44,000 employees.
Audi said a fund would be set up at the Neckarsulm site to fund the shift toward electric vehicles and would be worth 300 million euros by 2025.
"In times of upheaval, we are making Audi more agile and more efficient," Audi CEO Bram Schot said. "This will increase productivity and sustainably strengthen the competitiveness of our German plants."
Much of Volkswagen and Audi's focus will be on electric models in China, the world's biggest auto market.
Parent company Volkswagen announced last week that Volkswagen Group China, together with its Chinese partners, plans to invest over 4 billion Euro ($4.4 billion) next year, with around 40 percent of this investment going towards e-mobility.
Over the next few years, the company foresees spending more on new energy vehicles in China, which includes fully electric and plug-in hybrid models, than on internal combustion engine vehicles.
Audi released its first mass-market EV the e-tron SUV this year.
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