Volkswagen’s software division, Cariad, will cut 1,600 jobs by the end of 2024 as part of a restructuring plan aimed at improving efficiency, German business newspaper Handelsblatt reported on Wednesday.
The move affects about 30% of Cariad’s 5,900 employees. The unit, founded in 2020, was created to develop digital solutions across Volkswagen Group’s brands but has struggled with delays and cost overruns.
Volkswagen had initiated a transformation plan for Cariad two years ago to enhance operational performance. “Now, it is time to look at the headcount,” the report stated, citing company sources.
Volkswagen Faces Broader Cost-Cutting Measures
The job cuts come as Volkswagen considers closing some of its German plants in a bid to regain competitiveness in Europe. The company’s domestic factories employ around 120,000 workers, making potential closures a significant shift for the automaker.
In December 2024, Volkswagen employees and members of the IG Metall union staged walkouts to protest against anticipated job losses. Rising costs and growing competition in the electric vehicle (EV) market have put pressure on the company, which owns ten major car brands.
Volkswagen’s financial struggles have been evident, with Q3 2024 profits falling 64% year-on-year to €1.58 billion ($1.72 billion). The company has never closed a factory in its 87-year history, but mounting economic and industry challenges could force unprecedented measures.
Volkswagen Strengthens Ties with Rivian
Meanwhile, Volkswagen is deepening its partnership with EV startup Rivian following their joint venture, “Rivian and VW Group Technology, LLC,” established in November.
“The Volkswagen Group offers great opportunities for a small brand like Rivian,” former CEO Herbert Diess said, adding that the companies are considering “sharing modules and bundling purchasing volumes.”
Volkswagen has committed up to $5.8 billion in investment in the partnership, which initially focuses on software development. Rivian CEO RJ Scaringe described the deal as “a meaningful financial opportunity.”
The collaboration aims to create a new electric vehicle architecture for software-defined vehicles (SDVs), intended to streamline production and cut costs. Upcoming Volkswagen models, including an ultra-luxury Porsche SUV codenamed “K1” and an electric successor to the Golf, are expected to feature the new platform.