Volkswagen Plans Model Cuts as EV Demand Grows in Europe

Volkswagen has announced plans to cut its vehicle lineup by as much as half and further reduce production capacity, even as demand for its electric vehicles strengthens in Europe.The company is responding to weaker global demand, rising costs, and tougher competition by shrinking its operations, while continuing to invest in electric vehicles where customer demand remains strong in Europe.The German carmaker said on July 9 that it will reduce the number of model variants by up to 75 percent, and align its factories to produce about 9 million vehicles a year.A day later, on July 10, the company reported first-half deliveries of 4.13 million vehicles worldwide, down 6.3 percent from a year earlier.Volksvagen added that its European order book for battery-electric vehicles (BEVs) had grown by more than 50 percent since the end of 2025.Chief executive Oliver Blume said on July 9 that Volkswagen aims to become “the most attractive automotive company in the world” by 2030 through stronger brands, new technologies, and improved financial performance.He said the company will become faster, more resilient, and more competitive by reducing complexity, focusing technology investments, and cutting excess capacity.Existing savings programs are no longer enough because of economic and geopolitical pressures, said CFO and COO Arno Antlitz.The company said it had already reduced planned production capacity by about 2 million vehicles from pre-pandemic levels of roughly 12 million vehicles annually.A line of unsold 2024 GTI and Jetta sedans sits at a Volkswagen dealership in Denver on March 17, 2024. David Zalubowski/APIt now plans additional capacity reductions in Europe and China as it adjusts to slower demand and more intense competition.Volkswagen cited its agreement announced in late June to sell a majority stake in Everllence, a deal expected to generate about 7.4 billion euros ($8.5 billion) in cash and strengthen its balance sheet.EV Demand StrengthensThe restructuring announcement came one day before Volkswagen reported mixed first-half sales results.The company said on July 10 that deliveries totaled about 4.13 million vehicles during the first six months of 2026, compared with 4.41 million a year earlier.Growth in South America and Europe partly offset a sharp decline in China, where deliveries fell nearly 26 percent.Battery Electric Vehicle deliveries also fell globally, declining 5.8 percent to 438,500 vehicles.Europe remained the bright spot, however, with electric vehicle deliveries rising 8.4 percent, while U.S. deliveries dropped nearly 69 percent following the expiration of government subsidy programs and the effects of higher tariffs, according to Volkswagen.“The Volkswagen Group grew by around two percent overall in the first half of the year outside of China. We continued to gain ground, particularly in South America and Europe,” according to a member of Volkswagen’s Extended Executive Committee for Sales, Marco Schubert.He added that Volkswagen’s European order book for all-electric vehicles had increased by more than 50 percent compared with the end of last year.Schubert acknowledged that China remained difficult because of a market decline of about 20 percent, despite encouraging early demand for locally developed electric models. Job CutsVolkswagen’s latest delivery figures come as the company presses ahead with a sweeping restructuring program aimed at restoring profitability.The company said in March that it plans to cut about 50,000 jobs in Germany by 2030 after operating profit fell to its lowest level in a decade. Revenue remained broadly unchanged at about 322 billion euros ($374 billion), while operating profit dropped to less than 9 billion euros ($10.5 billion).A Volkswagen electric car is parked in front of a charging station in Salzgitter, north-central Germany, on May 18, 2022. John Macdougall/AFP via Getty ImagesThe planned reductions include positions at Audi, Porsche, and software subsidiary Cariad, expanding on an agreement reached with labor unions at the end of 2024 to eliminate 35,000 jobs by 2030 as part of a broader cost-cutting program.Volkswagen is one of several global automakers reducing costs amid slowing demand, intensifying competition from Chinese manufacturers, and the transition to electric vehicles, which are weighing on earnings. Companies including Aston Martin, General Motors, Mercedes-Benz, and Nissan have also announced job cuts in recent months.Andrew Moran contributed to this report.