Volkswagen Faces Twin Storms: Radical Job Cuts and a €1.5 Billion Software Alliance at Risk

Volkswagen’s shares have tumbled to a 52-week low of €69.82, leaving the stock down 34% since the start of the year, as CEO Oliver Blume’s aggressive restructuring drive collides with reports that a key autonomous-driving partnership with Bosch may be on the chopping block. The 14‑relative strength index has sunk to 18.6, deep in oversold territory, yet analysts see no clear floor given the mounting operational and strategic uncertainty.

The centrepiece of Blume’s cost-cutting push is a planned doubling of job reductions from the previously flagged 50,000 to as many as 100,000 positions by 2030. Four traditional plants — Hannover, Zwickau, Emden and Audi’s Neckarsulm site — are under review for possible closure. At the same time, Volkswagen intends to slash capital expenditure by roughly 15%, bringing the spending envelope down to between €130 billion and €135 billion. The model lineup would be nearly halved, from 150 nameplates to somewhere between 75 and 100, a move designed to reduce complexity and improve margins.

While the workforce braces for upheaval — Carsten Büchling, works council chief at the Kassel plant in Baunatal, has called the situation a “communication disaster” after earlier site guarantees through 2030 were called into question — the company is also exploring the production of Chinese-market models in Germany to keep its domestic factories running. Lower Saxony’s premier, Olaf Lies, has voiced support for that plan.

Alongside internal restructuring, Volkswagen is weighing a series of asset sales. The truck division Traton could see Volkswagen’s stake trimmed from 87% to 75%, while Ducati and the Europcar car-rental unit are also potential disposal candidates. Citi analysts calculate that the value of Volkswagen’s holdings in Porsche and Traton alone stands at roughly €44 billion — comfortably exceeding the entire company’s current market capitalisation. That disparity underscores just how deeply investor confidence has eroded.

Should investors sell immediately? Or is it worth buying Volkswagen?

Adding to the pressure, a report first carried by Bild and later confirmed by Reuters on June 28 suggests that Volkswagen may pull the plug on its “Automated Driving Alliance” with Bosch. The partnership, focused on developing a scalable platform for SAE Level 3 functions, has absorbed around €1.5 billion of investment. Neither Volkswagen nor its software subsidiary Cariad has commented officially, and a follow-up report by the industry publication Electrive noted that the alliance is not yet formally dead. Yet the timing is delicate: as recently as August 2025, Volkswagen, Bosch and Cariad described their collaboration as deepening, with a joint software stack expected to enter series production from mid‑2026. Cariad even referenced the alliance alongside a Qualcomm tie-up at the start of 2026.

If the breakup goes ahead, it would force Volkswagen to rethink its entire software strategy — deciding which capabilities to develop in-house and which to source from new partners. For investors, the immediate concern is potential one-off charges and further delays to vehicle-platform timelines. The automaker is already locked in a race against tech giants and Chinese competitors on software-defined vehicles and autonomous driving.

The board is scheduled to vote on the restructuring proposals on July 9. If the supervisory board withholds approval, Blume is prepared to call an extraordinary general meeting in August, escalating what is already a fraught internal power struggle. The stock, which briefly recovered to around €70 before sliding again, remains hostage to the outcome of that vote and to any clarity on the Bosch relationship. Until either matter is resolved, the shares look set to drift at or near their trough, with no catalyst in sight to break the selling momentum.