Volkswagen Stares Into The Financial Abyss

With other automakers heading in the same direction, we could be giving them a government bailout soon enough.

A new WardsAuto report is sending shockwaves through the auto industry as it’s revealed Volkswagen’s CEO Thomas Schaefer is warning managers “the roof is on fire.” After investing heavily in developing EVs and getting all cozy with China, those two strategies are blowing up in the automaker’s face in a way everyone should’ve seen. We have to wonder just how bad will things get and how many other automakers will be looking at financial doom while asking everyone to finance their government bailout.

Automakers are building electric cars but consumers aren’t buying them.

Schaefer tried stirring his managers during a recent internal meeting, says WardsAuto, telling them “all is at stake” as he portrayed just how bad the impending financial catastrophe for the company might be. To weather the storm, the CEO is calling for “small wins” and streamlining operations while instituting “performance programs.” He hopes to shed $11.2 billion in spending over the next three years just to keep the company going.

We can’t stress enough how bad this is. While we have no doubt the German government would bail out Volkswagen if things get too bad, that’s going to put quite the strain on the country and its economy. Plus, we would be shocked if this doesn’t spell some big layoffs in the near future along with other painful cuts.

Other automakers which have been going all-in on EVs have been feeling the pinch. And with demand for electric cars softening, the worst is yet to come. For example, Ford disclosed it lost a whopping $2.1 billion on its EV division during 2022. While the automaker tried to spin that loss as not a big deal, both it and GM have already been doing layoffs and battening down the hatches for a coming economic storm. On top of that, Ford CEO Jim Farley has almost casually admitted the automaker’s strategy of leaning into EV will cost many people their jobs.