VW CEO Calls for Immediate Freeze on Spending: ‘All Is at Stake’

Volkswagen-spending-freeze

During a recent internal meeting with managers, Volkswagen CEO Thomas Schafer said “the roof is on fire,” suggesting “all is at stake” for the German carmaker as it seeks to become a leading manufacturer of EVs while also supplying global markets with internal combustion engine vehicles, according to Wards Auto.

The meeting came after mixed results for the firm’s all-electric business. In the U.S., sales of the ID.4 crossover quadrupled in the second quarter compared to last year, with 6,690 vehicles sold. Meanwhile, a section of the European Emden plant in Germany---specifically the one where the ID.4 is assembled---was closed at the end of June for six weeks due to weak demand.

Schafer indicated to the more than 2,000 managers the next weeks and months will be “very tough,” and leaned on them to make “small wins.” He also plans to introduce a new series of so-called “performance programs” with the goal of saving the company a massive $11.2 billion in spending over the next three years.

“We are letting the costs run too high in many areas,” Schafer said, calling for an immediate freeze on spending as the brand continues to invest heavily in new EV technology and production infrastructure, Wards Auto noted.

Furthermore, sales in China have been underwhelming, forcing VW to lower the price of its most profitable models to remain competitive, but that also means lower profit margins. For example, the all-electric ID.3 hatchback’s price has been slashed to just $17,500 in China, making it half as expensive as in Europe, where it starts at roughly $36,000 without tax.

“Our structures and processes are still too complex, slow and inflexible,” Schafer added.

VW is preparing to start production of the all-new ID.7 electric sedan, as well as new generations of the gasoline-powered Tiguan and Passat models. Soon, VW also wants to launch a series of more affordable EVs that could be priced as low as $22,000 to compete with proposed offerings from rivals such as Citroen and Renault.

We thank InsideEVs for reprint permission.

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