Volkswagen’s CEO Thomas Schäfer has reportedly warned of some pretty tough times ahead for the German automaker. According to Autocar, he suggested that it “all is at stake” during an online address this week, where he also told more than 2,000 senior managers in the meeting that “the roof is on fire.”
A lot of the issues seem to be stemming from Volkswagen’s venture into the EV space while still holding on to core internal-combustion models. The 53-year-old executive reportedly called for an immediate spending freeze because, “We are letting the costs run too high in many areas.”
Autocar reports that Schafer told attendees that the next few weeks and months will be “very tough” for VW, while also calling on managers to make “small wins.” All of this information reportedly came from sources with information about the minutes of the meeting. In a move that combines cost cutting and operational streamlining, Shäfer apparently said he planned to introduce a new series of “performance programs” over the next three years that aims to save VW €10 billion – about $11.2 billion.
A lot of this comes down to the fact Volkswagen is currently investing heavily in EV technology and production infrastructure. On its own, that would be a lot of cash, but you have to consider that’s only half the story. The automaker is still developing combustion engine vehicles to meet increasingly stringent emission and safety standards.
In a perfect storm-style scenario, this is all happening as VW deals with a sales downturn in its largest market, China. The automaker has been forced to discount many of its more profitable vehicles to remain competitive against strong Chinese domestic competition. But sales help is on the way. Autocar reports that in the next few months, sales of the electric VW ID. 7 sedan will start in Europe. It’s also planning to unveil its next-generation ICE Tiguan and Passat models, and a new Atlas just hit the market.