Volkswagen's Cariad plans 1,000 job cuts and 6.1 billion euro investment reduction

Planned workforce reductions

Volkswagen's software subsidiary, Cariad, plans to eliminate approximately 1,000 additional jobs from its existing workforce of roughly 4,300 employees. Management informed staff of the planned downsizing on Wednesday, 30 September 2026, during an internal works meeting in Wolfsburg. Division representatives told attendees that the personnel reduction is necessary to maintain competitiveness compared to external software suppliers. The planned cut affects nearly one quarter of the unit's remaining staff. A Cariad spokesperson declined to comment on the plan. Management has terminated several existing collective bargaining agreements to renegotiate working terms, with talks between company leadership and employee representatives scheduled to determine the precise timeline and implementation methods.

Investment cuts and financial targets

According to an internal company document, Cariad plans to reduce its overall investments by approximately 6.1 billion euros between 2027 and 2031. Alongside these capital expenditure reductions, the software division is tasked with contributing an additional 400 million euros to the Volkswagen Group's targeted operating earnings improvement by the start of the next decade. Management is scheduled to present a detailed operational restructuring concept by the end of December 2026. These measures align with Volkswagen's group-wide strategy to improve profitability by 2030, a corporate plan that entails billions of euros in development budget cuts and the elimination of tens of thousands of positions across the broader automotive group.

Strategic pivot to external partnerships

The downsizing follows a strategic shift in how Volkswagen develops vehicle software under Group Chief Executive Officer Oliver Blume. While his predecessor, Herbert Diess, sought to develop comprehensive vehicle software platforms entirely in-house, the group replaced Cariad leadership in 2023 after software development bottlenecks delayed key vehicle launches. Under Blume, the automaker has increasingly relied on external partnerships, including collaboration with Xpeng in China and a joint venture with United States electric vehicle maker Rivian established in late 2024. The Rivian joint venture now handles the primary development of the new software-defined vehicle architecture and infotainment systems. Cariad has adjusted its focus toward maintaining legacy operating systems E1.1 and E1.2 for several years, supporting the CEA architecture in China, and developing proprietary core technologies such as driving dynamics software and cloud applications.

Headcount trajectory and labour negotiations

The newly planned job cuts represent the latest phase of downsizing at the software division. At the end of 2023, Cariad employed roughly 6,500 people. In early 2025, Cariad Chief Executive Officer Peter Bosch announced a plan to eliminate roughly 30 percent of the division's positions following group-wide collective bargaining settlements, which brought the workforce down to its current level of about 4,300 employees. Previous rounds of job cuts were implemented through voluntary measures, including severance packages and early retirement programmes. Although corporate agreements had previously ruled out compulsory redundancies until 2029, Cariad's termination of collective bargaining agreements clears the way for management to renegotiate job security conditions directly with employee representatives.