Volkswagen is fighting a losing battle against EV transition

One of Europe's largest employers is fighting for its survival — and losing.

Volkswagen's announcement of 100,000 layoffs, 16 percent of its workforce, and the closure of four German plants has triggered alarm bells across Europe. The scale is staggering. The timing may be too late.

The instinct is to blame China. That's the wrong diagnosis. China is a symptom. The real problem is the speed of the transition from combustion engines to electric drive — a transition Volkswagen saw coming and failed to make.

In 2020, then-CEO Herbert Diess brought Elon Musk in to make the case for going electric. A year later Musk addressed VW's top two hundred executives directly. Then in 2022 Diess was fired, replaced by Oliver Blume, who pledged to extend combustion engine production while dabbling in EVs. Blume is still CEO. He is the one announcing this week's mass layoffs.

Blume is not anti-EV — Volkswagen remains the EV leader among European legacy manufacturers. But extending combustion engine production to 2035 is a losing bet. Chinese manufacturers like BYD build better pure EVs at lower cost, and that advantage only grows over time.

Europe's fuel economics make the shift even more urgent. Drivers in the EU pay the equivalent of around $7.40 per U.S. gallon — nearly double the U.S. average of $4, with Germany higher still at $9–10. The difference is largely taxation, but the effect is the same: EVs are dramatically cheaper to run, costing sixty-five euros per month to operate versus 140 euros for a petrol car.

Range anxiety is becoming obsolete. Tesla already operates around 1,500 Supercharger stations across Europe — the continent's most established fast-charging network — and is expanding aggressively. BYD is planning its own Flash Charging network capable of taking a battery from 10 to 70 percent in five minutes, with an ambitious target of 3,000 stations across Europe by end of 2027. That network does not exist yet at meaningful scale, but the direction of travel is clear.

The market data are unambiguous. In May 2026, pure electric vehicles outsold petrol cars in Europe for the first time — 23 percent of sales versus 21.7 percent — with EV volumes up nearly 40 percent year-over-year. Tesla has doubled its European sales so far in 2026. BYD surged 159 percent. The BYD Seal retails at around 35,000 euros, undercutting the Tesla Model 3 at 41,000.

Meanwhile Tesla is expanding its Berlin factory, adding 1,000 workers. Volkswagen is cutting 100,000.

Unless Volkswagen acts decisively and immediately, it will not survive this transition. The window is closing — and it may already be shut.

Hilliard MacBeth

 

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fund.