Volkswagen's (VLKAY) agreement to reduce employment by 30,000 comes with a key sweetener for German unions and for the province of Lower Saxony, the automaker's 20% owner.
VW disclosed it will build its own battery and electric motor plants in Germany, supplying 3 million batteries a year by 2025, a major investment that underscores the seriousness of its assertion that a quarter of VW's vehicles will be electric. VW's shift toward electric and self-driving cars will create 9,000 jobs in its home market, according to a pledge by management.
Nevertheless, several analysts deemed the cuts too small. In the wake of VW's diesel emissions crisis, the company has put aside $19 billion to pay for fines, damages and repairs following the admission last year that it had cheated on regulations in the U.S.
"The deal may be the best the company could negotiate with labor but it's not a victory for either side," Erik Gordon, a business professor at the University of Michigan, told Reuters. "The cuts are too small to make VW cost competitive with Toyota and other global rivals."
I wouldn't count VW out of the race for global supremacy too quickly, however. Notwithstanding the talent it has lost -- and will lose -- once the investigation into the cheating scandal is complete VW will still employ a deep reservoir of young, capable and dedicated engineers and managers.
The future of personal mobility looks more and more like one that will be dominated by electricity and by artificial intelligence. No one knows how soon the technologies will be ready for prime time, though the imminent emergence of cars like General Motors's (GM) Chevrolet Bolt EV in the U.S., which is to be sold as the Opel Ampera in Europe, will speak volumes about how a no-compromise electric car is accepted by mainstream consumers.