Volkswagen Boss Tells Workers It 'Can't Afford' An Electric Version Of Its Most Important Car

An internal memo reveals how mounting financial pressure is affecting development of the next-generation Golf.

By: Adrian Padeanu

Nov 2, at 2:13am ET

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Volkswagen's decision to temporarily suspend development of the electric Golf is looking increasingly worrying. Just days after the automaker confirmed it was putting the ID. Golf project on hold because of mounting financial pressures, a new report sheds more light on the situation. And the explanation from the company's top brass is unusually blunt: “We simply can't afford this work right now.”

According to Reuters, CEO Thomas Schäfer delivered the message in an internal memo sent to employees. He acknowledged the Golf's importance to both the company and its hometown of Wolfsburg. Still, he admitted that the automaker doesn't currently have the financial breathing room to continue preliminary development work.

'I know what the Golf means for Volkswagen and for Wolfsburg. That's why this decision was really not an easy one for us," Schäfer wrote. "We simply can't afford this work right now.'

VW Golf generations

Wolfsburg Is Falling Behind on Cost Cuts

That's quite an admission for a company so closely tied to the Golf. The hatchback has been around since 1974 and has sold more than 37 million units across eight generations. Yet even VW's most important nameplate isn't exempt from the sweeping cost-cutting measures.

The internal memo also reveals that VW's main factory is struggling to meet its financial targets. The Wolfsburg plant is reportedly €300 million ($336 million) short of its cost-reduction goal, adding pressure on management to rein in spending.

The situation could be even worse, as Wolfsburg isn't among the four German factories of the VW Group potentially facing closure under the company's restructuring plan. Still, the figures highlight just how widespread financial problems have become.

VW is already planning to eliminate approximately 100,000 jobs in Germany, while labor relations have deteriorated amid disagreements over the restructuring strategy. Workers are also unhappy about Audi's proposed $4 billion investment in a new US factory.

VW Golf generations

VW Claims the Electric Golf Technically Isn't Delayed

There is at least some good news for those waiting for the ninth-generation Golf. VW's works council says the temporary spending freeze on preliminary development work won't affect the planned launch and believes it can recover the lost time.

That doesn't mean the project is back on track, though. The ID. Golf is expected to become one of the first production models based on the group's Scalable Systems Platform (SSP), an architecture designed to simplify vehicle development and reduce costs. The platform was originally supposed to arrive in 2026 but has already suffered significant delays.

VW previously indicated that it didn't need an electric Golf in 2028, with the model now expected around the end of the decade. The latest suspension makes that timeline even harder to take for granted, although the company hasn't announced another launch delay.

For now, the ID.3 Neo will continue to serve as Volkswagen's electric alternative to the Golf. Meanwhile, the combustion-powered Golf is expected to soldier on for several more years, with production scheduled to move from Wolfsburg to Puebla, Mexico, in 2027.

The Golf Is VW's Most Important Car Ever

The electric Golf isn't dead, but its development is now caught between VW's ambitions and a rather inconvenient financial reality. When the company's own boss says it can't afford to work on one of its most important future models, it's clear that the road to electrification won't be as straightforward as Wolfsburg once hoped.

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More importantly, VW's inability to afford an electric version of arguably its most important car says a lot about the challenges the automaker faces. This isn't just a problem for the brand, either. As the VW Group continues to grapple with restructuring costs, delays, weaker demand in China, and pressure to cut spending, the Golf's uncertain future shows how deep those problems run.

If VW is struggling to fund the next chapter of the car that helped define its identity, it raises serious questions about how easily the wider group can deliver on its ambitious electrification plans.

Source: Reuters