The CEO of the Volkswagen Group’s core VW model has issued a warning a few lack of competitiveness because the model seems to be to enhance its return on gross sales and develop its market share for electrical automobiles in China.

“With a lot of our pre-existing buildings, processes and excessive prices, we’re now not aggressive because the Volkswagen model,” Thomas Schäfer, CEO of the VW model, stated at a employees assembly, in response to info posted on an inner web site and seen by Reuters.

The feedback come as VW is ready to implement a plan to chop prices to the tune of 10 billion euros (roughly $10.9 billion). Whereas it will embrace employees reductions, the reductions are anticipated to be made through agreements on partial or early retirement.

VW has beforehand stated it plans to reap the benefits of its getting old workforce to cut back employees numbers with out firing folks, and that it would not intend to hold out any main dismissals, a minimum of by the present decade.

Volkswagen plant in Wolfsburg, Germany

In an effort to curb prices, the automaker additionally introduced in September that it has deserted plans for a second plant at its headquarters in Wolfsburg, Germany. The automaker will as a substitute depend on capability at current crops.

The model enjoys the very best gross sales volumes inside the VW Group, however its return on gross sales is the bottom. In an investor presentation earlier this 12 months, VW stated it needs to develop return on gross sales from 3.6% registered final 12 months to six.5% by 2026.

Its low market share for EVs in China has additionally been a difficulty. To hurry up improvement of EVs for China, which is the world’s largest marketplace for each new automobiles and EVs, VW earlier this 12 months partnered with Xpeng in a deal that may permit VW to realize entry to the a few of the Chinese language automaker’s EV platforms. Fellow VW Group model Audi cast an analogous deal with China’s SAIC this 12 months as nicely.

VW Group has additionally seen EV gross sales sluggish in its dwelling market of Europe. When asserting its third-quarter outcomes final month, the automaker stated it now expects EV gross sales to make up between 8 and 10% of its whole gross sales this 12 months, down from an earlier goal of 11%.