German auto components big Continental AG is slicing round 3,000 analysis and improvement jobs in its automotive division, a transfer that comes as the corporate prepares to spin off the struggling enterprise amid broader turmoil for the auto trade stemming from overly aggressive funding in electrical automobiles.
The job reductions—equal to about 10 % of Continental’s R&D workforce—will happen by the top of 2026, with fewer than half of the cuts occurring in Germany, the corporate introduced Tuesday. Somewhat than direct layoffs, Continental says it’s going to depend on attrition and inner hiring to attain the cuts.
On the coronary heart of the shake-up is Continental’s automotive section, which produces braking methods, automated driving applied sciences, and different key car elements. This division accounts for about half of the corporate’s complete income however has been underneath intense monetary strain, forcing the producer to make drastic cost-cutting measures.
Whereas Continental has not explicitly linked the R&D cuts to electrical car (EV) market struggles, the timing raises critical questions. European automakers closely invested in EVs underneath regulatory strain from Brussels and Berlin, solely to face slowing demand, weaker-than-expected gross sales, and tightening shopper budgets.
Volkswagen AG—one of many largest backers of the EV transition—has already slashed 35,000 jobs as a part of its cost-cutting technique, whereas Porsche plans to chop 1,900 employees. Different German auto suppliers, together with Schaeffler AG, ZF Friedrichshafen, and Bosch, have additionally introduced mass layoffs in current months.
One of many main drivers of this downturn has been rising prices and flagging demand for EVs. Regardless of years of subsidies and regulatory mandates, European shoppers haven’t embraced electrical automobiles as rapidly as policymakers anticipated, resulting in manufacturing cuts, extra inventories, and monetary pressure on suppliers like Continental.
The auto sector’s struggles are additionally compounded by broader financial pressures, together with the lingering results of excessive inflation, rising labor prices, and risky power costs. Inflation has helped drive up the price of uncooked supplies and manufacturing, squeezing revenue margins at corporations already burdened by the expensive transition to EVs.
Continental’s announcement provides to mounting proof that the shift to electrical automobiles has been removed from easy. Even with heavy subsidies, automakers and their suppliers are struggling to make EV manufacturing financially viable, forcing painful cutbacks throughout the trade.
With international auto gross sales weakening and EV adoption slowing, Continental’s spinoff of its auto division seems to be extra about injury management than positioning for future development. Because the trade recalibrates in response to financial realities, count on extra job cuts and company restructurings forward.
