Alarm bells are ringing at Volkswagen amidst a downturn in sales and huge investment in EVs, enough that Volkswagen CEO Thomas Schaefer told more than 2,000 senior managers in an internal meeting that the “roof is on fire.” 

According to Wards Auto, Schaefer outlined in an hour-long meeting the challenges that VW faces in the near and long term, but with a particular focus on the nearest weeks and months. He called for managers to make “small wins” and revealed a plan to severely cut spending at the auto manufacturing giant. His call for a freeze on spending was immediate, saying that the costs have run too high in too many areas.

VW CEO Thomas Schaefer. VW

Schaefer’s plan to cut spending includes an $11.2 billion saving “performance program” that the automaker will implement over the next three years, which has already been discussed at the board level. He insists that the automaker must be more agile to adapt to a quickly changing market–one that VW has suffered from, particularly amidst tough competition in its largest market: China. 

VW’s plan to electrify its lineup along with keeping its core internal-combustion business has proven difficult, with growing pains from its first EV offerings putting consumers off. Since the diesel emissions scandal that rocked the automaker in 2015, its products have noticeably changed and cut costs. Most notably, the deletion of physical buttons in favor of touch-capacitive switchgear, and the lackluster infotainment that has only just been addressed with the upcoming ID.7 sedan.

“Our structures and processes are still too complex, slow, and inflexible,” Schaefer said in the meeting. Shortly after Schaefer completed his remarks, chief financial officer Patrick Andreas Mayer offered a more dire view of affairs at VW. “Our business is unwell,” Mayer said. He described Schaefer’s address and call to cut spending as a “last call” for VW.

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