Volkswagen to Shed 7,000 Jobs Due to Automation in Transition to 'Electric and Digital Era'

Volkswagen, Emissions
A sign indicates charging spots for electric cars at a public parking lot, with the power station of the Volkswagen factory stands behind it, in Wolfsburg, Germany, on March 12. The German automotive giant announced it planned to shed 5,000 to 7,000 jobs by 2023 as it moved toward the “automation of routine tasks.” Sean Gallup/Getty Images

German automotive giant Volkswagen announced it planned to shed 5,000 to 7,000 jobs by 2023 as it moved toward the "automation of routine tasks."

The manufacturer said it planned to let the work force shrink naturally as employees retired, and did not intend to fire current staff. In a statement released Wednesday, it said 2,000 more jobs would be created in its technical development division.

Volkswagen also said it would guarantee jobs for its work force until 2025 and possibly longer. The planned cuts would affect its Emden and Hanover factories in Germany, Yahoo Finance reported.

The statement outlined the carmaker's plans to launch an "electric offensive" in a bid to become more efficient. Volkswagen said it wanted to implement a "digitalization roadmap" that would see billions of euros invested in IT systems.

Head of the Volkswagen Group works council, Bernd Osterloh, recently told the German newspaper Braunschweiger Zeitung: "Almost two years ago, we pointed out to the board that the introduction of new and modern IT systems would lead to a reduction in a number of indirect areas."

As part of its modernization plans, the group also aimed to produce some 22 million electric vehicles over the next decade, Yahoo Finance reported. The VW brand plans to produce 10 million new electric vehicles, the company statement said.

"We will significantly step up the pace of our transformation so as to make our company fit for the electric and digital era," COO Ralf Brandstätter said in the release.

The Volkswagen group—which owns 12 brands including Volkswagen, Porsche, Skoda and Audi—will offer 70 electric models over the next decade, the company announced at a press conference Tuesday.

The company had been hit hard by delays in its attempts to meet a new emissions certification—the Worldwide Harmonised Light Vehicle Test Procedure. Yahoo Finance said product delivery problems cost the carmaker about €1 billion ($1.1 billion).

"WLTP and the way we dealt with it was not optimal," CEO Herbert Diess said at the Tuesday news conference, per Yahoo Finance. "People were overtaxed in many ways…had we been focused early on, we probably would have done it better."

In 2015, the Volkswagen Group was embroiled in a scandal over emissions regulations. The U. S. Environmental Protection Agency said the company had installed software to secretly dodge emissions rules in certain models since 2008. The company faced billions of dollars worth of fines and saw some former executives arrested over the scandal.