Volkswagen’s ID. Cross Will Be Built in Spain as German Plants Face Axe — New SUV Debuts in Crisis

Volkswagen rolled out its compact ID. Cross electric SUV on Wednesday, a model priced at €27,995 that is meant to revive flagging sales in the mass market. But the launch was overshadowed by a deepening internal war over costs. The vehicle will be produced in Spain rather than Germany, underlining just how far the carmaker is willing to go to slash expenses at a time when four domestic plants are on the chopping block.

The boardroom battle erupted earlier this month. On July 9, the supervisory board voted 12 to 7 to reject CEO Oliver Blume’s “Zukunftsplan,” which had called for factory closures and tens of thousands of job cuts. Blume responded with a blunt internal memo dated July 15 — the same day the ID. Cross debuted — warning that the group now needs to eliminate 100,000 positions worldwide. Some 50,000 of those would come on top of the cuts already agreed for Germany. The rationale: Volkswagen’s overheads are 20 percent above competitors’, a gap worth €11 billion annually. The memo also confirmed that production capacity is being trimmed from 12 million to 9 million vehicles a year to avoid European overcapacity.

The numbers from the showroom floor explain the urgency. Global deliveries fell 6 percent year-on-year in the first half of 2026 to 4.13 million units. The second quarter alone saw a steeper drop of 8.6 percent to 2.08 million vehicles, dragged down by a 36.6 percent plunge in China to 424,300 units. Over the full six months, China — Volkswagen’s single largest market — contracted 25.9 percent, while battery-electric vehicle sales there collapsed 47.9 percent. The Core brand group, which includes VW passenger cars, posted a first-half decline of 5.9 percent to 3.115 million vehicles. Porsche suffered an 18 percent quarterly drop, while Skoda managed a rare bright spot with a 4.9 percent gain. Chancellor Friedrich Merz weighed in on Wednesday, calling a possible plan to let Chinese partners build models in German factories a mere “Notlösung” (emergency solution) and arguing that the yuan is undervalued by 25 to 30 percent, distorting competition.

Should investors sell immediately? Or is it worth buying Volkswagen?

Investors have been voting with their feet. Volkswagen’s preferred stock closed at €74.38 on Wednesday, up 3.62 percent from Tuesday’s €71.78, but that bounce does little to mask the damage: the shares have lost 29.90 percent since the start of the year and trade 31.82 percent below the 52-week high of €109.10 reached in December 2025. The 50-day, 100-day and 200-day moving averages all sit well above the current price — at €83.31, €86.74 and €93.51 respectively — confirming a bearish trend. The relative strength index at 42.0 points to neither oversold nor overbought conditions.

Wall Street is cautious. The average analyst price target stood at €74.97 in early July, barely above the current level, and Bernstein Research maintains a “Market-Perform” rating. Internally, management is drafting a “rescue plan” that would trim investment and R&D budgets by €50 billion between 2027 and 2031, bringing the total to €135 billion. On the technology front, the Rivian joint venture, RV Tech, selected Flow Engineering’s platform on July 13 to run the next-generation vehicle architecture. The half-year financial report is due on July 24 and will likely lay bare the impact of the Chinese collapse and the EV price war on margins.

The ID. Cross, built on the MEB+ platform, offers up to 427 kilometers of WLTP range and can charge from 10 to 80 percent in about 23 minutes with the smaller battery. Pre-orders for higher-spec versions are already open in Germany, but the base variant won’t arrive until October. By then, the question of whether this Spanish-made SUV can generate enough volume to help bridge the gap left by China’s retreat will be answered only in part. For now, the launch stands as a symbol of a company trying to sell a future it can barely afford to build.

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