Cariad Job Cuts: The AI Shift Depends on Reskilling

The Cariad job cuts shrink Volkswagen's software subsidiary far more than they equip it with new AI positions: officially around 1,000 of roughly 4,300 positions in Germany are to go and the IG Metall union and the works council expect up to 1,600, while only around 200 positions for AI specialists are being created. Because a job security agreement rules out compulsory redundancies until the end of 2029, Cariad has to deliver its announced shift to artificial intelligence largely with the roughly 2,900 people who stay, so reskilling and role design will decide whether it succeeds. By our own calculation the net reduction saves around 180 million euros a year, which is less than a fifth of the target of lowering development costs by around one billion euros a year.

Cariad is officially cutting 1,000 jobs while IG Metall and the works council expect 1,600

Cariad's management board announced further job cuts to employees at a staff meeting on Wednesday, 30 September 2026. Handelsblatt reported first. The German Press Agency dpa confirmed the figure of around 1,000 positions from company sources, as Autohaus reported on 1 October 2026. That is almost a quarter of the roughly 4,300 people Cariad employs in Germany, down from 6,500 at the end of 2023. According to Handelsblatt, Cariad is to cut investment by around 6.1 billion euros between 2027 and 2031. The timing and instruments of the cuts are still open, because negotiations with employee representatives have yet to take place.

Automobilwoche reported on 6 October 2026 that Cariad intends to align its work “consistently with the broad use of artificial intelligence”. Around 200 positions for AI specialists are to be created, while a further 200 are cut elsewhere. IG Metall and the works council fear that up to 1,600 positions will go, because around 400 employees from an earlier programme are also still due to leave. Rivian now supplies the basic architecture of the vehicle software for Western markets and an alliance with Xpeng does so for China, so Cariad is concentrating on automated driving, infotainment, cloud systems and chassis software. In a statement to mobiFlip Cariad describes its goal as a “new, smaller tech organisation geared to speed”. According to dpa, works council chair Gerhard Retzer called the termination of collective agreements and the job cuts no plan for the future. IG Metall announced determined resistance.

Cariad loses up to 1,400 positions net while the shift to AI creates 200 new ones

Cariad shrinks by up to 1,400 positions net, because only 200 new AI positions offset the 1,600 expected departures. Automobilwoche names three items on the departure side: the new programme with around 1,000 positions, around 400 employees from an earlier programme and 200 positions cut in return for the AI positions. Together they add up to exactly the union's 1,600, Automobilwoche names the three items but does not add them up itself.

Of the 4,300 positions around 2,900 would then remain, which is 45 percent of the workforce at the end of 2023. The 200 new AI positions would equal around 7 percent of this future workforce, so the other 93 percent have to change their tasks with AI if Cariad wants to align all of its work with AI. According to dpa, Cariad handled earlier rounds of cuts through severance and early retirement programmes. Such programmes select departures by the willingness of employees, so system knowledge can be lost exactly where the integration of partner components needs it.

The job cuts cover only a small part of Cariad's savings target of one billion euros

By our own calculation the net reduction of 1,400 positions saves around 180 million euros a year, because even the entire workforce in Germany costs far less than one billion euros. The calculation assumes fully loaded costs of 130,000 euros per position and year, because Cariad does not publish a figure. At 100,000 euros the saving would be 140 million euros, at 160,000 euros it would be 224 million euros. According to Automobilwoche personnel costs are the main cost item by a wide margin, although the reports do not give the number of employees outside Germany.

The investment cut equals around 1.2 billion euros a year over five years and is therefore of the same order as the savings target, although the reports leave open whether both figures describe the same programme. The larger part of the savings therefore has to come from how the work is divided up: less in-house development, more partner components, lower investment and renegotiated collective terms. How to lower costs without losing the ability to deliver is described in Efficiency programmes: cutting costs while protecting performance.

Cariad's core capabilities are moving from in-house development to integrating partners

With the partner architectures from Rivian and Xpeng, Cariad's core capabilities shift from programming complete platforms towards architecture, interfaces, validation and partner management. How much AI changes the individual tasks depends on the task and on experience. Erik Brynjolfsson, Danielle Li and Lindsey Raymond measured in the customer service unit of a software company that an AI assistant raised the number of issues resolved per hour by 15 percent on average, with less experienced staff benefiting above all (Quarterly Journal of Economics, 2025). In a randomised study published in July 2025 the research organisation METR found that experienced open-source developers took 19 percent longer with AI tools. In February 2026 METR reported signs of a speed-up with later tools but considers the new data an unreliable signal because of selection effects. The benefit of AI therefore has to be measured at the level of the individual task before it enters workforce planning, as AI in software development shows.

Whether the 200 AI specialists work as a shared platform team or as part of the four field teams depends on how similar the AI applications of the fields are. Which roles agents change in development workflows is covered in Agentic AI and the organisation.

Under job security, AI roles at Cariad are filled mainly through reskilling

Under a job security agreement a company fills new AI roles largely from its own workforce, because it can hardly acquire skills by replacing staff. In its Future of Jobs Report 2025 the World Economic Forum expects around 39 percent of workers' existing skills to be transformed or become outdated by 2030. Reskilling works under cost pressure when it is tied to specific target roles, for example from software development to integration and testing or from project control to partner management. Management plans external hiring only for the remaining gap, as described in Strategic workforce planning for three years and Building AI capabilities in the organisation.

The works council is involved, because in Germany a restructuring of this size is usually an operational change under section 111 of the Works Constitution Act, for which management negotiates a reconciliation of interests and agrees a social plan. Under section 92a the works council can make proposals to safeguard employment, explicitly including training. Where tasks change so that employees' skills are no longer sufficient, it has a right of co-determination under section 97(2) when in-house vocational training is introduced. This overview does not constitute legal advice. Training therefore belongs in the negotiation from the start, whose process is described in Operational change in reorganisations.

Executive teams should calculate the workforce balance first and fill AI roles second

Executive teams in mid-sized companies that combine a shift to AI with cost cutting start with a workforce balance per role and measure the new roles after twelve months:

1. Calculate the workforce balance: within four weeks management, HR and controlling set out departures, turnover, new hires and reskilling per role family for three years. Success means a balance that shows which part of the cost target comes from personnel and which from the way work is divided up.
2. Measure the benefit of AI per task: each unit head tests AI in two to three tasks over eight to twelve weeks. Success is measured by time per case and error rate before and after.
3. Match target roles internally: within six weeks HR and unit heads describe the tasks and training path of each new role and name people from the existing workforce. Success is the share of roles filled internally.
4. Agree training with the works council: from the second month management includes training and voluntary programmes in the negotiation on the reconciliation of interests and the social plan. Success means a signed agreement and the participation rate.
5. Review after twelve months: management records the fill rate, delivery performance and costs of the new roles. Success is the gap to plan, as described in Measuring reorganisation success after twelve months.

Niehues Consulting combines organisation design and AI management

Niehues Consulting supports executive teams and heads of department in building organisations that deliver reliably. Organisation design creates structures, roles and decision paths for day-to-day business and for transformation. In delivery management, a delivery manager or product owner steers the programme until the change has arrived in operations. Where AI enters the workflows, a business case and a prototype are added, followed by introduction in the business units.

The approach follows the Niehues Delivery Model with its phases Understand, Build and Introduce. Before a shift to AI it asks three questions. In Understand: which tasks does AI change and who will do them in future? In Build: which roles, teams and interfaces do operations require? In Introduce: are employees trained and workflows adapted? Founder Marin Niehues, a management consultant from the delivery side, builds organisations that deliver. His projects range from venture-backed scale-ups to DAX 40 groups, with assignments in more than 20 countries on six continents. In the free 30-minute initial consultation you assess together which roles in your organisation change through AI and how to prepare your workforce for the new roles: book a consultation.