VW in the chip crisis – No chips, no cars: Production stop in Wolfsburg and looming short-time work

The Nexperia case explains: This one supplier plunges the entire German car industry into crisis

A shock for Germany as a manufacturing hub: VW's Wolfsburg plant is facing a production stoppage for the successful Golf and Tiguan models, and the threat of mass short-time work looms. The reason is an acute shortage of essential semiconductors, triggered by an escalating geopolitical conflict over the Dutch chip manufacturer Nexperia. After the Dutch government took control of the company under pressure from the US, China responded with far-reaching export bans – thereby crippling a critical supply chain for the entire industry.

This crisis comes at an inopportune time for Volkswagen. The company is already struggling with a financing gap in the billions and the pressure of the transformation to e-mobility. Now, the production shutdown threatens further massive drops in sales and puts tens of thousands of jobs at risk. But the impact extends far beyond Wolfsburg: From Mercedes and BMW to key suppliers like Bosch, everyone is affected by the missing components. The new chip crisis ruthlessly exposes the dependence of European industry on global supply chains and the technology war between the superpowers USA and China.

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No chips, no cars: Why VW is now being forced to its knees and what this means for Germany

What is the current production situation at Volkswagen (VW), and what are the reasons behind the discussion about short-time work and the impending production stoppage? This question involves numerous aspects that encompass both global economic and industry-specific perspectives. The following comprehensive question-and-answer presentation examines the VW case based on the events surrounding chip manufacturer Nexperia, the consequences for the entire automotive industry, and the economic and social consequences for Germany's largest automaker.

What happened that threatened a production stop at VW?

On October 21, 2025, it was announced that VW was preparing to halt production of key models such as the Golf and Tiguan at its main plant in Wolfsburg. The reason for this is an acute shortage in the supply of semiconductors, triggered by international trade and security tensions surrounding chip manufacturer Nexperia and its Chinese owner Wingtech. The Dutch government took control of Nexperia at the end of September 2025 after concerns about technological security and corporate governance were raised under pressure from the United States. China responded with export bans, which largely brought chip production at Nexperia to a standstill.

How does the Nexperia dispute affect the automotive industry?

Nexperia produces essential standard semiconductors that are found in numerous components of modern vehicles – from simple control and display elements to safety-relevant functional groups such as airbags and vehicle systems. Suppliers incorporate these components into the finished assemblies and thus find their way into models such as the Golf and Tiguan. For many of these chips, there are no quickly certifiable alternatives. In addition to VW, other manufacturers such as Mercedes, BMW, and suppliers such as Bosch are directly affected. Stocks often only last for a few weeks.

What concrete action has the Dutch government taken and why?

On September 30, 2025, the Dutch government assumed operational control of Nexperia, citing security concerns. This measure was based on the Goods Availability Act, which allows for the control of private companies in the interest of national and European technology centers. The goal was to secure manufacturing know-how and potentially restrict the transfer of critical technology to China. At the same time, the Chinese CEO was removed by court order, and an independent director was installed. China, in turn, subsequently banned the export of components produced by Nexperia, disrupting supply chains.

How dramatic are the effects for VW – and what does this mean for the Wolfsburg site?

The impending production stoppage of the Golf and Tiguan models directly affects Wolfsburg, the main plant and heart of the Volkswagen Group. Supplies are still guaranteed for the current week; the semiconductors could be installed as early as the following week, and production for certain models could be halted. Such a stoppage would have serious economic consequences: slumps in sales and profits, disrupted supply chains, and a threat to numerous jobs. Production figures in Wolfsburg are already declining. Since the coronavirus pandemic, the plant has already recorded its lowest production figures since 1958.

Is short-time work threatened or are other measures planned?

VW has already contacted the employment agency to request short-time work for parts of its workforce. Initially, several thousand employees could be affected, and if the crisis persists, even tens of thousands. The company is striving to continuously analyze the semiconductor crisis and its impact on production and to implement measures such as reducing overtime, shutdowns, and flexible working hours in coordination with IG Metall. Emergency clauses such as a reduction in weekly working hours to 28 hours will also be implemented before short-time work is implemented on a large scale. Past collective bargaining agreements and job security models are being reviewed and adjusted.

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What is VW's financial situation, and what role do investments play?

The chip shortage and the production decline come at a time when VW is under severe financial strain. According to CFO Arno Antlitz, the group is facing a financing gap of eleven billion euros for the coming year alone. This is due to high investments in electromobility, digital technologies, innovation programs, and declines in key markets such as China and the USA. The only short- and medium-term solution appears to be austerity measures – for example, through the sale of shareholdings and a drastic reduction in marketing, sales, and development costs. Without additional funds, important product investments could not be realized, and the strategic realignment toward future technologies would be jeopardized.

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What role do suppliers and semiconductor certification play?

Since Nexperia semiconductors are incorporated into components and systems by suppliers, the entire European automotive industry is affected. A short-term switch to alternative chip manufacturers is not possible, as new products must undergo extensive certifications and testing, especially for safety-relevant applications. Such processes often take several months until final release and market approval. This makes it virtually impossible to resolve the current bottleneck in the short term.

Have there been similar semiconductor crises before, and what lessons were learned from them?

Since the end of 2020, and even more so during the coronavirus pandemic, automakers have been suffering from international bottlenecks due to rapidly increasing demand for consumer electronics and IT systems, disrupting supply chains. At that time, almost all manufacturers had to curb production, resulting in significant economic losses. The industry has subsequently attempted to diversify its supply chains and sourcing strategies, strengthen local and European semiconductor manufacturers, and establish long-term supply contracts. Nevertheless, supply remains fragile—especially since new geopolitical crises can disrupt main routes and supply flows at any time.

What are the reactions of the industry and politicians?

Industry associations such as ACEA and suppliers are warning of a domino effect if the Nexperia chips continue to be scarce. The components installed in the electronic control units are essential for the smooth operation of modern vehicles. The German government and the EU Commission are closely monitoring developments and are appealing to their European partners to work together to strengthen security of supply and industrial policy objectives. The planned strengthening of European semiconductor capacities remains sluggish, and players such as Intel and other investors have so far only built up limited new capacity.

What role do geopolitical conflicts such as the US-China conflict and their impact on high technologies play?

The current chip crisis is the result of the global trade and technology war between the US and China. China is increasingly using its role as an exporter of components and rare earths as a strategic lever. The US has placed Wingtech, and thus Nexperia, on sanctions lists, and the Netherlands directly intervened in the ownership structure. In the face of AI, semiconductor technology, and digitalization, the world is in a new kind of cold war with clear blocs and standards. The consequences extend to complete production shutdowns in industries like automotive, which are heavily dependent on global supply chains. Without substantial political solutions, the situation remains tense.

How is VW preparing for the future to overcome crises such as the semiconductor shortage?

VW has realigned its semiconductor procurement strategy, established closer partnerships with manufacturers and suppliers, and increased supply chain transparency. This includes proactive bundling agreements, flexible volume planning, reducing product complexity, and greater integration of development collaborations with technology partners. Elements such as a targeted definition of critical components and the expansion of in-house competencies are intended to increase crisis resilience and innovative strength. Nevertheless, the dependence on a few key manufacturers and global supply flows remains critical, and a complete solution to the current crisis cannot be achieved in the short term.

Is there an outlook for the coming weeks – and what should employees and suppliers expect?

Most automakers' stocks of critical semiconductor components will only last a few days or weeks. If no solution to the Nexperia dispute or alternative supply options are found, further production stoppages, short-time work, and long-term structural adjustments in manufacturing are threatened. Suppliers and employees should be prepared for further measures to facilitate flexible working hours and short-time work. A rapid restart of production lines can only be achieved once new certifications have been completed and geopolitical compromises have been reached.

How could the industry become more resilient in the medium and long term?

Experiences from the semiconductor crises and the coronavirus pandemic have shown that the European automotive industry urgently needs to diversify its supply chains and establish local semiconductor production. Strategies such as reshoring, increased research and development in Europe, universal chips, and innovative design architecture can reduce dependence. Cooperation between OEMs, suppliers, and governments is also essential for better crisis management. Rapid certification processes and emergency plans are just as important as political and technological independence.

Volkswagen and the chip shock: Why supply chains must be rethought

The Volkswagen case illustrates not only the high dependence on modern global supply chains, but also the complex geopolitical and industrial policy interdependencies of the present. The chip shortage is a symptom of a much broader transformation that will accompany and challenge the automotive industry, its employees, and suppliers in the coming years. Measures to counteract production shutdowns and short-time work will help in the short term, but the solution requires long-term strategies and political cooperation.

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