Volkswagen and labour unions are inching closer to a deal to restructure the brand without shutting down German factories, reported Bloomberg, citing sources familiar with the matter.

In exchange for workers giving up bonus payments, management is willing to keep plants open and extend job security agreements until 2030.

Additional cost-saving strategies under discussion include relocating the production of the Golf hatchback from the Wolfsburg factory in Germany to Mexico and ceasing the manufacture of VW-branded electric vehicles in Zwickau.

These moves are part of an effort to reduce capacity and streamline operations.

In a handout to the staff, seen by Reuters, VW's works council chief Daniela Cavallo said: "The board of management has still not presented a coherent overall concept for how it intends to strategically lead Volkswagen into the future with the right products, processes and plans."

In November 2024, Volkswagen's CEO announced layoffs and plant closures to achieve a cost reduction of €4bn ($4.16bn).

This announcement sparked unrest among the workforce, leading to strikes in December.

Approximately 100,000 employees across Germany participated in protests against proposed wage cuts and potential plant closures.

The IG Metall union also warned of further escalation if the automaker continues with its plans.

On 2 December, 98,650 workers from nine plants took part in walkouts, including two-hour stoppages by morning shift workers and early departures by evening shifts.

Meanwhile, this week Volkswagen purchased a 9.9% stake in Canadian lithium firm Patriot Battery Metals for C$69m ($48m).

This strategic deal is intended to secure a supply of raw materials for electric vehicle (EV) batteries from North America.

Patriot Battery Metal’s agreement with Volkswagen includes a binding commitment to provide the automaker with 100,000t of spodumene concentrate annually for ten years, starting when production begins at the Shaakichiuwaanaan lithium project.