The CEO of the Volkswagen Group’s core VW model has issued a warning a few lack of competitiveness because the model appears to be like to enhance its return on gross sales and develop its market share for electrical automobiles in China.

“With a lot of our pre-existing constructions, processes and excessive prices, we’re not aggressive because the Volkswagen model,” Thomas Schäfer, CEO of the VW model, mentioned at a workers assembly, based on data posted on an inside web site and seen by Reuters.

The feedback come as VW is ready to implement a plan to chop prices to the tune of 10 billion euros (roughly $10.9 billion). Whereas this may embody workers reductions, the reductions are anticipated to be made by way of agreements on partial or early retirement.

VW has beforehand mentioned it plans to make the most of its ageing workforce to scale back workers numbers with out firing individuals, and that it does not intend to hold out any main dismissals, not less than by means of the present decade.

In an effort to curb prices, the automaker additionally introduced in September that it has deserted plans for a second plant at its headquarters in Wolfsburg, Germany. The automaker will as a substitute depend on capability at present vegetation.

The model enjoys the very best gross sales volumes inside the VW Group, however its return on gross sales is the bottom. In an investor presentation earlier this yr, VW mentioned it desires to develop return on gross sales from 3.6% registered final yr to six.5% by 2026.

Its low market share for EVs in China has additionally been a problem. To hurry up growth of EVs for China, which is the world’s greatest marketplace for each new automobiles and EVs, VW earlier this yr partnered with Xpeng in a deal that may permit VW to achieve entry to the among the Chinese language automaker’s EV platforms. Fellow VW Group model Audi cast an identical take care of China’s SAIC this yr as nicely.

VW Group has additionally seen EV gross sales sluggish in its house market of Europe. When asserting its third-quarter outcomes final month, the automaker mentioned it now expects EV gross sales to make up from 8-10% of its complete gross sales this yr, down from an earlier goal of 11%.