By Andrea Figueras

Volkswagen's software unit Cariad has agreed on a plan with employee representatives to reduce costs by 20% that includes potential buyouts.

Under the deal, Cariad will offer a voluntary severance program instead of cutting jobs outright, it told Dow Jones Newswires on Friday.

"In return, the existing job security has been extended until 2029," Cariad said.

The software company, which currently employs around 6,500 people, didn't estimate how many employees would be affected by the measures.

"Cariad is focused on reducing costs, not headcount," it said.

In October, Manager Magazin published an article stating that Volkswagen intended to cut 2,000 jobs at its software subsidiary as part of its restructuring.

Cariad, which was put under review by Volkswagen's Chief Executive Oliver Blume, has struggled to deliver software on schedule, causing the delay of electric car releases at Audi and Porsche.

Earlier this year, Blume reshuffled the management team of the software division and changed its CEO and chief financial officer. Sanjay Lal, who had previously worked at Tesla and Rivian, will start as Cariad's chief software officer in January.

Write to Andrea Figueras at andrea.figueras@wsj.com

(END) Dow Jones Newswires

December 15, 2023 08:12 ET (13:12 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.
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