German auto parts giant Continental AG is cutting around 3,000 research and development jobs in its automotive division, a move that comes as the company prepares to spin off the struggling business amid broader turmoil for the auto industry stemming from overly aggressive investment in electric vehicles.
The job reductions—equivalent to about 10 percent of Continental’s R&D workforce—will take place by the end of 2026, with fewer than half of the cuts occurring in Germany, the company announced Tuesday. Rather than direct layoffs, Continental says it will rely on attrition and internal hiring to achieve the cuts.
At the heart of the shake-up is Continental’s automotive segment, which produces braking systems, automated driving technologies, and other key vehicle components. This division accounts for about half of the company’s total revenue but has been under intense financial pressure, forcing the manufacturer to make drastic cost-cutting measures.
While Continental has not explicitly linked the R&D cuts to electric vehicle (EV) market struggles, the timing raises serious questions. European automakers heavily invested in EVs under regulatory pressure from Brussels and Berlin, only to face slowing demand, weaker-than-expected sales, and tightening consumer budgets.
Volkswagen AG—one of the biggest backers of the EV transition—has already slashed 35,000 jobs as part of its cost-cutting strategy, while Porsche plans to cut 1,900 workers. Other German auto suppliers, including Schaeffler AG, ZF Friedrichshafen, and Bosch, have also announced mass layoffs in recent months.
One of the major drivers of this downturn has been rising costs and flagging demand for EVs. Despite years of subsidies and regulatory mandates, European consumers have not embraced electric cars as quickly as policymakers expected, leading to production cuts, excess inventories, and financial strain on suppliers like Continental.
The auto sector’s struggles are also compounded by broader economic pressures, including the lingering effects of high inflation, rising labor costs, and volatile energy prices. Inflation has helped drive up the cost of raw materials and manufacturing, squeezing profit margins at firms already burdened by the costly transition to EVs.
Continental’s announcement adds to mounting evidence that the shift to electric vehicles has been far from smooth. Even with heavy subsidies, automakers and their suppliers are struggling to make EV production financially viable, forcing painful cutbacks across the industry.
With global auto sales weakening and EV adoption slowing, Continental’s spinoff of its auto division appears to be more about damage control than positioning for future growth. As the industry recalibrates in response to economic realities, expect more job cuts and corporate restructurings ahead.
