Volkswagen to cut up to 7,000 jobs at VW brand by 2023

German automaker Volkswagen said it would eliminate up to 7,000 jobs by 2023 as it seeks to accelerate its transition to electric vehicles, although the cuts should be achieved via retirement offers.

"Volkswagen will be boosting the pace of its transformation... taking important steps this year to strengthen competitiveness on a sustained basis," the flagship brand of the mammoth VW group said in a statement.

It estimates that the automation of routine tasks will result in the loss of between 5,000 and 7,000 jobs by 2023 and that around 11,000 workers will be eligible for retirement in the coming years.

The job cuts will be part of a savings drive aimed at slashing costs by 5.9 billion euros per year by 2023 at VW's own-brand division.

Meanwhile the Wolfsburg-based firm said it would increase investments in "future topics" like battery-powered cars and automated driving over the same period, from the 11 billion euros (12.4 billion U.S. dollars) announced in November to some 19 billion.

Even as some positions are cut, bosses expect to create 2,000 new jobs in electronics and software development to shape the firm's reorientation, and said they would uphold a job security guarantee valid until 2025.

Chief operating officer of the VW brand Ralf Brandstaetter said in a statement the changes would "make Volkswagen fit for the electric and digital era."

The gigantic carmaker's electric transition is driven by the need to conform to strict emissions limits on greenhouse gas carbon dioxide (CO2), set to bite in the EU from 2020.

At a press conference Tuesday, the 12-brand Volkswagen group said it would increase the number of electric models it offers across its brands like VW, Porsche, Audi or Skoda over the coming decade to 70, 20 more than previously planned.

But the enormous investments needed are already weighing on performance and profit margins.

At the VW brand, executives aim to lift their profit margin to 6 percent by 2022, compared with 3.8 percent last year.

The job cuts announced Wednesday come on top of an existing restructuring program slashing 21,000 positions worldwide and targeting three billion euros per year of savings by 2020.