Volkswagen has temporarily suspended development work on the all-electric ID. Golf at its headquarters in Wolfsburg, Germany, as the group faces mounting costs and financial difficulties. Brand CEO Thomas Schäfer said the company cannot afford the investment required to move the next-generation compact forward for now.

In an internal memo seen by Reuters, Schäfer said the decision was difficult given the Golf’s importance to Volkswagen and Wolfsburg. “We simply cannot afford this work right now,” he wrote, referring to the development pause.

The works council says the suspension will not affect the vehicle’s planned launch date and has pledged to make up for the lost time. However, it acknowledged that freezing spending on preliminary work reflects the group’s strained financial position.

The electric Golf is expected to be among the first vehicles based on Volkswagen Group’s upcoming Scalable Systems Platform (SSP). The architecture is intended to reduce vehicle complexity and production costs. The project had already been delayed from initial plans for a 2026 arrival.

The pause comes as Volkswagen accelerates a wider cost-cutting and restructuring effort. The group reported a net loss of €5.822 billion in the third quarter of 2026, including an exceptional €7.8 billion impact, mainly related to the impairment of Porsche’s value. From January to September, it recorded a net loss of €2.72 billion, compared with a profit of €3.405 billion in the same period of 2025.

Volkswagen’s savings program is valued at around €31 billion and includes reducing its model range, lowering vehicle manufacturing and overhead costs, and cutting up to 100,000 jobs. The company is also considering wage freezes through 2030 across the group.

Wolfsburg’s plant is €300 million behind its cost-reduction target, according to Schäfer’s memo. The factory is not among those threatened with closure, but is under growing pressure to improve efficiency. Volkswagen has kept the possible closure of up to three factories on the table after agreeing to transfer a fourth site in Germany.

Sources: elDiario.es.