Volkswagen is considering more than 4,000 additional job cuts at Porsche as part of its most sweeping restructuring yet, highlighting the depth of the crisis facing the German automaker as weak Chinese demand and a costly shift in electric vehicles weigh on its most prestigious brands.

Documents detailing a recent agreement by Volkswagen’s supervisory board call for about 4,100 positions to be eliminated at Porsche, with the measures aimed at addressing an estimated €700 million ($803.8 million) overhead shortfall, German business daily Handelsblatt reported on Saturday.

The cuts would come on top of existing agreements, the newspaper reported.

The scale of the restructuring underscores the pressure on Porsche, which has historically been one of Volkswagen’s most profitable businesses but is now confronting weaker sales in China, high costs and uncertainty over its electric vehicle strategy.

Porsche management and labor representatives agreed in July to an additional 5,000 job cuts, following 4,000 reductions already agreed earlier. Those measures would bring the number of currently agreed job cuts at the Stuttgart-based sports car manufacturer to about one in five employees by 2035.

Volkswagen’s parent company can recommend measures at Porsche but cannot impose them directly, adding another layer to the restructuring process.

The latest reported cuts come as Volkswagen itself has sharply reduced its expectations for the year.

On Friday, the group lowered its full-year operating margin target to as little as 1%, compared with its previous forecast of 4% to 5.5%.

The revision was largely linked to a write-down at Porsche, underscoring how problems at the sports car business are increasingly affecting the wider Volkswagen group.

Porsche’s difficulties are significant because the brand has traditionally provided Volkswagen with strong profitability and pricing power. A sustained deterioration therefore carries consequences beyond Porsche’s own financial performance.

Chief Executive Michael Leiters is under pressure to deliver a turnaround after the company suffered a sharp decline in sales in China and incurred substantial costs from changing course on its electric vehicle strategy.

The combination has exposed a difficult problem for Porsche: the company must invest in new technologies and products at the same time as it reduces costs and responds to weaker demand in one of its most important markets.

China and EV Strategy Drive the Reset

China has become a central weakness for Porsche.

The company’s premium positioning has not insulated it from the broader slowdown affecting foreign automakers in the Chinese market, where domestic manufacturers have strengthened their position through competitive pricing, electric vehicles, and sophisticated software.

The challenge is acute for European luxury brands because China’s auto market has shifted rapidly toward locally developed electric and hybrid models.

Porsche’s response has also been complicated by its electrification strategy.

The company invested heavily in electric vehicles as European and global regulations pushed automakers away from combustion engines. But weaker-than-expected demand for some EV models has forced Porsche to reconsider the pace and composition of its transition. That reversal comes with a substantial financial cost. Automakers cannot easily unwind years of investment in electric platforms, battery technology and production capacity without taking charges or restructuring operations.

For Porsche, the result has been pressure from both directions: the need to continue developing electric vehicles while maintaining profitable combustion-engine and hybrid models for customers who have not switched to EVs.

The reported 4,100 additional cuts suggest the company is now trying to bring its cost base into line with a weaker sales and earnings outlook.

Wider Volkswagen Restructuring

The Porsche measures form part of a much broader restructuring at Volkswagen. The group is attempting to reduce costs across its German operations while dealing with weak demand, intense competition from Chinese manufacturers and the capital requirements of the industry’s transition toward electric and software-defined vehicles.

The scale of the challenge weighs heavily for Germany, where Volkswagen has historically maintained a large manufacturing footprint and a powerful workforce.

Cost reductions therefore involve negotiations with employee representatives and can take years to implement fully.

At Porsche, the reported measures would extend an already substantial workforce reduction. If the latest plans are implemented alongside previously agreed cuts, the company would be reshaping a significant portion of its workforce over the coming decade.

The objective is not simply to reduce headcount. Volkswagen is trying to repair profitability at a time when the traditional advantages of European automakers are under pressure from changing consumer demand and a more competitive global market.

Porsche’s difficulties also reveal a wider problem facing established automakers: electrification has created new competitors while weakening some of the advantages built around traditional combustion-engine technology.

For Volkswagen, the immediate priority is restoring margins. But the scale of the reported Porsche restructuring suggests that the group is confronting a deeper question over how much of its existing cost structure can be sustained as competition, technology and demand patterns change.

The latest profit warning and reported job cuts indicate that the adjustment at Porsche is becoming a major part of Volkswagen’s broader effort to rebuild its financial performance.

TikTok and its Chinese parent ByteDance have hit a setback in their proposed $400 million settlement with the U.S. Justice Department after a federal judge indicated he would reject a key part of the agreement involving a long-running privacy consent decree.

U.S. District Judge George H. Wu in Los Angeles said Friday that he was inclined to reject the companies’ request to terminate a 2019 consent decree imposed on TikTok’s predecessor, Musical.ly. He scheduled a hearing for Monday to consider the issue.

Wu said that, based on the information currently before the court, he could not determine that ending the decree would provide a “durable remedy” or that the proposed termination was appropriately tailored to the changes cited by the government.

The ruling does not, on its face, reject the entire $400 million settlement. But it puts a significant component of the agreement in doubt and could complicate TikTok’s effort to resolve allegations that it mishandled children’s personal information.

Under the proposed settlement reached in August, TikTok agreed to pay $300 million immediately and another $100 million if the court terminated the 2019 consent decree.

The decree dates back to Musical.ly, the short-video platform that was later folded into TikTok. In 2019, the Federal Trade Commission alleged that Musical.ly knew children under 13 were using the service but failed to obtain parental consent before collecting their names, email addresses, and other personal information.

Musical.ly paid $5.7 million to settle those allegations. The resulting consent decree imposed reporting and record-keeping requirements that remain in effect through 2029.

The latest dispute shows why the decree remains important to the Justice Department’s case. Terminating it would have provided TikTok with a way to close out a regulatory obligation that predates the current ownership and operating structure of its U.S. business.

The $400 million settlement itself stems from a Justice Department lawsuit filed in 2024. The government accused TikTok and ByteDance of violating U.S. children’s online privacy laws by collecting personal information from users under 13 without the required parental consent.

The government has argued that TikTok has undergone substantial changes since the lawsuit was filed, including changes to its ownership structure, management, compliance operations, and privacy practices. Those changes form part of the rationale for seeking an end to the older consent decree.

But Wu’s tentative position suggests that the court wants more evidence that those changes are sufficient to replace the protections and oversight contained in the existing order.

TikTok’s Broader U.S. Restructuring

The privacy case is unfolding alongside a much larger effort by ByteDance to restructure TikTok’s U.S. operations and address Washington’s concerns over the platform’s ownership and handling of American user data.

In January, ByteDance agreed to establish a majority American-owned joint venture intended to safeguard U.S. user data and help avert a potential U.S. ban. TikTok’s U.S. business has more than 200 million American users.

The joint venture has pointed to new safeguards designed to prevent children from accessing the platform. In a court filing, it said all users are required to provide their date of birth and that it has developed age-moderation systems designed to identify users under 13 who misrepresent their age.

Those measures are relevant to the Justice Department’s argument that TikTok’s privacy practices have changed significantly since the original allegations.

The judge’s response, however, indicates that the court may require a clearer connection between those changes and the proposed termination of the 2019 decree. That creates an unusual situation for TikTok. The company is attempting to resolve a new federal privacy case while simultaneously seeking to remove an older regulatory obligation that remains in force for several more years.

The settlement would have, for the Justice Department, provided a financial penalty and a resolution to the litigation while allowing TikTok to operate under its newer compliance framework. For TikTok, ending the consent decree would remove an additional layer of federal oversight inherited from Musical.ly.

The court’s decision could therefore determine whether the proposed settlement can proceed in its current form or whether the parties will need to renegotiate the arrangement.

The Monday hearing is expected to provide more clarity on whether the judge’s concerns can be addressed without reopening the broader settlement. Until then, the $400 million agreement remains subject to a significant legal hurdle, with the fate of the 2019 consent decree at the center of the dispute.