It’s not looking good for German carmaker Volkswagen. The company is facing a serious crisis and is reportedly set to slash up to 30,000 jobs in Germany, according to German news outlet Manager Magazin. This significant reduction would affect nearly a quarter of VW’s workforce in the country, sending shockwaves through the automotive giant.

The situation at the VW Group has been grim for a while, with job cuts expected, but the scale of these potential layoffs is staggering and took many observers by surprise. VW chief financial officer Arno Antlitz had previously indicated that two factories might be at risk, citing a loss of sales for about 500,000 cars, a number high enough to justify the operations of those plants. “The market simply isn’t there anymore,” Antlitz remarked during a recent address to the workforce.

VW is grappling with a €5,000,000,000 (P310,500,000,000) financial shortfall, and according to Manager Magazin, the workforce—currently standing at 130,000 in Germany—may need to be reduced by as much as 30,000.

But the pain doesn’t stop with job cuts. VW is also planning to cut investments, with its midterm strategy seeing potential reductions of around €20,000,000,000 (P1,242,000,000,000). This would impact VW’s core brand as well.

It’s not just factory workers in the firing line either. The report suggests that of the 13,000 employees working in VW’s research and development department, as many as 4,000 to 6,000 jobs could be at risk. Naturally, VW’s powerful workers council isn’t taking this lightly.

Daniela Cavallo, head of the workers council, has made it clear she is committed to keeping all plants open, though she has signaled some flexibility when it comes to discussions around wages. Unions are famously powerful in Germany, but even they will have to make some concessions.

Volkswagen is at a critical junction, and these drastic measures highlight the serious challenges facing the company as it struggles to stay competitive in a rapidly changing automotive landscape.

All of the firm’s brands are affected in some way or another, and some critics say that the carmaker has been lagging behind the competition from Asia, especially when it comes to EVs.

Increasing energy prices and a continued policy of deindustrialization by the leftist-green-influenced coalition government have also created further challenges, with many companies in the automotive and other sectors moving jobs away from Germany.