Destroyer’s Boomerang
Evgeniy Fedorinov, Sovetskaya Rossiya, December 22, 2025 —
Sanctions against Russia have become a disaster for German industry.
Anti-Russian sanctions have boomeranged back on their creators, dealing a crushing blow to the EU economy. The situation has reached the point of absurdity: due to sky-high energy prices, producing a ton of stainless steel in Germany has become economically unviable—it’s far easier and cheaper to buy it abroad. The legendary German auto industry, once the undisputed flagship of the global automotive industry, is experiencing truly dark times: tens of thousands of highly skilled specialists are being forced to leave their jobs, and state-of-the-art factories equipped with the latest technology are closing their workshops, plunging into an oppressive silence. In an effort to weaken Russia, Germany has unwittingly undermined its own economic foundations, threatening to destroy its centuries-old industrial achievements.
This event can, without exaggeration, be called an epochal turning point for the entire global automotive industry: for the first time since 1937, the Volkswagen concern will cease operations at one of its factories in Germany.
The Dresden plant was officially opened in 2002, and from the very beginning, its operations set new industry standards. From its earliest days, the company established itself as a cutting-edge production facility, seamlessly combining innovative technologies, impeccable engineering, and legendary German quality. At its peak, the plant demonstrated truly impressive performance—up to 200,000 vehicles per year.
For thousands of plant workers, this place became more than just a place of employment, but a true mission in their lives. Cutting-edge production solutions were implemented here, and revolutionary approaches to assembly were tested.
Every car that left the factory carried a piece of German engineering soul, embodying long-standing traditions of quality and reliability in metal and plastic. Engineers prided themselves on the precision of their calculations, workers on the meticulousness of their assembly, and managers on their impeccable logistics. But today, this glorious story is approaching its dramatic conclusion.
The plant’s closure is just the tip of the iceberg of the colossal transformations sweeping the group. Behind this difficult decision lies a massive restructuring program that will affect 35,000 Volkswagen employees. This figure is staggering: it’s not just a matter of staff reductions, but the fate of an entire city’s population, which will lose its jobs overnight. Tens of thousands of families across Germany will face agonizing uncertainty about the future, the need to restructure their life plans, find new sources of income, and redefine their career paths in a rapidly changing labor market.
Many workers dedicated decades of their lives to the plant—starting as apprentices, rising to foremen, and passing on their experience to future generations. For them, the plant’s closure represents more than just the loss of a job; it represents the destruction of their way of life, their professional identity, and long-standing relationships with colleagues.
The reasons that forced the concern to take such a radical step are rooted in a complex interweaving of interconnected problems, each of which is destructive in its own way and capable of single-handedly undermining the stability of even a giant like Volkswagen.
Let’s start with the fundamental problem—the energy crisis, which has hit German industry with unprecedented force. Germany, which for decades had relied on stable and relatively inexpensive supplies of Russian energy, suddenly found itself in a situation of severe shortage. A sharp rise in electricity and natural gas prices literally upended the economics of production: the cost of producing a single car skyrocketed, making many production lines unprofitable. While the cost per kilowatt-hour had previously allowed for competitive prices on finished products, now even process optimization could not offset the rising costs. The competitiveness of German automobiles in the global market began to rapidly decline.
The energy crisis was compounded by significant trade barriers erected against European automakers. US authorities imposed additional tariffs on imported European vehicles, dealing yet another painful blow to Volkswagen’s export potential. The US market, which for decades had brought the company stable profits and served as a reliable foundation for growth, was now becoming a source of losses and disappointment. The company was forced to rethink its supply chains and seek alternative markets.
The situation with electric vehicles—the auto industry’s “bright dream” of a clean and environmentally friendly future—is particularly bittersweet. Volkswagen has invested billions of euros in developing electric cars, counting on explosive demand and a rapid paradigm shift in the automotive industry.
Buyers are reluctant to switch en masse to electric vehicles for a number of reasons, the main one being the prohibitive cost of such vehicles for the average consumer, especially considering the additional cost of home charging equipment. A chronic shortage of charging station infrastructure also plays a role, particularly in regions with lower population density and significant distances between settlements. Additionally, long charging wait times, which are incomparable to the minutes it takes to refuel with traditional fuel, are also a factor.
As a result, the multibillion-dollar investment not only failed to pay off within the expected timeframe but also became a heavy financial burden, diverting resources from other critical areas. The concern was forced to allocate additional funds for marketing and demand stimulation, offer preferential leasing terms, and subsidize the installation of charging stations—all of which only increased the losses.
In parallel with disappointing results in the electric vehicle sector, the company is forced to spend colossal amounts of money on improving internal combustion engines—the very technology that was recently hailed as “obsolete.” However, increasingly stringent environmental standards make it impossible to simply abandon internal combustion engines: each new modification requires enormous investments in research, testing, and the implementation of innovative solutions. Volkswagen finds itself in a veritable trap of dual expectations: on the one hand, it must actively invest in the future (electric vehicles and alternative energy sources), while on the other, it must maintain the pace of modernization of its existing internal combustion engine fleet to meet current regulatory requirements. At the same time, the company’s budget is far from unlimited, and the need to balance these conflicting objectives is becoming increasingly difficult.
Engineers are faced with a paradoxical situation: they must simultaneously develop technologies that are intended to replace one another. Teams working on internal combustion engines compete for resources with those working on electric motors. Budget committees are forced to make an agonizing choice: whether to fund the modification of a traditional engine to meet new emissions standards or invest in battery research, the return on which remains uncertain.
The combination of these factors has led to truly catastrophic financial results. Volkswagen’s budget for the coming years has been cut by billions of euros—an amount that could have supported the development of dozens of promising projects.
Production cuts and optimization are already causing concern among the group’s partners—component suppliers, logistics companies, and dealer networks. Many of them, who had built long-term plans based on stable orders from Volkswagen, are now forced to revise their strategies, reduce staff, or even cease operations.
It’s important to note that all of these problems are direct or indirect consequences of major geopolitical changes, including sanctions against Russia. The disruption of established economic ties, the urgent need to restructure supply chains, and the rapid rise in raw material and energy prices created a perfect storm that led to the current crisis. Germany, as the heart of European industry and a key link in the pan-European economic system, felt the full force of these upheavals.
The closure of the Dresden plant is just one of the first visible signs of the profound changes awaiting the auto industry in the coming years. It’s a worrying sign that the era of undisputed dominance by traditional automakers is coming to an end, and that it is being replaced by a new reality—more complex, unpredictable, and requiring a completely different approach to industrial development.
It’s symbolic that the Dresden plant, while closing as an assembly site, may be reborn in a new role. According to some reports, the premises are planned to be transferred to the local technical university for the creation of a research cluster. Here, where yesterday they assembled car bodies and installed engines, tomorrow they could develop artificial intelligence algorithms or prototype quantum processors. It’s a metaphor for the entire industry: the past is passing, but in its place, space is emerging for fundamentally different technologies.
For Germany, the plant’s closure is not only an economic but also a social tragedy. For decades, Dresden lived by the rhythm of auto production: morning shifts, quarterly bonuses, corporate celebrations. Now this way of life is crumbling, leaving a void that can’t be filled with one-time payments. Local cafes, shops, and public services, which depended on workers’ salaries, will also be on the brink of extinction. Municipal budgets will lose tax revenue, which will hit schools, hospitals, and road infrastructure.
Ultimately, the history of the Dresden plant is a mirror of global change. A world accustomed to the stability of industrial giants is confronting a reality where technologies are updated faster than investment returns. Where brand loyalty gives way to the demand for instant adaptation. Where the past, no matter how glorious, has no right to hinder the future.
While the future remains uncertain, one thing is certain: the world of automotive manufacturing will never be the same as we knew it. Those who embrace these changes will have the chance to become the architects of a new era. Those who try to cling to the past risk being trapped in it forever.