Volkswagen continues to hew to its works council promise not to outright close any of its German sites. By Stewart Burnett
Volkswagen is terminating vehicle production in a German city after all, signing a letter of intent with the Free State of Saxony and Technical University of Dresden to convert its Transparent Factory into an innovation campus focused on AI, robotics, microelectronics and chip design. The public-private partnership will invest more than €50m (US$58.2m) over seven years, with TU Dresden eventually using nearly half the facility space.
ID.3 production in Dresden will cease as of January 2026 when the building undergoes conversion; first joint research projects will follow around mid-2026 with regular operations kicking off in 2027. The facility will be fully converted into a delivery and research site, having delivered approximately 3,500 vehicles during 2025 as Volkswagen’s second-largest German handover site.
In a move likely to satiate local unions and the works council, all 230 remaining employees will keep their Dresden positions during the transition; however these numbers will decline through natural attrition (retirements, and so on) in the coming years. Workers whose roles are phased out will also receive transfer offers to Zwickau and Chemnitz sites, partial retirement schemes or termination agreements, with transfers to the Wolfsburg plant also available alongside €30,000 relocation bonuses.
The Dresden closure forms one part of Volkswagen’s ‘Future Volkswagen’ programme targeting German production capacity reduction of some 730,000 vehicles annually through 2028 and 35,000 ‘socially responsible’ job reductions by 2030. “The decision to end vehicle production at the Gläserne Manufaktur after more than 20 years was not an easy one,” said Brand Executive Thomas Schäfer. “However, from an economic perspective, it was absolutely necessary.”
The Dresden facility opened in 2001, initially producing the Phaeton luxury sedan until 2016 when it switched to the e-Golf and subsequently ID.3 electric models. The site assembles roughly 6,000 units annually, marking it as more showcase-oriented than a full-scale factory, with production costs among the highest worldwide.
Saxon Minister President Michael Kretschmer has characterised the development as a turning point for the region’s industrial position. “The realignment of the Gläserne Manufaktur will not only create an innovation campus of national significance—we are also sending a clear signal about our state’s ambition to be at the forefront of future technologies,” Kretschmer said. The city aims to serve as a hub for Europe’s semiconductor industry, with projects from Bosch, Infineon and TSMC also underway.
