Volkswagen Group is preparing to spend around €16 billion on job cuts and potential factory closures as Europe’s biggest automaker launches the most aggressive restructuring in its history.

The scale of the bill underlines the pressure facing Volkswagen as it battles rising competition from Chinese manufacturers, tariffs and years of excess production capacity. The company’s new restructuring pact could ultimately eliminate up to 60,000 jobs worldwide, around 50,000 more than previously planned.

Four German factories are also in the firing line. Production at Emden and Zwickau could eventually be phased out at an estimated cost of about €1 billion per site, while Neckarsulm and Hanover could each require around €2 billion as Volkswagen explores alternative uses for the plants.

The largest portion of the restructuring bill is expected to come from workforce reductions, with around €10 billion earmarked for associated costs, according to a person familiar with the plans.

Volkswagen has not confirmed the €16 billion figure. A company spokesperson declined to comment on the estimate, which was first reported by German magazine Der Spiegel.

The restructuring represents a high-stakes attempt to reset Volkswagen’s cost base while the automotive industry shifts rapidly towards electric vehicles and new manufacturing models.

For investors, the immediate price is enormous. But Volkswagen’s bigger gamble is that billions spent shrinking its traditional operations will ultimately create a leaner company capable of competing in a market increasingly dominated by Chinese rivals and more cost-efficient manufacturers.