Zwickau Plant Named Volkswagen’s Circular Economy Hub

Volkswagen has designated its Zwickau plant as the Group’s center of excellence for the circular economy, outlining investment plans, recycling targets, and future operations.

Volkswagen’s vehicle plant in Zwickau is entering a new phase of transformation, officially becoming the Group’s central competence center for the circular economy. For the automaker, this is not a pilot project but a structural shift toward a closed-loop production model designed for the long term.

At the Zwickau site, processes for vehicle dismantling, component reuse, and material recycling will be developed, tested, and standardized. The knowledge gained is intended to be transferred to other Volkswagen locations worldwide. Over the coming years, the Group plans to invest up to €90 million in the plant, while the Free State of Saxony is supporting the project with public funding of around €10.7 million.

The practical rollout of circular economy activities has already begun. In 2026, the plant is processing an initial batch of 500 pre-series vehicles. From 2027 onward, capacities will gradually increase, with the goal of reaching up to 15,000 vehicles per year by 2030. The focus lies on systematic dismantling, returning usable parts to the cycle, and producing high-quality recycled materials.

The move into circular economy operations was anchored in the collective bargaining agreement reached in December 2024. Alongside vehicle production, the new business area is positioned as a second pillar for sustainable employment at the site, supporting both job security and the development of future-oriented skills in the region.

Digital technologies play a central role in the initiative. Volkswagen plans to rely on data platforms and artificial intelligence to monitor material flows, manage dismantling processes, and assess the economic viability of new circular business models. At the same time, Zwickau is set to become a training and qualification hub, preparing employees for future circular economy activities across the Group.

Within Volkswagen’s broader strategy, the project reflects a push to reduce dependence on primary raw materials, strengthen supply chain resilience, and lower the carbon footprint of its vehicles. Circular economy is seen not only as an environmental necessity, but as a foundation for new markets, services, and value creation — from refurbished components to second-life applications.