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Will Herbert Diess’s departure damage Volkswagen’s EV strategy?

Volkswagen Group Chief Executive Herbert Diess will leave the company, to be replaced by Porsche Chief Executive and former VW head Oliver Blume, at the start of September. Diess’s departure follows a vote by VW’s supervisory board, which includes representatives of employee organizations and the state of Lower Saxony, the company’s second-largest shareholder. The 20-seat board voted unanimously to replace Diess, sources told the Financial Times.

Herr Diess was widely considered the architect of VW’s bold electrification strategy. Under his leadership, the Group became by far the most charged of the legacy automakers. He oversaw the launch of new native EVs, and committed to invest some €52 billion to restructure the company for the coming electric era.

However, he repeatedly locked horns with VW’s powerful works council, which represents most of its 300,000 workers in Germany. Workers’ representatives have repeatedly criticized his management style and communications skills.

A remark Diess made in 2021 was widely interpreted as implying that electrification could cost as many as 30,000 jobs, inciting outrage from unions. (However, the way we and others parsed his statement, he was saying that moving too slowly on electrification was the threat to jobs.)

Diess’s propensity to stress the urgency of “catching up with Tesla” also apparently ruffled some powerful feathers. Among other sins, he cited a report that Tesla can build a Model 3 over three times as fast as VW builds an ID.3 at its Zwickau EV plant, and invited the company’s controversial CEO Elon Musk to address VW execs on a video call.

It’s also worth mentioning that VW’s stock price has been on a downward trajectory for the last year.

VW’s works council leader Daniela Cavallo stressed the importance of ensuring that “job security and profitability remain equally important corporate goals in the coming years. Our focus as an employee organization is clear: all our colleagues must be involved. Today’s decisions pay tribute to this.”

Will Diess’s departure cause VW to put the brakes on electrification? Theoretically, EVs are simpler to produce than ICE vehicles, and it’s widely expected that the shift to electric motors will lead to job losses, not only at automakers, but at suppliers (also major employers in Germany). Is an unhealthy jobs-versus-climate narrative developing in the German auto industry?

That remains to be seen. None of the reports we’ve read cited Diess’s electrification plans as a reason for his departure per se. Diess’s successor Oliver Blume is not without EV cred—he oversaw the development and market launch of the electric Porsche Taycan.

Source: Financial Times, Reuters, Electrek

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