The Volkswagen Group announced in a softly worded press release on July 22 that Herbert Diess, who has been the group’s CEO since 2015, will step down and leave the company on September 1. He will be succeeded by Oliver Blume, the current CEO of Porsche AG.
Hans Dieter Pötsch, Chairman of the Supervisory Board, gave Diess a glowing review as he pushed him overboard. “During his tenure as Chairman of the Board of Management of the Volkswagen Passenger Cars brand and as Chairman of the Group Board of Management, Herbert Diess played a key role in advancing the transformation of the company. The group and its brands are viable for the future; its innovative capabilities and profit potential are enhanced. Mr. Dice has impressively demonstrated the speed with which and the consistency with which he was able to carry out large-scale transformation processes. Not only did he steer the company through extremely turbulent waters, but he also implemented a fundamentally new strategy.
Diess was hired to pull Volkswagen’s chestnuts out of the fire after he was caught by the police rigging his diesel cars to avoid emissions regulations, and he did an admirable job. But sources familiar with the matter told Reuters that the Porsche and Piech families, which own more than half of the voting rights and a 31.4 percent stake in Volkswagen, are pushing for a change at the top. “Dis was incorrigible. He significantly changed Volkswagen for the better. But his communication was miserable,” a source told Reuters on condition of anonymity.
Blume will take over on September 1 and will continue to serve as CEO of Porsche AG as the company moves forward with a planned IPO later this year. Blume has held many positions within the Volkswagen Group, starting as an intern at Audi in 1994, where he rose to head of production. He also worked at SEAT and Volkswagen before moving to Porsche. He became Chairman of the Board of Porsche in 2015 and a member of the Board of Management of the Volkswagen Group since 2018.
“Oliver Blum has proven his operational and strategic skills in various positions within the group and across several brands and has led Porsche AG from a financial, technological and cultural perspective with great success for seven consecutive years. From the Supervisory Board’s point of view, he is now the right person to lead the Group and further enhance its focus on customers and the positioning of its brands and products,” says Pöch.
“Oliver Bloom, together with the entire Management Board, will continue to push for the transformation of the company started by Diess with a leadership culture that makes teamwork a top priority,” the press release said.
Not everyone is sure that this is a wise move by Volkswagen. Analyst Daniel Roeska of Bernstein Research told Reuters that the management of the two companies could “exacerbate the mismanagement. We don’t think investors will like the dilution of the CEO … especially if the IPO was supposed to create more independence from the Volkswagen Group.”
What went wrong?
While Dice has taken an investor-friendly approach, cutting costs and promoting electrification, Reuters says the volatility created by his leadership style has weighed on the company’s market value, which has been on a downward spiral since early 2021. (Quite possible is the global pandemic may also have a hand in this.)
Daniela Cavallo, chairman of Volkswagen AG’s General and Group Works Council, warned that support for extending Diess’ contract will depend on whether he can keep Volkswagen at the forefront of the European car industry. Jörg Hoffmann, president of Germany’s most powerful union, IG Metall, and deputy chairman of Volkswagen’s supervisory board, said: “The dynamics of change in the automotive industry are enormous. The decisions made today will allow us to maintain the momentum and use the lead we have built up.”
Dies was clearly not seen as a friend to the workers who assemble all the cars for the Volkswagen Group. Furthermore, the Porsche and Piech families cannot be happy to see the value of their holdings decline, even if Diess ultimately had little control over the computer chip and supply chain problems.
In Europe, Volkswagen leads electric vehicle (EV) sales with roughly 25% market share compared to Tesla’s 13%, but with Giga Berlin starting to ramp up production, some at the company are nervous the company won’t be able to continued to lead in market share under Dies.
Reuters also says Dice has had problems with Cariad, the software unit built on his watch. It has consistently gone over budget and is reportedly years behind on its goal of rolling out a new unified software platform that will be included in most cars produced by the Volkswagen Group.
But what remains glossed over is that Diess was always seen as an outsider at Volkswagen, someone who had not risen through the Volkswagen hierarchy. Clearly, there are people like Blume and Ralf Brandstätter who consider themselves “company men” and who may have been a bit annoyed when Diess was brought in and placed above them.
What’s next for Diess?
Courtesy of Volkswagen AG
Dees didn’t seem to expect this to come. Just a week ago, he posted on LinkedIn: “After a really stressful first half of 2022, many of us are looking forward to a well-deserved summer break.” Now it looks like Dies’ summer break will be significantly longer than he expected.
So where does Herbert Diess go from here? He is obviously a man of great energy and great vision. He could provide the spark that led to the creation of CATL when we were responsible for purchasing at BMW. There will likely be many companies that would like to bring him on board to start their own electric vehicle transformation. Stellantis or Renault Group are two I can think of.
There is another intriguing possibility. Many speculate that Tesla is now ready for an experienced business executive to take over from the mercurial Mr. Musk. That would free Elon to pursue other interests, like building colonies on Mars or being the final arbiter of what anyone in the world can or can’t say online. We don’t know if any of this will happen, but if someone tells us that Diess will be taking the reins at Tesla, it’s entirely possible that there will be an uproar in some corners of the CleanTechnica dining room. When we know more, you will know more.
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