Herbert Diess (AP)
Volkswagen AG unexpectedly ousted Herbert Diess, chief executive officer and architect of the auto industry’s biggest electrification effort, after repeated clashes with labor unions prompted his support to with key stakeholders.
Porsche Boss Oliver Blume will succeed Diess within weeks, ending a four-year term in which Diess’ tough leadership style has caused constant friction and reduced his effectiveness. Mistakes in important projects including delays at VWIts software unit also contributed to the shake-up, people familiar with the matter said.
VW’s board is betting Blume will be a more stable and cooperative leader, the people, who asked to remain anonymous, said when discussing private discussions. He will remain head of Porsche, which VW is trying to include later this year in what could be one of Europe’s biggest initial public offerings.
Diess, 63, becomes the latest in a long line of leaders completed by VW’s complex chain of power centers. The skirmishes between the controlling family of the manufacturer, the union, and the German state of Lower Saxony, which held a significant stake, undermined performance and ended careers.
Wolfgang Porsche and Hans-Michel Piech, leaders of the VW majority voting family, said in a joint statement: “Herbert Diess has strategically guided the Volkswagen group towards electric mobility. “It is with his concrete credit that the Volkswagen group is today in a strong position to transform further.”
Diess has been hired from BMW car AG in 2015, right before VW admitted to cheating millions diesel car lie emissions tests. He is credited with driving the most aggressive electrification effort of any former automaker, garnering praise from the likes of Tesla Boss Inc. Elon Musk.
Oliver Blume (AP)
Blume, 54, has been considered a potential successor to Diess for some time, although any change is seen as years. VW’s board extended Diess’ contract around this time last year to 2025.
He will be backed by Arno Antlitz, who will become VW’s chief executive in addition to chief financial officer.
Less than two hours before VW announced Diess was leaving the board, he tweeted a LinkedIn post wishing employees a happy summer break and writing that the company was doing well in the second half of the year. .
Blume started at VW as an intern at Audi, then rose through the ranks at Seat and the company’s eponymous brand before joining Porsche in 2013 as production director. He has managed to largely curb Porsche’s involvement in the diesel emissions scandal that has cost the manufacturer more than 30 billion euros ($30.7 billion).
Diess has initiated an ambitious push into battery production and supported Porsche’s IPO, scheduled for the fourth quarter. At the same time, he occasionally runs into friction with VW unions and other stakeholders. He likened VW to an “oil tanker” with “old structures” that needed to be demolished, and vowed to modernize the company and move faster.
VW’s efforts to develop its own software have also been hampered by internal controversies and delayed key projects, including a next-generation Audi EV line-up and an updated version of the Audi EV. Japan Porsche Macan sport utility vehicle.
While Diess enjoys widespread support among analysts and investors, VW’s share price has fallen in recent months. Its preferred stock has fallen 24% this year, reducing the company’s market value to less than 84 billion euros, a far cry from its target of 200 billion euros set for 2019.
Blume will also be left with the unfinished business of reviving VW’s relevance in the US. Diess has set a goal of doubling its domestic market share and plans to spend $1 billion to revive the Scout brand as a maker of electric SUVs and pickups to reach out to consumers. Ford Motor Co., General Motors Co. and Rivian Automotive Inc.
The VW brand, which turned a profit in the US last year, has long struggled due to a lack of popular SUV models in its lineup. In March, VW committed $7.1 billion over the next five years to improve services in the US and promote the battery research and manufacturing capabilities.
VW’s board of directors convened this week in Chattanooga, Tennessee, where the automaker map SUV and electric ID.4. Scott Keogh, who brought the VW brand back to profitability for the first time in years, tapped to top the Scout brandwhile Pablo Di Si, an Argentinian in charge of VW South America, was appointed as Keogh’s successor as head of the Americas.
