FRANKFURT — It has been a sobering week for Herbert Diess’ electric vehicle ambitions.
Whereas Tesla joined the trillion-dollar club, acquired a landmark order from Hertz and set a new sales record in Europe, the Volkswagen chief introduced a gross sales and deliveries outlook reduce and a drop in quarterly income that drove dwelling one level: Dethroning Elon Musk because the king of electrical automobiles (EV) has bought so much more durable.
“The latest achievements of Tesla are sending a transparent message,” Diess informed analysts throughout a name on third-quarter outcomes on Thursday that ended up being primarily about Tesla.
“We now have to organize for a brand new section of competitors.”
A longtime admirer of Musk, Diess this yr cranked up the stress and outlined plans — together with organising six massive battery factories in Europe — geared toward overtaking VW’s U.S. rival because the world’s high EV vendor by 2025.
However a continual semiconductor scarcity has slowed Volkswagen’s progress, laying naked the drawback quantity automobile makers have in contrast with luxurious rivals that promote fewer automobiles.
And with Tesla value virtually eight instances as a lot as VW whereas promoting simply 5% of the vehicles, and its Model 3 changing into the first-ever EV to guide month-to-month European gross sales, at this stage it is extra about maintaining, not catching up.
“They’re gapping away when it comes to their gross margins. They appear to have a structurally higher entry to chips. They appear to have a structurally higher entry to batteries,” Patrick Hummel, head of European and U.S. Auto & Mobility Analysis at UBS, stated in the course of the name with Diess.
To make issues worse, Musk will quickly begin producing vehicles at Tesla’s state-of-the-art plant in Gruenheide close to Berlin, taking the battle for world automobile dominance to Germany, the place among the first cars have been invented.
Diess, 63, who has steered the carmaker out of its Dieselgate emissions dishonest scandal, stated this can pressure native heavyweights to considerably increase their recreation to cease falling additional behind.
“Tesla Gruenheide is for us for positive a brand new reference, setting new benchmarks relating to velocity, productiveness, additionally lean administration and we now have to regulate ourselves to that,” he stated throughout a name with reporters.
Buddies shut, enemies nearer
Diess, who years in the past bought a suggestion to guide Tesla, has repeatedly singled out Musk’s success on the EV pioneer which has disrupted the auto business’s established methods and whose $1 trillion valuation dwarfs that of Volkswagen.
Although Volkswagen’s shares are up 28% to this point this yr, its present valuation of round 121 billion euros ($141 billion) is a good distance from the 200 billion Diess believes the corporate, which incorporates luxurious manufacturers Porsche and Audi, is value.
Diess, who grew to become Volkswagen’s CEO in 2018, even invited Musk to talk to his managers this month, seen as a transfer to place stress on senior management to maneuver extra shortly to meet up with the U.S. carmaker.
A central a part of that push might be Volkswagen’s Trinity challenge, underneath which the carmaker desires to construct a flagship EV sedan at its Wolfsburg plant from 2025/26 and switch the manufacturing unit right into a challenger to Tesla’s Gruenheide website.
This plan contains reducing the time it takes to assemble EVs to about 10 hours, Volkswagen Chief Monetary Officer Arno Antlitz informed Reuters, about the identical time it takes Tesla to construct its Mannequin 3.
It is also clear that this can imply fewer jobs, which carries the chance of prolonged and painful battles with labour representatives, who historically have wielded vital energy on the world’s second largest carmaker.
“We now have to organize manufacturing for a lot diminished labour in among the strains. We now have to organize for much less complexity, for extra velocity, line velocity,” Diess stated.
Earlier this week, Volkswagen’s new labor boss took Diess to job for being too centered on traders and never invested sufficient within the workforce, which is worried that the EV change will price tens of hundreds of jobs.
CFO Antlitz stated that though each administration and employees could agree on the necessity to overhaul Wolfsburg he acknowledged that discovering widespread floor might be difficult.
“After all there’s the query, as traditional, on ‘how can we get there’ however I am satisfied that we share this similar imaginative and prescient with the works council.”
When requested for remark, a spokesperson for Diess referred to his remarks made on Thursday. Spokespeople for Tesla in Germany weren’t instantly out there for remark.
