The Volkswagen Group in a press release on July 22 announced that Herbert Diess, who has been the CEO of the group since 2015, will leave the company and will leave the company on September 1. He will be succeeded by Oliver Blume, current CEO of Porsche AG.
Hans Dieter Pötsch, Chairman of the Supervisory Board, gave Diess a glowing testimonial as he pushed him overboard. “During his tenure as Chairman of the Board of Directors of the Volkswagen Passenger Cars brand and as Chairman of the Board of Directors of the Group, Herbert Diess played a key role in advancing the transformation of the company. The Group and their brands are viable for the future, their innovative capabilities and winning power are strengthened Mr. Diess impressively demonstrated the speed and consistency with which he was able to carry out large-scale transformation processes reach. He not only steered the company through extremely turbulent waters, but also implemented a fundamentally new strategy.”
Diess was hired to pull Volkswagen’s chestnuts out of the fire after they were caught rigging their diesel-powered cars to evade emissions regulations, and he did an admirable job. But sources with knowledge of the matter told Reuters that the Porsche and Piech families, which own more than half the voting rights and a 31.4% stake in Volkswagen, pushed for a change at the top. “Diess was incorrigible. He significantly changed Volkswagen for the better. But his communication was miserable,” a source who asked not to be identified told Reuters.
Blume will take over as of Sept. 1 and will continue as CEO of Porsche AG as the company moves forward with an IPO planned for later this year. Blume has held numerous positions within the Volkswagen Group, starting as a trainee 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 Directors of Porsche in 2015 and a member of the Board of Directors of the Volkswagen Group since 2018.
“Oliver Blume has demonstrated his operational and strategic skills in various positions within the group and across brands and has managed Porsche AG from a financial, technological and cultural point of view with great success for seven consecutive years. From the point of view of the Supervisory Board, he is now the right person to lead the group and to further improve the customer focus and the positioning of its brands and products”, says Pötsch.
“Oliver Blume, together with the entire Board of Directors, will continue to advance the transformation of the company initiated by Diess with a leadership culture that makes teamwork a top priority,” the statement said.
Not everyone is convinced that this is a wise move by Volkswagen. Bernstein Research analyst Daniel Roeska tells Reuters that leading both companies could “make a bad governance situation worse.” We don’t think investors will like CEO dilution…especially if the IPO was supposed to create greater independence for the Volkswagen Group.”
What went wrong?
While Diess took an investor-friendly approach, cutting costs and encouraging electrification, Reuters says the instability created by his leadership style weighed on the company’s market value, which has been on a downward spiral since the start of 2021. (It’s entirely possible that the global pandemic may have played a part as well.)
Daniela Cavallo, chairman of Volkswagen AG’s general and group works committee, had warned that support for extending Diess’ contract would depend on whether he could keep Volkswagen at the forefront of the European car industry. Joerg Hofmann, chairman of Germany’s most powerful trade union, IG Metall, and vice chairman of Volkswagen’s supervisory board, said: “The dynamics of change in the automotive industry are enormous. The decisions taken today will allow us to maintain the pace and take advantage of the leadership we have achieved.”
Diess was clearly not perceived as a friend of the workers who assemble all the Volkswagen Group cars. Moreover, the Porsche and Piech families cannot have been happy to see the value of their holdings decline, even if Diess ultimately had little control over the supply chain and computer chip issues.
In Europe, Volkswagen is ahead in electric vehicle (EV) sales, with about 25% market share compared to Tesla’s 13%, but with Giga Berlin starting to ramp up production, some within the company are nervous that the company can’t. to continue leading the market share under Diess.
Reuters also says Diess had problems with Cariad, the software unit built into his watch. It has consistently gone over budget and is said to have been years behind its goal of launching a new unified software platform that would be incorporated into most vehicles produced by the Volkswagen Group.
But what is not said is that Diess has always been seen as an outsider at Volkswagen, someone who did not rise through the Volkswagen ranks. Clearly there are people like Blume and Ralf Brandstätter who consider themselves “company men” and who might have been a bit upset when Diess was brought in and installed over them.
What’s next for Diess?
Courtesy of Volkswagen AG
Diess apparently didn’t see it coming. Just a week ago, he posted on LinkedIn: “After a very stressful first half of 2022, many of us are looking forward to a well-deserved summer break.” Now it looks like Diess’ summer vacation will be considerably longer than he expected.
So where does Herbert Diess go from here? He is obviously a person of enormous energy and great vision. Perhaps he gave the spark that led to the creation of CATL when we took on the task of buying from BMW. There will likely be many companies looking to bring it on board to start their own electric vehicle transformation. Stellantis or Renault Group are two that come to mind.
There is another intriguing possibility. Many have suggested that Tesla is ready for an experienced business executive to take the reins from the mercurial Mister Musk. That would free up Elon to pursue other interests, like building colonies on Mars or being the final arbiter of what everyone in the world can or can’t say online. We don’t know if any of this will happen, but if someone told us that Diess would take the reins at Tesla, there’s a good chance there would be applause in some corners of the CleanTechnica executive dining room. When we know more, you will know more.
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