The reasons for an unexpected dismissal and its meaning on the map of the automotive industry

Herbert Diess, still CEO of the VW Group, in front of an ID.3, the big bet of his management since 2018. REUTERS/Wolfgang Rattay/File Photo

The automotive world was shaken last Friday, when the decision of the Supervisory Board of the Volkswagen Group, of early termination of the contract with Herbert Diess, CEO of the company since 2018and who had recently renewed his agreement to remain in charge of the company until 2025.

The families Porsche and Piech, owners of the majority shareholding in Volkswagenwere the ones who supported Diess at the head of the Group despite the attacks that it received from several fronts, among them a very strong one such as the union, which is part of the board of directors of the council. However, that support was eventually gone, and the decision was made without even having Diess in Germany, since was in the US, visiting the VW SUV factory in Chattanooga, Tennesseewhen informed of the decision.

In addition to his clashes with union representatives, Diess had on his shoulders the weight of the electric transformation of the group’s brands, for which he had an aggressive resource optimization strategy, the entry into public offering of Porsche investors, and the development of the single digital platform for all products of the brands that make up the VW Group.

Herbert Diess with Elon Musk, with whom he has an excellent relationship, but also takes him as a model to watch and imitate in the industry
Herbert Diess with Elon Musk, with whom he has an excellent relationship, but also takes him as a model to watch and imitate in the industry

But there was something else that never finished pleasing in the company, and this was his high public profile. Diess never hid his admiration for Elon Musk and how he led Tesla to absolute leadership in electric mobility. He was harshly criticized even for being photographed with him on several occasions, for which the German executive always had a similar response.

“I am often asked why I keep comparing ourselves to Tesla. I know this is upsetting to some, but even if I don’t talk about Elon Musk anymore, he will still be there and revolutionizing our industry and becoming more and more competitive.”said in another interview published by automotive news in October 2021.

The comparison with Tesla was not casual or capricious. Diess wanted to position VW as the leading car brand in electrification in the short term, and for this, he had raised the need to improve the manufacturing mode. His comparison was Tesla built a car in just 10 hourswhile, as he himself said, Volkswagen’s main electric car factory demand more than 30 hours per unit. Diess intended to reduce that time to 20 hours for this year.

Diess's big bet was the total electrification of Volkswagen.  A difficult decision to make at a time of such great changes
Diess’s big bet was the total electrification of Volkswagen. A difficult decision to make at a time of such great changes

“I am worried about Wolfsburg. I want your children and grandchildren to continue to have a secure job here with us in Wolfsburg. That is my goal today. That’s why I’m here”he said last fall, during a speech at Volkswagen’s most famous plant. The problem was the way he said things, because he also had the idea to compare VW to an “oil tanker”, with “old and embedded structures” that need to be dismantled, promising to modernize the company and move faster.

But beyond the anecdotal details, what can actually be seen behind this shocking news is that the automotive world is changing rapidly at this timeand not only This at the head of the Volkswagen Group had to face these new realities, to have Tesla as a competitor, not to have microchips and be forced to slow down the pace of production, and especially having to decide whether to go for electrification alone or other sustainable fuel options.

This decision is not easy, it is being taken by all the OEM companies in the world, and it brings with it consequences that are not yet very precise but probable of inevitable reductions in the workforce that they will have to face in a few more years. The electric car has fewer parts, it dispenses with motors and transmissions, and that will force the plants of all the brands that are in charge of that production in particular to be transformed.

Oliver Blume, until Friday CEO of Porsche, will succeed Herbert Diess at the head of the VW Group from September
Oliver Blume, until Friday CEO of Porsche, will succeed Herbert Diess at the head of the VW Group from September

The appointment of Oliver Blume as the new leader of the VW Group is not accidental either. Beyond its seniority in Porsche, where he was CEO until last Friday, is one of the main promoters of the development of synthetic fuels known as e-fuels, which would allow cars with internal combustion engines to continue to exist beyond 2035when the manufacture of impellers that use petroleum-derived fuels is prohibited.

Whether or not full electrification ceased to be Volkswagen’s master plan cannot be known from the outside. But beyond the high profile and ways of Diess, a sudden exit like this, which will take effect on September 1, could lead to the belief that there may have been a reading of costs, feasibility and market, which would lead to deciding a change of courseAnd that change was not possible with the man who wanted to beat Tesla and turn VW into the number 1 company in the sale of electric cars in the world.

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