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InvestmentsWhat's driving the latest Volkswagen power struggle? By Reuters

What’s driving the latest Volkswagen power struggle? By Reuters

¬© Reuters. FILE PHOTO: Herbert Diess, CEO of German carmaker Volkswagen AG, poses in an ID.3 pre-production prototype throughout the presentation of Volkswagen’s new electrical automobile on the eve of the International Frankfurt Motor Show IAA in Frankfurt, Germany September 9,

By Christoph Steitz and Ilona Wissenbach

FRANKFURT (Reuters) – Volkswagen (DE:) CEO Herbert Diess’ frail relationship with German labour representatives hit a brand new low this week with disagreement over how radical the overhaul at Europe’s high carmaker have to be in its quest for electrical car dominance.

While either side tried to show unity at a employees assembly on Thursday, the first at Volkswagen’s big Wolfsburg plant in practically two years, there isn’t any assure the dispute will be mounted shortly, if it may be mounted in any respect.

In reality, Volkswagen’s four-member mediation committee is planning to debate Diess’ future quickly, sources have stated, creating uncertainty round the carmaker’s management lower than 4 months after the CEO’s contract was prolonged.


Daniel Schwarz, analyst at Stifel, thinks so.

“His consistent EV (electric vehicle) strategy makes sense. He has a stronger focus on capital markets than his predecessors, which is benefiting the Volkswagen share,” he stated.

While Volkswagen’s most popular shares have gained simply 6% since Diess took over as CEO in April 2018, its frequent inventory – greater than half of which is owned by high shareholder Porsche SE – is up 68%.

Diess, whose contract was prolonged till 2025 in July, is presently hammering out the firm’s subsequent funding plan to 2030, a course of that often causes friction amongst stakeholders annually.

Bernstein analyst Arndt Ellinghorst is extra sceptical.

“Diess stands for the radical change the company must go through after the dieselgate emissions scandal. What he does not yet stand for is implementation.”

Porsche AG boss Oliver Blume, Audi CEO Markus Duesmann in addition to Volkswagen model CEO Ralf Brandstaetter have all been named as potential successors in the occasion that Diess will get the boot or decides to depart the multi-brand group.

“You need someone in Wolfsburg who understands the company and who is prepared to engage with the works council. I don’t know if Oliver Blume is the right person,” Ellinghorst stated. “Ralf Brandstaetter could possibly be better at that.”


Volkswagen, the world’s second largest carmaker after Toyota, is beneath strain to adapt to large trade shifts, most notably the rise of EVs and self-driving automobiles.

Both areas are outdoors the consolation zone of German carmakers, together with Volkswagen, who’ve lengthy dominated the age of inner combustion engines.

Enter new rivals, notably Tesla (NASDAQ:), which have began with a clear sheet of paper and revolutionised manufacturing and provide chains.

“In the world of combustion engines we are leading. We’re good at that, maybe better than everyone else,” Diess advised employees on Thursday. “But in the new world … we are facing competition Volkswagen has never seen before.”



The 63-year previous has been repeatedly criticised for his communication model that labour representatives say shows a scarcity of curiosity in the considerations of 675,000 staff round the world.

Diess, particularly, drew the ire of employees when he advised Volkswagen’s supervisory board in September that roughly 30,000 jobs had been in danger if the firm was too sluggish in its EV transition, sources have stated.

The identical goes for a few of Diess’ social media actions, together with a video https://twitter.com/Herbert_Diess/status/1420700739677179906 of him thanking employees for report first-half outcomes whereas browsing on the canal subsequent to the Wolfsburg headquarters.

“The way you have presented yourself in recent months I do wonder whether you’re actually aware of the situation at our site here and how this is being perceived by the workforce,” works council head Daniela Cavallo stated on Thursday.



The U.S.-based carmaker has proven it isn’t simply the variety of automobiles you make, however know-how and software program that decide success in the new auto world.

Tesla, which bought 627,350 autos in the first 9 months of 2021, is price $1.2 trillion, greater than eight instances Volkswagen’s 124 billion euros ($143 billion) market valuation, regardless that the German group bought eleven instances as many automobiles in the interval.

Tesla can be producing extra shortly and effectively, with Diess anticipating the U.S. firm would require simply 10 hours to assemble every car at its deliberate Gruenheide plant close to Berlin, anticipated to open later this 12 months.

“In (our plant in) Zwickau we’re at more than 30 hours, we hope to achieve 20 hours next year – our original project target was 16 hours,” Diess stated.


At 31.4%, Porsche SE, which is 50%-owned by the Porsche and Piech households, is Volkswagen’s largest shareholder, whereas Qatar and the state of Lower Saxony, the place Volkswagen relies, personal 14.6% and 11.8%, respectively.

Between them they maintain greater than 90% of the voting rights, however on Volkswagen’s supervisory board – which approves key strategic choices – labour representatives maintain half of the 20 seats as a part of Germany’s co-determination precept.

In the uncommon occasion of a stalemate on the board, the chairman – on this case Porsche SE CEO Hans Dieter Poetsch – holds sway.

($1 = 0.8665 euros)


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