The visionary who wanted to change Volkswagen just a little too quickly

Then suddenly it was over. Speculation about the departure of Volkswagen CEO Herbert Diess had been a recurring phenomenon for years. Again and again the battle flared up between the eccentric Tesla fan and the very powerful works council at Volkswagen. About a more efficient shift system. Or about job losses.

So far, Diess has always managed to stay on. But on Friday evening it became clear that he had not survived a vote within the supervisory board – where the works council also has input. Diess will leave within five weeks as CEO of Volkswagen, one of the largest industrial companies in Europe (660,000 employees, turnover over 250 billion euros). An official reason for the departure has not been disclosed, in a statement supervisory board chairman Hans-Dieter Pötsch kept it as a thank you to Diess. Diess himself posted on Twitter a photo of him looking lovingly at the Volkswagen logo and wish everyone a happy holiday.

Despite the brief information, it is clear to Volkswagen followers why Diess has to leave. The position of the Austrian, the architect of Volkswagen’s ambitious electrification strategy, has never been undisputed. At Volkswagen, a power struggle raged almost continuously between the works council (or) and the CEO about the direction of the mega concern.

The OR, led by Daniela Cavallo, has been unhappy with the functioning of the Austrian born for years. According to him, the huge and unwieldy Volkswagen group (also Skoda, Audi, Porsche, among others) had to change radically in order not to perish in competition with Tesla, producer of electric cars.

In doing so, Diess did not shy away from cutting jobs and he also challenged favorable employment conditions. For his change agenda, Diess has so far retained the support of other key supervisory directors, including the influential shareholder families Porsche and Piëch, and the president of the state of Lower Saxony, Stephan Weil. But especially the first lost according to German and international media also their confidence in recent months, after software problems continued to occur with new electric models – a fact that works council chairman Cavallo was happy to draw attention to.

Love for Tesla

Diess’ departure marks the end of one of Europe’s most outspoken and controversial executives. Someone who gave Volkswagen a significant electric push, but ultimately didn’t sit well with the conservative company. The 63-year-old engineer and manager, who made a career at BMW (unique for a Volkswagen CEO), became the boss of the group in 2018. In the aftermath of the dramatic cheating diesel scandal, in which Volkswagen manipulated emissions data for years, Diess decided to fully invest in the electrification of Volkswagen, for which it invested billions.

That is now the norm in the car world, but Diess was there relatively early in 2019 and quickly ruled out other options such as hydrogen cars. According to him, Volkswagen had to work hard. Otherwise, Wolfsburg—the city of headquarters and largest manufacturing facility—would end up like Detroit, the American city that was once the center of the American auto industry but lost that position. Diess liked to praise Tesla founder Elon Musk on Twitter and even went for a ride with him in an electric Volkswagen at Braunschweig airport.

Take the example of this man, who turned the automotive world upside down with innovation and a start-up culture, was his message to the staff.

Outsider Diess actually thought Volkswagen was just a sleepy, bureaucratic mess. The company had to become much more flexible, faster, more agile and more efficient. Diess is said to have said internally in late 2021 that half of the 60,000 employees at the large factory in hometown Wolfsburg could lose their jobs if the company did not work faster on the electrical transformation.

It was all completely new for the staff – and often a bit too radical. Employees didn’t see a visionary, but a hard-core remediator who didn’t seem to respect them. They were not used to that: Volkswagen has traditionally functioned as a mini-society, where the CEO has to weigh up many different interests against each other. The state of Lower Saxony is a shareholder, the trade union IG Metall is powerful, the chairman of the works council is the ‘shadow director’.

riots

What did not help was that Diess also regularly damaged his own image with riots. He went wrong when he kept repeating the slogan ‘Ebit power frei’ at a meeting for managers: whoever makes a profit with his business unit (ebit, in jargon) gets more freedom, was the idea. But it mainly sounded like the ‘arbeit macht frei’ on the gate of Auschwitz.

Diess himself continued to believe firmly in his vision, and at least partially implement it. Under his leadership, Volkswagen launched a large number of new electric models, especially the ID.3. The group also started building several battery factories. And the image of Volkswagen clearly greened and ‘hidden’ under his leadership.

In recent months, there has been no great fuss about the course of Volkswagen. But there were big other problems. For example, the introduction of new software systems for cars has been delayed time and again. Sales of new electric models also lagged in China. Or chairman Cavallo blamed Diess for both, and this time she got the Porsche and Piëch families with her.

Also read this extensive profile of Diess that NRC made in 2021: At Herbert Diess it is always waiting for the next conflict

Together with the other commissioners, the two families eventually decided to appoint Oliver Blume as their new CEO. He currently leads Porsche within the Volkswagen Group. He is expected to continue the electric course – of all luxury brands, Porsche is relatively successful with electric models, such as the Taycan. But it will probably become quieter: Blume was born near Wolfsburg, has worked for the group all his life and knows the culture of Volkswagen through and through.

–