WOLFSBURG, Germany – In July, when Herbert Diess, CEO of Volkswagen, wanted to congratulate the company on a successful first half of the year, he wrote: video about myself racing down the waterway at the company’s headquarters in Wolfsburg in an electric hydrofoil, thanks to the approximately 200,000 VW workers.
“I look forward to meeting you after my vacation,” he said as he sliced lazy donuts in the water, “and will continue to work together towards the success of VW.”
While Volkswagen is still struggling to reclaim the credibility lost in the 2015 emissions scandal and to ward off the growing threat from Tesla, the message was clear: this is not a 62-year-old engineer running a closed business founded in the 1930s. but a dynamic engine and shaker ready to lead the reborn company to a prosperous future.
It has been a bumpy ride since then.
A dire global semiconductor shortage has slowed VW’s production lines, resulting in a 24 percent drop in third-quarter shipments and a sharp drop in profits, which sent share prices down. Workers are increasingly unhappy that the company has extended temporary vacations introduced to prevent layoffs during the coronavirus pandemic.
In the meantime, Tesla, VW’s new leading competitor, has achieved a number of important results. Tesla’s share price has exceeded $ 1 trillion. According to research firm Jato Dynamics, its Model 3 recently became the best-selling car in Europe, the first electric car and the first car outside of Europe. And 100 miles east of Wolfsburg, Tesla’s new $ 7 billion plant could start producing cars in a matter of weeks.
While Volkswagen workers complained about their lack of work, their CEO continued to share his adventures on social media incessantly, riding a Porsche e-bike in the Alps and driving one of the company’s ID.3 electric models around Austria to showcase his battery. longevity.
But when Mr Diess, who turned 63 last month, recently mentioned that Wolfsburg may eventually have to cut up to 30,000 jobs as the company shifts production to electric vehicles, union leaders said workers have seen enough.
“You regularly provide us with beautiful photographs of your excursions, but unfortunately still not with semiconductors,” Daniela Cavallo, Volkswagen’s senior labor representative and member of its supervisory board, told Mr Diss at this month’s employee meeting.
“Stop speculating about job cuts,” she said, “and work with us to work out solutions.”
Since then, a committee of the supervisory board has been convened to address tensions between the two sides, prompting speculation about whether Mr. Diess’s work might be at stake. Lists of possible successors began to circulate.
A rare outsider, handpicked by BMW three years ago to lead the world’s second-largest automaker, Mr Diess (pronounced DEES) is faced with a twofold challenge: regaining the trust of customers who turned their backs on VW in the wake of the diesel scandal, and turning the company into a powerhouse. Electromobility that can withstand Tesla’s growth in the European market.
Since taking office, he has sought to open the company known for its isolated culture to the general public, and has focused on the need for VW to develop its own batteries and software. However, he never seems to miss an opportunity to compare Volkswagen to Tesla, often in a negative light.
Nov 24, 2021 2:56 PM ET
“We need a new mindset at Volkswagen AG to face new competitors,” Mr Diess wrote on his LinkedIn page after Tesla’s CEO Elon Musk spoke at the VW executives road trip in October. “In the past we did a lot right, in the old world Volkswagen is strong, but there are no guarantees for the new world.”
While VW employees may be annoyed by their executive’s style, many others believe that such crude tactics are the only way a company with a tradition (some of its manufacturing facilities are on local historic place registries) will be able to compete with Silicon Valley. run.
“One thing Diess does, which is positive,” he keeps repeating – even when no one in Wolfsburg wants to hear it, “is that Tesla is the benchmark,” said Stefan Bratzel, director of the Automotive Management Center in Bergisch Gladbach, Germany. “He is using Tesla to pressure the company into the necessary transformation.”
But Mr Bratzel warned that Mr Diess needed the support of the company’s employees, who hold half the seats on the 20-person supervisory board, which hires and fires executives and sets strategy. Two more members, representatives of the German state of Lower Saxony, which owns 20 percent of the company, usually vote with the workers.
The situation at Tesla is completely different: Mr. Musk has resisted attempts to organize workers in the company into unions.
The recent sales success of the Tesla Model 3 in Europe has hit Wolfsburg hard. He pushed the Golf, which had been the mainstay of Volkswagen for decades, to fourth place.
“Tesla ends the golf era with its Model 3,” reads the headline of the German national daily Die Welt. “THIS makes Tesla better than VW,” the mainstream newspaper Bild said in an article highlighting the Californian company’s innovation and the speed of bringing new ideas to market.
Mr Diess has repeatedly highlighted the efficiency gap between the two companies. He notes that while Tesla aims to assemble a car in 10 hours at its new plant, workers at Volkswagen’s Zwickau plant take three times as long to produce an electric ID.3 or ID.4. A planned refurbishment of the plant next year will cut production time by 10 hours, but leave it twice as long as Tesla envisioned.
This month, Ralph Brandstätter, head of Volkswagen’s brand division, announced that the company is considering building a new plant from scratch for its Trinity fast-charging electric sedan, which is slated to unveil in 2026. The plant is nothing short of radical for Volkswagen, which built the eighth-generation Golf in the 1930s plant where the first Beetles were produced.
“Within five years, we want to turn this place into a global beacon for the production of the most modern and efficient vehicles,” said Mr Brandstätter.
Employees welcomed the proposal, which Ms Cavallo emphasized was developed with the participation of union representatives with an eye to retaining the workforce in Wolfsburg. But observers noted that the timeline was too long for a company seeking to prove itself agile and activate its reflexes.
“What Tesla has done in two years, Volkswagen says, will take five,” said Mr Bratzel, pointing out how Mr Musk began building his plant in Germany before all the necessary permits were issued. Tesla is about to demolish a new facility.
“Dear German players should be able to rethink their process in order to understand how it can be faster and more efficient,” said Mr Bratzel. “Tesla is very good at it.”