Software delaying Volkswagen electric cars makes Diess lose his job

The software of the new electric cars of the Volkswagen Group came bringing head to Herbert Diess from the problems that it already caused in its day in the Volkswagen ID.3. The unit in charge of its development, Caryaddirect responsibility of the former CEO of the Group, has not been able to solve the problems and has forced to delay the arrival of new models of Porsche, Audi and Bentley. This situation, unsustainable for the owners of the German group, has been responsible for the departure of Herbert Diess from his position, a clear demonstration of the change that the automobile industry is undergoing.

At its meeting last Friday, the Volkswagen group’s supervisory board appointed Oliver Blume, current president of Porsche, as the new president of the German consortium, replacing Herbert Diess. The chairman of the supervisory board, Hans Dieter Pötsch, thanked Diess for the work carried out at the head of the group and the Volkswagen brand in advancing the transformation of the company, but did not specifically allude to the causes of this dismissal.

Diess’ departure as CEO is due to the successive and serious delays in the development of the software that will manage all its electric cars, which has delayed the scheduled launch of new models from Porsche, Audi and Bentley. An untenable situation considering the precedents of a software whose first errors postponed the initial launch of the first electric cars of the ID family and in addition some of its customers are still suffering who have to take their vehicles to dealers to receive updates due to problems. to perform these through OTA (over the air).

software electric cars volkswagen dismissal herbert diess-interior1
Herbert Diess’s latest plan was to invest 89,000 million euros in software and electric vehicles over the next five years, generating 10,000 new jobs.

Diess, direct manager of Cariad, the unit that develops the software, neither did he know how to make allies in the Group and became increasingly isolated under a tough and demanding leadership style. His effort to transform the company into the leader in electric vehicles repeatedly clashed with union leaders, warning that Volkswagen was far behind Tesla in many aspects, such as the productivity and efficiency of its production centers, for which it needed to eliminate thousands of jobs. Finally, bugs in the software have been eroding Diess’s support from the powerful Porsche and Piech family, responsible for making the most important decisions.

In December, Volkswagen overhauled its board of directors, stripping Diess of some responsibilities and giving him a critical task: change caryad. While many of the bugs have since been ironed out, Diess was not able to make the problems completely go away. Quite the contrary.

Cariad has delayed the launch of major new models for the group, including the electric Porsche Macan, a high-volume sports car in light of the brand’s plans to launch a public offering to go public in the fourth quarter of this year. Audi’s new line of Artemis electric vehicles has been delayed for around two years and won’t see the light of day until 2027. And it’s possible that BentleyVolkswagen’s luxury firm, may not go fully electric by the end of this decade as planned, also due to software problems, it has been reported. Automobilwoche earlier this month. “Taking control of Cariad appears to have been the undoing of Diess,” said Matthias Schmidt, a German independent auto industry analyst.

Volkswagen’s solutions to the challenges presented by the new automobile industry reflect its status as industrial giant: It is able to invest a lot of money and a lot of manpower to solve many problems. But modernizing the company for the digital age requires attracting talent and developing skills that are outside of their traditional areas of expertise. Drivers are increasingly demanding faster, more usable and intuitive user interfaces and efficient and reliable connected services that could create new revenue streams, if done right.

“Software is the key to the future,” Tesla CEO Elon Musk tweeted when asked by one of his followers about Herbert Diess leaving Volkswagen. Both directors have always shown their mutual admiration and friendship beyond the competition between their respective companies.

Diess was not lacking in ambition. His latest investment plan required €89 billion in software and in electric vehicles in the next five years. Last year, Volkswagen announced that it would eventually create 10,000 jobs within its software development operation alone, making it one of Europe’s largest companies in this space. Just three weeks ago, he was proposing major investments in China to employ several thousand software engineers in the world’s largest car market.

It was also clear what was at stake. Diess compared the new automobile industry with mobile telephony, referring to Nokia’s lack of response when Apple’s iPhone emerged. For him, autonomous driving, based on software and communication, would cause an even more important transformation than the electrification of propulsion systems.

Volkswagen now turns to the CEO of Porsche, Oliver Blume, trusting him to be more of a team player and astute navigator within the various factions of the group. Unlike Diess, Blume does not have a huge presence on LinkedIn or Twitter, but he has shown that can recognize industry trends. The former Audi trainee who has run Porsche since 2015 defended the development of the Taycan, the brand’s first all-electric model, which now outsells the 911.

Oliver Blume.
Oliver Blume will combine his new responsibility at the head of the Volkswagen group with the presidency of Porsche.

Getting Volkswagen out of its quagmire will not be easy. Schmidt said that Blume needs to bring about a deeper cultural change in Cariad to make things work. In the analyst’s opinion “they should have looked for the best people in Silicon Valley because you can’t lead in software with people from the automobile industry itself”.

Blume, whose appointment will take effect on September 1, will combine his new responsibility at the head of the Wolfsburg-based group with the presidency of Porsche, which is studying a possible IPO.

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