VW CEO goes from thrilling investors to making enemies at home

Missed targets and suggestions of massive job cuts have seen the mood darken at the German carmaker.

Herbert Diess, CEO of Volkswagen AG (VW), speaks during a Bloomberg Television interview at the IAA Munich Motor Show last September.

What should have been a routine Volkswagen AG board meeting this week to approve its spending plans has turned into a de-facto referendum on the leadership of CEO Herbert Diess.

Last March, Mr Diess enthralled investors with his vision for turning into the global leader in electric cars. 

VW would deliver 1m battery-powered and plug-in hybrid vehicles this year, and would soon build half a dozen factories in Europe alone, the chief executive officer proclaimed. The stock shot up by 29% in a single day.

These days, the mood is decidedly less celebratory in Wolfsburg, where Germany’s largest carmaker is based. The group is trailing in targeted deliveries for the year and VW is losing market share in China, its biggest sales region.

Diess has caused outrage among workers and stakeholders by suggesting that massive job cuts might be needed to compete with much nimbler rivals like Tesla, which is putting the final touches on a new factory near Berlin.

The backlash, coupled with a chip shortage that has hurt the entire car industry, has put Diess on the defensive. Worker representatives have publicly chastised the CEO, and while Diess looks safe for now, the conflict has laid bare the tensions at one of Germany’s prime manufacturers as it struggles to chart a path into a battery-powered future.

“VW’s execution of its much-hyped electric vehicle ramp-up needs to materially step up in order for investors to buy into a credible transition story,” said Bernstein analyst Arndt Ellinghorst.

Bloomberg