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Herbert Diess's Sacking Shows What Happens When You Mess With the Establishment

Herbert Diess was far from a perfect leader at Volkswagen. Still, he is credited with the company’s successful turnaround following the Dieselgate fallout. Diess also pushed Volkswagen to become an EV powerhouse and made many enemies in the process.
Porsche CEO Oliver BlumeVW CEO Herbert DiessVW CEO Herbert DiessVW CEO Herbert DiessVW CEO Herbert Diess
Volkswagen’s board ousted Herbert Diess, the man tasked with running the company since 2018. The news was a total surprise to everybody, starting with the media and ending with Herbert Diess himself. To be sure, Diess’s position within the company was long-time contested. Still, the moment chosen for his sacking couldn’t be less inspired. Two hours before he was forced to resign, Diess expressed his gratitude for Volkswagen’s successful steps this year in a vacation message. Little did he know that the vacation would be longer than expected.

“After a really stressful first half of 2022 many of us are looking forward to a well-deserved summer break,” wrote Diess on LinkedIn on Friday. “So, thank you for all your efforts and congratulations on the incredible achievements in most of our business areas, I am very satisfied with our performance. Enjoy the break — we are in good shape for the second half!”

Not only Diess was surprised to be shown the door, but the Volkswagen Group executives also precipitated this without a plan B in place. While Oliver Blume was earlier mentioned as a possible successor to Diess, he is currently tangled up at Porsche in a complicated IPO process. He cannot leave Porsche in the middle of this delicate affair, and having him run both the Porsche brand and Volkswagen Group is already making investors very nervous.

While Herbert Diess is the man who pivoted Volkswagen away from the Dieselgate scandal and into an EV future, he made powerful enemies along the way. For all his strategic thinking, Diess was a horrible communicator, and this was enough to put him on a collision course with the labor union leaders and the company’s powerful supervisory board. Only last year, Diess’s power struggle with Daniela Cavallo, the head of the works council, ended with him under supervision.

It was the powerful Porsche and Piech families, who own over half the voting rights and a 31.4% equity stake in Volkswagen, who saved Diess back then. If the Volkswagen workers had it their way, Diess would’ve been long gone. The state of Lower Saxony, another major Volkswagen stakeholder, also lost its taste for Piech over the past year. But Diess’s course manner irritated even his previous saviors. According to Automobilwoche, it was precisely the Piech and Porsche families that pushed for the removal of Herbert Diess.

Diess’s clash with the labor union leaders came after Volkswagen’s CEO warned that the Group would be forced to lay off 30,000 workers if it didn’t successfully transition to electrification. But building electric vehicles requires fewer workers because EVs use much fewer parts, so you understand the conundrum for the union leaders. Diess’s obsession with overtaking Tesla is what ultimately prompted his demise.

It appears that the Cariad blunder was the final straw. The software arm of Volkswagen Group was supposed to deliver the software needed to transition the German carmaker’s fleet to the autonomous driving era. Earlier this month, it was revealed that Cariad could not deliver on its promise, and key flagships at the most profitable companies like Porsche, Audi, and Bentley had to be delayed for years. This is a disaster for the company, even though Diess tried to deflect the blame toward Porsche and Audi, which made repeated special requirements for the software.

The union won eventually, especially as Diess’s successor, Oliver Blume, is seen as a “consensus man.” He is much better than Diess at bringing everyone on the same page. Still, he ultimately lacks the strategic thinking of the man he replaces. Oliver Blume also pushed for developing the e-fuels facilities and is already in hot water because of this. A Porsche-gate is brewing in Germany over Blume allegedly colluding with Germany’s finance minister Christian Lindner to push e-fuels in the government’s coalition agreement.

As for Herbert Diess, he is already auctioned off by other carmakers with a more focused vision toward electrification. The Chinese startup NIO is one of them, although many suggested Diess would be a nice addition to Tesla. He could ultimately stay at Volkswagen. After all, ex-CEO Bernd Pischetsrieder, who remained with the company from his dismissal in 2006 until 2012, set a precedent. Diess has a contract with Volkswagen until his 67th birthday in October 2025.

 
 
 
 
 

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