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Volkswagen Replaces CEO Herbert Diess After Vehicle Delays & Clashes with Labor Unions

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【Summary】​Volkswagen AG Chief Executive Officer Herbert Diess ceded direct control of the German automaker's main passenger-car brand after clashing with labor unions over production issues affecting two key models. Diess was serving a dual role as chairman of the board of management of Volkswagen Group as well as the chairman of the board of management of the Volkswagen Passenger Cars brand.

FutureCar Staff    Jun 08, 2020 1:05 PM PT
Volkswagen Replaces CEO Herbert Diess After Vehicle Delays & Clashes with Labor Unions
Herbert Diess poses with the Volkswagen ID Buzz electric van at the 2017 North American International Auto Show.

Volkswagen AG Chief Executive Officer Herbert Diess ceded direct control of the German automaker's main passenger-car brand after clashing with labor unions over production issues affecting two key models, Reuters reports.

Ralf Brandstaetter, currently chief operating officer for the VW brand, will take over as CEO allowing Diess to focus on leading the group, the automaker said Monday after a supervisory board meeting, the company said in a statement. 

Diess was serving a dual role as chairman of the board of management of Volkswagen Group as well as the chairman of the board of management of the Volkswagen Passenger Cars brand. Diess decided to assume both jobs after taking over as CEO of the world's largest automaker in April 2018.

Volkswagen's CEO is giving up managing the company's core VW brand in order to concentrate more on the group as a whole, the automaker said Monday. VW's other brands include Audi, Porsche and Skoda.

Herbert Diess served as brand manager at Volkswagen before being promoted to CEO. Prior to joining VW, he worked at rival automaker BMW.

Diess was responsible for many of the recent initiatives at Volkswagen, including the automaker's shift to building more electric vehicles and rebuilding VW's image as a more environmentally friendly company. The automaker has committed billions of dollars to the effort. However, his tenure as CEO of VW was not without controversy.

Diess was partially blamed for the delayed launch of the ID.3, the company's first fully electric car to compete with Tesla. VW blamed the persistent delays on "software problems." The ID.3 was scheduled to be launched this summer. Software problems also delayed the launch of the 8th generation Golf, one of the company's best selling models.

Diess inherited much of the fallout from the dieselgate scandal

In Sept, 2019, German prosecutors charged Diess and Hans Dieter Pötsch with stock market manipulation for failing to inform shareholders of an investigation in the United States that led to Volkswagen's conviction in the 2015 diesel emissions scandal known as "dieselgate."

German law requires that top executives must inform shareholders about any information that can cause huge financial risks and issues for shareholders. 

As a result of the dieselgate scandal, the automaker's stock lost over half its value between June and Oct 2015, after the illegal software was discovered.

Volkswagen admitted to outfitting millions of diesel cars worldwide with software to cheat on emissions tests which caused the company to lose over $30 billion, as well as damaging its global reputation. In total, Volkswagen paid around $34 billion in fines as a result of dieselgate. Deiss was tasked with most of VW's recent electrification initiatives, including the launch of the ID family of fully-electric models.

VW also announced today the departure of Dr. Stefan Sommer, who will be leaving the Board of Management of Volkswagen on June 30. 

Dr. Sommer was responsible for components and procurement at the automaker and was instrumental in the establishment of a joint venture between Volkswagen and Swedish battery maker Northvolt for the large-scale production of lithium-ion batteries in Germany. The factory will help lessen VW's reliance on Asian battery suppliers for its future electric vehicles.

Battery cell production at the plant is scheduled to begin in early 2024 with an initial production capacity of 16 gigawatt hours.

In a statement, VW said Dr. Sommer is leaving "at his own request by amicable and mutual agreement."

In Nov 2019, VW announced its was increasing its spending on electrification and automated driving and digital services by 36%. The new five-year budget for investment in electric vehicles and digitalization totals 60 billion euros ($66 billion), or 12 billion euros a year.

Diess received praise from Tesla Chief Elon Musk last year for his efforts to remake VW into an electric focused brand.

"Herbert Diess is doing more than any big carmaker to go electric," Mr. Musk wrote on Twitter. "The good of the world should come first. For what it's worth, he has my support."

resource from: Reuters

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