Volkswagen turned a page with the arrival of Oliver Blume at the controls

published on Thursday, September 01, 2022 at 10:23 am

Volkswagen on Thursday entrusted its future to a new boss, Oliver Blume, responsible for piloting the automotive giant through a difficult economic situation, after four years of tumultuous command by Herbert Diess.

The product of the house is broken by the mysteries of the group, the new CEO did not come to turn the table: he must continue the main lines of the strategy led by his predecessor – the transition towards electricity and connected mobility.

“We made the right strategic and technological choices within the executive board, around Herbert Diess,” Mr. Blume told the local daily Braunschweiger Zeitung on Thursday. “Now comes the time to practice it” while ensuring “financial stability”.

“One of the main points for me is to rebuild the team spirit” within the group, he added.

His predecessor mainly owed his dismissal in July to recurring tensions with staff representatives and the management team, fueled by his direct and challenging style.

However, Mr. Blume reached the controls of “a difficult moment” in the life of the first manufacturer in Europe, observed Matthias Schmidt, analyst specializing in electric cars.

The new 54-year-old boss will have to navigate a more uncertain context than ever with the war in Ukraine and the persistence of component shortages.

He will also have to lead the IPO of the Porsche subsidiary this year and solve the difficulties that have slowed the development of Volkswagen’s software, which is supposed to be the heart of the car of the future.

The electric and connected revolution includes tens of billions of euros of investment, while the group posted mixed results in the second quarter.

– No “wars” –

To succeed the 63-year-old Austrian, the main shareholders – the Porsche-Piëch family – chose a familiar face.

Arriving at VW in 2015, current chairman of the board of directors of Porsche, Oliver Blume was even born in Braunschweig, a few kilometers from the historic headquarters of the group in Wolfsburg (center).

“There are changes, but in a relatively mild way”, summarized for AFP Ferdinand Dudenhöffer, director of the Center Automotive Research. “Blume is not a man who fights wars.”

In detail, Mr. Blume can stand on the question of synthetic fuel.

Produced from CO2 specifically in the atmosphere using electricity, they allow the use of traditional engines with very low CO2 emissions.

Herbert Diess chose to bet everything on battery-powered cars, unconvinced of the efficiency of synthetic fuels.

“We will continue the pace of the electric strategy, and possibly accelerate” but these fuels are “complementary” and have certain “advantages” especially for their transport and the compatibility with existing fuel pumps, confirmed by Oliver Blume.

“Volkswagen will move slightly away from the pure electric strategy” in the face of the risks of a very radical turn, deciphers Ferdinand Dudenhöffer.

– Home batteries –

If the use of synthetic fuels on a large scale is “unfeasible” in the state, talking about it allows imagining the future for the combustion engine, according to the expert.

The delicate subject will be decided by Brussels, which is currently working on a possible ban on new non-electric individual cars from 2035.

Oliver Blume may weigh in for an extension of engines using alternative fuels.

At risk, on the contrary, not being able to develop “fully” in electricity like Tesla, the American competitor who is a pioneer, experts warn.

Another project for Mr. Blume: software.

While Herbert Diess wanted to make a profit by doing the coding in house, his successor could rely more on suppliers.

Because “for software to work, you need coders and not car engineers”, summarizes Mr. Schmidt.

The new CEO, on the other hand, had to confirm the decision to focus more on the American market to limit dependence on China, seeing it on Thursday as “a margin for development”.

In-house production of battery cells, a key component of electric cars, will remain at the heart of the strategy.

For the six battery factory projects in Europe with a capacity of 40 GWh each, and one in the United States, Volkswagen created a dedicated entity “PowerCo”, which can welcome outside investors .

“Maybe that’s the legacy of Diess, as well as pioneering electrification after the dieselgate scandal” of rigged engines, according to Mr Schmidt. It is up to his heir to bear the fruit of the legacy.

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