🧐 Did Volkswagen Just Lose the EV Race?
Tesla and Volkswagen have been competing for the top EV maker spot for a while now. But one decision by VW may have made them lose the race.
Volkswagen has long been competing with Tesla for the title of the world's biggest EV maker.
But a recent move may have jeopardised its chances to overtake Tesla.
The company just fired the guy responsible for setting up the whole EV plan.
And guess what, it is not the first time it has fired a key employee.
😲 Yet Another CEO Fired
Volkswagen has a history of firing its CEOs before their contract ends.
And history has repeated itself.
The company has fired yet another CEO, Herbert Diess, before his contract was set to end in 2025.
Now, the CEOs before Diess were fired because of Volkswagen's "dieselgate" scandal.
What's that?
You see, the rage about clean cars is not new.
Even before EVs became popular, governments across the world had issued limits on the amount of emissions cars could release.
To fool these agencies, VW had installed "diesel dupes" in their cars. These software-based devices basically detected when they were being tested and showed that the car was emitting low emissions. But the actual amount of emissions that the cars were emitting was much much higher.
Following the scandal, Diess, who wasn't CEO yet, suggested that Volkswagen should focus on electric vehicles.
This would serve two purposes: help salvage the company's image and make it future ready.
Win-win, right?
So, it was no surprise that Diess was made the CEO of the company in 2018.
In fact, his plan was so good that he won the award for "One of the Best CEOs" of 2018.
Not just that, his focus on EVs has led the company to become the fourth largest EV manufacturer worldwide and the largest EV maker in the EU.
So, why fire the guy?
Well, while these achievements were great, there were quite a few problems at the company.
For starters, the company's market share has been dropping in China and the US.
It needs better EV and passenger models to boost market share in these two regions, something Diess has failed to do.
But this problem wasn't as serious enough to fire a CEO over, right?
Yes, normally this probably would have been ignored. But what couldn't be ignored was Diess' leadership style.
Thanks to his leadership style, Diess did not get along well with Volkswagen's workers council, an important organization which represents over 60,000 workers and controls over half the seats in the Volkswagen's supervisory board.
Why did Diess not get along with the workers council?
Well, there are several reasons for this.
Firstly, Diess had suggested that 30,000 workers, which is almost half the workforce, could become redundant due to VW's slow shift to manufacturing EVs.
This obviously didn't go down well with the workers.
What's more, he constantly kept comparing Volkswagen workers with Tesla's. And if you are an Indian, you obviously know how annoying the constant comparison with Sharmaji's son can get.
He told workers that Tesla assembled a car in 10 minutes, while Volkswagen took 30 minutes to do the same task.
Not only did workers not appreciate this comparison, they also disputed the fact.
To make matters worse, he even invited Elon Musk to address Volkswagen's executive.
While this “keep your enemies close” approach might have helped motivate some, it didn't work for Volkswagen's workers council, who probably played a huge role in his ouster.
And his leadership style wasn't the only problem. His public image had also become problematic.
From referring to Nazi quotes, to denying the presence of concentration camps in China, Volkswagen's chief managed to stay in the news but not for good reasons.
What could have been the final nail in his coffin was the disastrous delays in the software division of Volkswagen Cariad, which Diess was heading.
These delays have majorly postponed deliveries of new Volkswagen group cars like Porsche, Audi and Bentley, which obviously didn't go down well with the company's board.
And the fact that he wasn't from the larger Volkswagen group family (he had come to the company from BMW), something that is really important to the company, also played against him.
Which is why his replacement has been chosen from the Volkswagen family: Oliver Blume, who heads Porsche AG at the moment.
👀 Why CEOs Are Fired?
Now, you may think that the reasons given to oust Diess may be trivial, given that he was such an important figure at the company.
But you will be surprised to know that most CEOs get fired because of “soft issues” like mismanaging change, a lack of compatibility with the company, too much talk and no action, and so on.
Even certified business geniuses like Steve Jobs and Jack Dorsey have been shown the door due to these soft issues.
Apple reportedly fired Jobs after tensions arose with the board who thought he was too focused on certain products and wasting the company's resources on them.
Dorsey was fired from Twitter in 2008 because he was apparently too obsessed with his outside hobbies, a fact that annoyed his co-workers.
Though both managed to make a comeback later, their firing highlights that companies are often ready to let go of CEOs doing good work if their attitude doesn't align with the work culture.
Something similar happened with Diess as well. Though nobody can pinpoint what exactly led to VW's board to take this sudden decision, most agree that this firing had been coming for a long time now.
However, with Diess out of the picture, VW's future in the EV industry seems uncertain.
Will the company still manage to become a world leader and beat Tesla? Or will this move help other growing Chinese companies take a hold over the Europe market?
Only time will tell.
⚡ In a line: Volkswagen's EV plans could be jeopardised because it has fired its CEO due to a number of organisational and leadership challenges.
💡 Quick question: Who do you think poses a bigger threat to Volkswagen: Tesla or China?
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