Automotive powerhouse is under pressure to step up its electric-vehicle strategy, and fast.
-- Shortly after taking the most important job in German industry, Volkswagen AG Chief Executive Officer Oliver Blume got some bad news.
Half a world away, Tesla Inc. has continued to expand and has laid claim to leadership in automotive innovation, undermining the German giant’s cash cow Audi — alongside Mercedes-Benz and BMW. Instead of sleek Audi sedans claiming “Vorsprung durch Technik,” Teslas have become the choice for consumers wanting to show they’re on the cutting edge.
The company has already spun off minority stakes in sports-car maker Porsche and its heavy trucks unit Traton SE, and calls for a deeper breakup may grow louder if it starts losing market share in Europe, said Daniel Roeska, an analyst with Bernstein. VW symbolizes the “economic miracle” of Germany’s post-war recovery like few other companies. The ongoing challenges of company and country are still equally intertwined. Both are heavily exposed to the risks posed by China’s growing industrial and political ambitions. The Asian superpower is Germany’s largest trading partner and the source of nearly 40% of VW’s global deliveries last year.
Alongside a smattering of technical advances, German brands focused on heritage — something Tesla and Chinese rivals couldn’t match. At Mercedes-Benz’s stand, the carmaker had a mocked-up electric version of its experimental C111 supercar from 1970. BMW’s Neue Klasse deliberately recalls its ground-breaking line of cars from the 1960s, and VW displayed the GTI electric-car concept, evoking the sporty version of the Golf.
For the 55-year-old Blume, who’s been at Volkswagen since joining a trainee program in 1994, the approach sticks to a familiar playbook: when in doubt, expand. It’s a common strategy for a group that operates 10 brands and counting. VW’s messy transition to electric vehicles has its roots in the emissions-cheating scandal. For years, the company had pushed “clean diesel” as a fuel-efficient alternative to hybrids, only to eventually acknowledge that those claims were bogus and millions of its vehicles had spewed out illegal amounts of pollution.
The situation at Cariad remained so dire that after taking over in September, Blume created a “savior crew” to develop a new strategy and cancelled the five-year financial planning update that fall.