The Exit of VW's CEO

The Exit of VW's CEO

Herbert Diess's grand strategy for defeating Tesla Inc. depended on 10,000 software developers turning Volkswagen into a tech powerhouse by taking the place of jaded factory workers. Instead, Diess was forced out after two years of angry comments from owners of VW electric cars directed at screens and finger-pointing by board members of the second-largest manufacturer in the world. Oliver Blume, the CEO of Porsche, will take over as CEO of Volkswagen this week.

Time for Blume to Bloom

Blume is more of a car guy than a software expert, and he was hired for the position because he is a team player and pragmatist. It's unlikely that Blume would implement significant changes during his first few months in office, which runs the danger of making VW consumers' concerns worse. The dashboard displays of drivers are freezing or sometimes going black. VW is forcing many owners to leave their EV at the dealership for a day in order to receive over-the-air updates for some functions, some of which may be safety-critical. More vehicles are being equipped with infotainment systems that rely on allegedly insufficient software, which jeopardizes VW's standing in both sales and quality rankings.

Oliver Blume, former CEO of Porsche

More than a dozen Tesla owners and testers from seven different nations were contacted by Bloomberg to gauge the size of the technology gap Blume must bridge. Drivers in ID have complained about their cars braking unexpectedly because to a traffic sign detection technology that is so buggy that they usually just turn it off, a smartphone software that is unstable and feature-limited, and issues syncing their phone with their EV wirelessly or with a cord.

Before the diesel-emissions scandal that shook the corporation to its core, Diess began working for VW in 2015. Three years later, as the outsider who could fix the situation, he was promoted to the top position. Almost immediately, Diess wrote a check for an order for batteries for electric vehicles that nearly matched the market value of Tesla at the time.

Technology Limitations

A 47-year-old software developer named Barry Holleran was among the first in Austria to receive an ID. Holleran claimed that his SUV is well-engineered and a decent, comfortable family vehicle, with VW's extensive background in making cars clearly visible. The software, however, is not very good. Updates are scarce, and the navigation system is completely useless.

VW and its more established competitors haven't rolled out software updates as frequently as Tesla. Early last year, Bert Steenbergen exchanged in his Skoda Kodiaq for an ID.4, and in the nearly 20 months since, there have been two updates. VW's long-term plan was for updating their cars every three months, but they now aim to provide customers regular upgrades. It is a learning process that is nimble, as with everything.

In order to compete with Tesla, established automakers like VW are learning to be more flexible on a variety of fronts, switching from tried-and-true internal combustion engines to battery power and from hardware to software.

With its ID models, VW made a bad first impression. Late in 2016, Diess established a software division that got to work creating the vehicles' operating system. Due to early buyers' willingness to wait months for certain capabilities to function, the ID.3 electric vehicle's first deliveries of the series only began on schedule in 2020.

VW launched a corporate-wide initiative that summer that was initially known as Within a few weeks, there was a sudden shift in leadership: Markus Duesmann, the CEO of Audi, replaced the person Diess had chosen to oversee the VW group's digital initiatives. In March of last year, the unit was given the new name Cariad, and in December, Diess was given control over it.

Herbert Diess and Elon Musk sharing a lighthearted selfie moment

VW Automotive Software - Cariad

It turned out to be expensive taking on that duty. According to persons familiar with the situation, Duesmann hired McKinsey to provide VW with a thorough evaluation of the state of its software efforts. The outcomes were dismal. Budgets had exploded, Cariad's decision-making process was deemed to be inefficient, and delays were going to delay the introduction of significant Porsche and Audi models. Blume, who worked for Volkswagen for 28 years and oversaw the launch of Porsche's first electric vehicle, may be planning some changes.

For its mass-market and premium brands, Blume has been more receptive to collaborating with nimble partners who promise quicker solutions, whereas Diess had highlighted the necessity for VW to go it alone and establish its own software platforms. Porsche and Apple have a good working relationship, and Apple has listed Porsche as one of the companies that will integrate a new version of its CarPlay system.

Blume commended Diess' work in developing a strategy for VW during a worldwide senior management conference on Thursday and stated that it is now time to deliver. The automaker's group board of management will be streamlined, with the CEO concentrating on strategy, quality, design, and Cariad.