Volkswagen turns the page with the arrival of Oliver Blume at the controls

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

Volkswagen entrusts its future to a new boss on Thursday, Oliver Blume, tasked with steering the auto giant in a difficult economic environment, after Herbert Diess’ four-year tumultuous tenure.

Product of the house broken in the mysteries of the group, the new CEO is not here to turn the tables: he must continue with the main lines of the strategy led by his predecessor: the turn towards electric and connected mobility.

“We have made the right strategic and technological decisions within the executive board, around Herbert Diess,” Blume told local daily Braunschweiger Zeitung on Thursday. “Now is the time to put it into practice” ensuring “financial soundness”.

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

His predecessor was mainly due to his dismissal in July due to repeated tensions with staff representatives and management, fueled by his direct and provocative style.

However, Blume comes to the controls at “a difficult time” in the life of the leading European manufacturer, observes Matthias Schmidt, an analyst specializing in electric cars.

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

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

The electric and connected revolution involves 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, have chosen a familiar face.

Arriving at VW in 2015, current Chairman of the Porsche Board of Directors, Oliver Blume was even born in Braunschweig, a few kilometers from the group’s historic headquarters in Wolfsburg (center).

“There will be changes, but in a relatively smooth way”, summarizes for AFP Ferdinand Dudenhöffer, director of the Automotive Research Center. “Blume is not someone who fights wars.”

In detail, Mr. Blume could stand out on the issue of synthetic fuels.

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

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

“We will keep pace with the electric strategy, and possibly accelerate,” but these fuels are “complementary” and have certain “advantages” in particular for transportation and compatibility with existing gasoline pumps, Oliver Blume said.

“Volkswagen will move away a little from the purely electric strategy” in the face of the risks of a too radical turn, deciphers Ferdinand Dudenhöffer.

– Homemade batteries –

If the use of synthetic fuels on a large scale “is not feasible” in the state, talking about it allows us to imagine a future for the combustion engine, according to the expert.

The sensitive issue will be decided in Brussels, which is currently working on a possible ban on new non-electric individual cars from 2035.

Oliver Blume could weigh in on an extension of engines using alternative fuels.

At the risk, on the contrary, of not being able to advance “fully” in electrics like Tesla, the American competitor that is a pioneer, experts warn.

Another project for Mr. Blume: software.

Although Herbert Diess wanted to make significant profits by doing the encoding in-house, his successor could rely more on vendors.

Because “for software to work, you need coders and not automotive engineers,” sums up Mr. Schmidt.

The new CEO, for his part, should confirm the decision to focus more on the US market to limit reliance on China, seeing it on Thursday as “a margin of progress”.

The in-house manufacturing of battery cells, a key component of electric cars, will remain at the core of the strategy.

For its six European battery megafactory projects with a capacity of 40 GWh each, and one in the United States, Volkswagen has created a dedicated “PowerCo” entity, which could receive outside investors.

“That may well be the legacy of Diess, as well as the pioneering electrification after the dieselgate scandal” of rigged engines, according to Schmidt. It is up to his successor to make the legacy bear fruit.

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