Previously, Oliver Blume headed the sports car brand VW Porsche. — © AFP
On Thursday, Volkswagen is handing over the reins to new CEO Oliver Blume, who is tasked with managing the German auto giant in difficult economic conditions after four tumultuous years under his predecessor Herbert Diess.
In July, the legendary producer announced his decision to part ways with Diess, who had drawn discontent with his uncompromising ambition to electrify the band.
Blume, current head of sports car brand Porsche, got behind the wheel of Volkswagen at a “very difficult time,” said Matthias Schmidt, an electric vehicle analyst.
Russia’s invasion of Ukraine has not only exacerbated the supply chain problems caused by the coronavirus pandemic, but also introduced uncertainty about energy supplies across Europe.
Economic turmoil comes as Volkswagen is investing tens of billions of dollars in an ambitious transition to electric vehicles, opening many battery factories across Europe.
Meanwhile, the new boss will also be tasked with fixing persistent setbacks in the group’s software division and guiding Porsche’s premium brand towards a difficult stock market entry.
– Electric strategy –
Diess took over Volkswagen in 2018 on a mission to turn the page on the dieselgate emissions fraud scandal.
The Austrian’s response was to kick-start Volkswagen in a reckless move toward electric vehicles, but his often combative style has ruffled the feathers at the outdated automaker.
The 63-year-old has finally lost the confidence of Volkswagen’s main shareholders, the Porsche-Piech family, as problems escalated in the group’s software division, headed by the CEO himself.
His successor, Blume, a longtime Volkswagen employee, intends to take a more conciliatory stance than Diess, hired as an outsider from rival BMW.
“Blum is not known for leading wars. He risks less than Diess,” Ferdinand Dudenhoffer, head of the Center for Automotive Research, told AFP.
Following Diess’ departure, Volkswagen CFO Arno Antlitz was sent in to stress that there would be “continuity” for the manufacturer.
But Bloom has made it clear that he may be more open to extending the life of older internal combustion engines with alternative fuels.
In a recent interview with Automobilwoche weekly, Blume said he sees synthetic fuel as “a smart addition to electric mobility.”
In theory, this “e-fuel”, made from carbon dioxide using renewable electricity, allows traditional engines to run with little to no carbon emissions.
While Diess remains unconvinced of an alternative to gasoline and diesel, synthetic fuel will allow Volkswagen to continue working on the future of internal combustion engines.
According to Dudenhoffer, Blum is unlikely to reverse the electrification plan outlined by Diess.
But the automaker may be moving “a bit away from a purely electric strategy” given the risks of a sudden shift to battery-powered vehicles, he said.
– Legacy –
In the end, the issue is likely to be decided in Brussels, where lawmakers have backed a ban on new non-electric cars from 2035.
Blume may also chart a different course in software. While Diess spearheaded an ambitious effort to almost entirely in-house development, Blum may have been open to bringing in more outside vendors.
“It’s a huge profit center, so they want to keep it all inside the company,” Schmidt said, but the analyst pointed out that “it takes people to run a software company, not motorists.”
Meanwhile, Bloom is likely to back Volkswagen’s new focus on the US market after years of battling over dieselgate.
The move will be linked to Volkswagen’s decision to invest heavily in developing and manufacturing its own batteries, thereby reducing its reliance on suppliers in China.
“In a way, this can be a Diess legacy, and running electrification after a diesel engine are probably the two biggest legacies to leave behind,” Schmidt said.