Volkswagen boss makes a revelation about Tesla
“There is no greater danger than underestimating your opponent,” said the legendary philosopher Lao Tse once, and Herbert Diess visibly takes this to heart.
The Volkswagen CEO is in full swing in his efforts to catch up with Tesla (TSLA) – Get Tesla Inc report in the fierce race to dominate the electric vehicle market.
‘Move Very Fast’
But Diess does not diss his opponent. On the contrary, as he showed on June 1st in a presentation at the CAR Symposium in Bochum.
The executive said that Elon Musk’s team is “moving very quickly, very focused,” adding that Tesla’s co-founder is “twice as fast as the rest of the industry.”
This isn’t the first time Diess has acknowledged Tesla’s speed and agility. The executive said last month, “We didn’t expect our main US competitor to be so quick and well prepared.”
“It’s going to be tight, but we won’t give up,” Diess said at the Financial Times’ “Future of the Car 2022” conference. “I still see a chance that we’ll be first by 2025. At least second.”
And the company recently sent a love tweet to his Texas-based rival, declaring: “@Tesla Model-Y, don’t we take a second to acknowledge how much you’ve done for the future of electric vehicles? #Say something nice day #drive bigger #driveelectric.”
But Diess is being paid to push Volkswagen into the electrified future. After all, the guy wasn’t named “Best CEO in the World” by CEOWORLD Magazine in 2018 just because he did well with his competitors.
As he said in Bochum: “There’s also a lot… a lot of momentum coming from our side. It will certainly be tight in the next few years.”
During the shareholders’ meeting last month. Diess said he expects Volkswagen’s electric vehicle business to be as profitable as its fossil fuel-powered cars sooner than planned.
The CEO said the company had previously expected to match its internal combustion engine vehicle profit margins with electric vehicle sales in two to three years, but the company has the ability to do so sooner.
“Our resilience strengthened”
Diess did not say when this would happen, but emphasized: “Thanks to good crisis management, we are financially robust and have strengthened our resilience.”
This resilience will come in handy against Tesla. Earlier this year, the automaker delivered the first-ever Model Y sedan made at its Berlin plant.
Meanwhile, Volkswagen announced last month that it had started production of the ID.4 all-electric crossover at a new plant in Emden, Germany.
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And the company plans to introduce an electrified version of the Scout, with production set to begin in 2026.
Diess said at the time that “electrification presents a historic opportunity to enter the highly attractive pickup truck and R-SUV segment now as a group, underscoring our ambition to become a relevant player in the US market.”
HSBC analyst Edoardo Spina had a good feeling for Volkswagen when he recently upgraded the company’s shares to a hold.
“VW’s ID ramp-up issues and overall weakness in China from last year have started to improve, and we expect further strength as the market recovers from ongoing lockdowns in 2H22e,” Spina told investors in a research note. “In Europe, VW expects strong momentum in the EV market and headwinds from disruptions in Eastern Europe and semiconductor shortages are impacting earnings.”
Volkswagen is planning an IPO for sports car brand Porsche, and Spina said it was a “key positive catalyst” in the fourth quarter.
There were stumbling blocks on the way from Diess to EV dominance. In 2019, he had to apologize for using a phrase that echoed the Nazi-era slogan “Arbeit macht frei”.
That same year, Diess and Volkswagen CEO Hans Dieter Pötsch were charged by German prosecutors with stock market manipulation related to the automaker’s diesel emissions scandal.
“Dieselgate” and beyond
The allegations stemmed from the company’s admission in 2015 that it had rigged millions of diesel cars worldwide to cheat on emissions tests.
At the time, Volkswagen said the allegations were unfounded. The charges were dropped in 2020 for a fine of 9 million euros, or about $10 million.
Last month the company agreed to pay around 91,000 British drivers linked to the “Dieselgate” scandal in an out-of-court settlement of £193million or $242million.
And Volkswagen has been criticized for operating a factory in China’s Xinjiang province, where the government has been accused of human rights abuses.
Diess said the company will not be ceasing operations there because “we believe our presence is having a positive impact.”
In addition, German media reports that the company faces an investigation by Brazilian prosecutors over human rights abuses at a large farm it operated in the Amazon rainforest basin under the country’s then-military regime in the 1970s and 1980s.
Volkswagen Brasil, which admitted back in 2017 to working closely with the dictatorship and providing it with “blacklists” of politically suspect employees, said in a statement that it “will contribute to the investigation in a very serious way,” according to La Prensa latina .