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

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

Volkswagen entrusts Thursday its future to a new boss, Oliver Blume, responsible for piloting the automotive giant in a difficult economic environment, after the four years of tumultuous mandate of Herbert Diess.

Home product broken in the mysteries of the group, the new CEO does not arrive to overturn the table: he should continue the main lines of the strategy led by his predecessor – the shift towards electric and connected mobility.

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

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

His predecessor mainly owed his ousting in July to repeated tensions with staff representatives and the management team, fueled by his direct and provocative style.

However, Mr. Blume arrives at the controls at “a difficult moment” in the life of the first European manufacturer, observes Matthias Schmidt, analyst specializing in electric cars.

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

He will also have to lead the IPO of the Porsche subsidiary this year and resolve the difficulties that are slowing down the development of Volkswagen 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.

Arrived at VW in 2015, current chairman of the board of directors of Porsche, Oliver Blume was even born in Braunschweig, a few kilometers from the historic headquarters of the group in Wolfsburg (center).

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

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

Made 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 by the efficiency of synthetic fuels.

“We will maintain the pace of the electric strategy, and possibly accelerate” but these fuels are “complementary” and have certain “advantages” in particular for their transport and the compatibility with existing gasoline pumps, affirmed Oliver Blume.

“Volkswagen will move away a little from the purely electric strategy” in the face of the risks of too radical a 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 to imagine a future for the combustion engine, according to the expert.

The delicate subject 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 for an extension of engines using alternative fuels.

At the risk, conversely, of not being able to advance “fully” on electric like Tesla, the American competitor who is a pioneer, warn the experts.

Another project for Mr. Blume: software.

While Herbert Diess wanted to make significant profits by carrying out the coding in-house, his successor could rely more on suppliers.

Because “to make the software work, you need coders and not automotive engineers”, summarizes Mr. Schmidt.

The new CEO, on the other hand, should confirm the decision to focus more on the American market in order to limit dependence on China, seeing it on Thursday as “a margin for progress”.

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

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

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

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