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Volkswagen CEO Dismiss Still Jet Lagged From A Visit To The US

Volkswagen CEO Herbert Diess has managed to survive repeated confrontations with strong worker representatives thanks to the steadfast support of the secretive dynasty that owns the bulk of VW.

But the family came to the conclusion that he had to go after significant project failures and employee unhappiness.

Herbert Diess is likely still entitled to be paid in full under his contract through October 2025 despite being dramatically fired as the CEO of Volkswagen while still jet-lagged from a visit to the US.

When his support from the wealthy Porsche and Piech families started to wane, Volkswagen AG’s bold attempt to remove its aggressive CEO was put in motion.

Volkswagen CEO Dismiss Still Jet Lagged From A Visit To The US

Herbert Diess has managed to survive repeated confrontations with strong worker representatives thanks to the steadfast support of the secretive dynasty that owns the bulk of VW.

But the family came to the conclusion that he had to go after significant project failures and employee unhappiness.

Volkswagen Ceo

Those acquainted with the discussions claim that July 20 was the pivotal day. Diess’s tenure was up, according to the supervisory board’s top committee, which was made up of labor leaders, representatives from Lower Saxony, Germany, and family members.

While still jet lagged from a trip to the automaker’s SUV production in Chattanooga, Tennessee, he discovered this about lunchtime the next day.

At the end of the day, Diess’s downfall is a stark mirror of the difficulties industrial goliath executives face when trying to modernize for the digital age.

VW’s unions wield significant influence even by German standards, where worker representatives account for half the seats on supervisory boards. T

heir leaders and the state are resistant to drastic and expedient change that will compromise jobs.

While Diess was excellent at giving VW a strategic direction, the company’s execution has been uneven and his delivery has ruffled some feathers.

The outsider BMW AG brought in in 2015 failed to amass enough allies and grew more and more lonesome.

He lost his job as a result of delays and cost cut threats when creating software for future automobiles.

According to Philippe Houchois, a Jefferies analyst, “the departure of CEO Herbert Diess should not be a surprise given how sidelined he had been in recent months.”

The timing is bad and serves as yet another example of VW’s incompetence.

Herbert Diess

VW’s spokespeople declined to comment on the circumstances surrounding Diess’s termination.

The eight-member presidium of VW’s supervisory board began private conversations last weekend with the goal of removing Diess before the company’s summer break.

Diess was in the US to accelerate development in a market where the largest automaker in Europe has traditionally lagged.

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Key members of VW’s major stakeholders began thinking about who may succeed Diess should internal tensions intensify while the company’s chief executive was away.

Software Woes

Recurring flare-ups have occurred, including late last year when Diess warned the firm ran the risk of falling behind Tesla Inc. and entertained the idea of making significant employment layoffs.

VW reorganized its management team in December, delegating some duties to Diess while giving him charge of Cariad, the automaker’s software division.

Discord at Cariad since then has delayed the planned release of significant new models, notably the electrified Porsche Macan SUV.

His struggle to muster broader support to execute his 89-billion euro ($91 billion) electric-vehicle and software strategy started to fray support among Porsche and Piech family members.

Oliver Blume, the CEO of Porsche, was identified as the heir apparent during discussions last week due to his long experience of holding important operational posts at VW and his shown success in reviving the sports-car division.

While Blume’s most notable accomplishment is Porsche’s all-electric Taycan, he has successfully led numerous projects across the organization, garnering the support of VW’s different factions.

Powerful figures at VW began to lean in favor of a leadership change as they considered the advantages and disadvantages of doing so.

Diess was presented with the choice and allowed 24 hours to answer after arriving from Chattanooga a few hours earlier.

The Successor

He chose to leave after consulting with legal counsel.

On Friday, Diess notified VW Chairman Hans Dieter Poetsch. The 20-member supervisory board of the corporation was scheduled to convene in Germany at 4:30 p.m.

The presidium members informed each camp that Diess’s replacement was on the agenda fifteen minutes before the meeting began.

He was dismissed by a unanimous vote of the board.

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In less than a month, Blume will replace Diess, who is credited with implementing the largest EV launch in the industry.

He most certainly still has a claim to full payment under the terms of his contract through October 2025.

The sum could exceed 30 million euros depending on how the automaker does in terms of its operating results and stock performance. Source: https://www.ndtv.com/

The Heartz Team.

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