Germany’s Volkswagen Group VWAGY on Thursday revealed a series of measures that include CEO Herbert Diess keeping his job, overhauling the board, naming a new China leader and the company raising its five-year spending plan for electric mobility to take on Tesla Inc TSLA.
The Big Changes: The 63-year old Diess will continue as Volkswagen Group CEO but his responsibilities have seemingly been reduced. Diess will serve in a new role as the head of the legacy automaker's software unit CARIAD, starting 2022.
The automaker also said Ralf Brandstätter, 53, will join the company’s board and also lead the company’s China business from August. Brandstätter replaces the current China CEO Stephan Wollenstein, who held the post for three years.
Volkswagen also said it will now spend $59 billion (52 billion Euros), up 50% from a previously announced plan to boost its overall electric mobility.
The automaker also set an ambitious target and said it expects that by 2026 one in four vehicles sold would have a battery-electric drive system. Besides Zwickau and Emden, it plans to electrify more sites in Europe.
“The Volkswagen Group and its workforce are now facing the most important years of the transformation. Our starting position is rock solid,” Volkswagen’s Deputy Chairman of the Supervisory Board Jörg Hofmann said.
“We must now continue to [realize] this historical change with a view to the future issues in a fair manner, thereby setting an example for the entire industry. This requires the highest level of focus and speed.”
Diess will continue to be a board member, the automaker said.
Why It Matters: The changes reflect Volkswagen’s aggressive transformation ambitions that were laid out under Diess’ leadership, whose responsibilities are being trimmed following a recent clash with labor leaders in Germany.
Brandstätter, a younger company veteran who joined the automaker in 1993 — straight after securing a degree in industrial engineering — is being handed over more power, starting with China and a say in the board.
China is a key market for Volkswagen outside of Europe, although sales of ID. series of electric vehicle sales in China lag far behind the company’s own target.
Volkswagen earlier this year said it aims to sell between 80,000 to 100,000 ID. in China.
Price Action: Volkswagen’s OTC stock closed 2.61% lower at $31 a share. The stock is down in the past six months but up 53% year-to-date.
Photo: Courtesy of Volkswagen
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