Elon Musk Responds To Reports That Software Issues Led To Volkswagen CEO Herbert Diess' Departure

Reports of Volkswagen AG VWAGY CEO Herbert Diess' exit from the company trickled in on Friday. A report by Automobilwoche suggested that the move was precipitated by disgruntlement among the Porsche and Piech families, which control the majority of voting shares at Volkswagen.

What Happened: Diess, though strategically brilliant, was found wanting in leadership and implementation by the families, the report said. The failure of software company Cariad served as the last straw. The accusation that group companies Porsche and Audi jeopardized the project by making special requests for the software did not reportedly go down well with Porsche’s management.

The fact that Diess first discussed the solution for Cariad at a company meeting even before discussing it with the supervisory board was resented by the board, the report said, citing an insider.

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Software – Key Differentiator: Commenting on the report, Cathie Wood-run Ark Invest analyst Brett Winton said Diess’ planned departure hasn’t much to do with the group’s ongoing software issues, but rather to Diess attributing some of the software blame to Audi and Porsche’s software customization requests.

“A sure sign that the software issues will magically resolve with the change in leadership,” he added.

Winton noted that OEMs still see software as a “cosmetic cost-center to be shrink-wrapped around the vehicle design.” It’ll be their death, he warned.

“Software is now the key performance differentiator,” Winton said. Every vehicle and the entire product strategy needs to enable and empower the software at its core, he added.

When YouTuber Whole Mars Catalog asked Tesla, Inc. TSLA CEO Elon Musk for his thoughts on Volkswagen letting go of Diess, the latter said software will be pivotal for the industry moving forward.

Musk’s response, though not direct, underlines the importance of software for future cars, which would come with autonomous driving, and delivery of service through over-the-air updates, among other things. Tesla is gearing for broader availability of its full-self-driving software suite, which is currently in advanced beta testing.

Photo: Courtesy of La Moncloa - Gobierno de  and Steve Jurvetson on flickr