VW’s billionaire clan plotted CEO ousting while he was on a US trip

“The departure of CEO Herbert Diess should not be a surprise given how marginalized he had become in recent months,” Philippe Houchois, a Jefferies analyst, wrote in a report. “The timing is unfortunate, and another illustration of dysfunction at VW.”

Spokespeople for VW declined to comment on the events leading up to Diess’s dismissal.

Software woes

Momentum to remove Diess before VW’s summer break started building last weekend, during individual discussions among the eight-member presidium within its supervisory board. Diess was in the US to shore up progress in a market where Europe’s biggest carmaker has long lagged.

While the top executive was away, key representatives of VW’s main stakeholders began contemplating who could replace Diess should tensions within the company worsen. There have been repeated flare-ups, including late last year, when Diess warned the company was at risk falling behind Tesla and mused about major job cuts.

In December, VW overhauled its management board, stripping Diess of some responsibilities while tasking him with leading Cariad, the carmaker’s software unit.

Since then, discord at Cariad has pushed back the scheduled rollout of important new models, including the electric Porsche Macan SUV. His struggle to muster broader support to execute his €89 billion ($131 billion) electric-vehicle and software strategy began to fray support among Porsche-Piech family members.

The successor

During the deliberations of the last week, Porsche CEO Oliver Blume emerged as the heir apparent, with his long history of key operational positions at VW and track record of rejuvenating the sports-car division. As VW’s power players weighed the pros and cons of putting a new leader in charge, they began to tilt toward making a change.

Hours after Diess returned from Chattanooga, he was hit with the decision and given 24 hours to respond. After consulting with legal advisers, he decided it was time to go.

Diess informed VW Chairman Hans Dieter Poetsch on Friday. A meeting of the company’s 20-member supervisory board was called for 4:30 pm in Germany. Fifteen minutes before the start of the meeting, the presidium members informed their respective camps that Diess’s replacement was on the agenda. The board voted unanimously for his dismissal.

Diess, credited with putting in place the industry’s biggest EV rollout, will make way for Blume in just over a month. He’s likely still entitled to be paid in full under his contract through October 2025. Depending on the automaker’s operating results and share performance, the amount could reach more than €30 million.

Bloomberg

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