The recent dismissal of Volkswagen Group CEO Herbert Diess has sent shock waves through the automotive industry, but particularly among those following the rise of electric vehicles. While most other traditional auto company bosses have seemed ambivalent toward the electric vehicle revolution, Diess has been pushing the Volkswagen Group hard toward transformation. Without Diess, will Volkswagen put a clear emphasis on electrification, or will things revert to more traditional drivetrains?
Things were looking good for Volkswagen’s electric vehicle sales in terms of volume. For the first half of 2022, Volkswagen managed to increase its EV deliveries by 27% compared to the same period in 2021, which is equivalent to a total of 217,000 electric cars. More than half of those sales were in Europe, but China has seen tremendous growth, although US sales are clearly not doing as well. Still, a 27% growth in sales volume is commendable given the chip shortage and general supply issues still affecting global auto deliveries, even though Tesla is doing even better.
The supposed reason (according to Automobilwoche) for Diess’s departure was a dispute over software. Porsche and Audi had apparently complicated the Volkswagen Group CARIAD project with special demands. CARIAD is Volkswagen’s attempt to provide a more unified software technology stack for its future cars. This will facilitate more accurate range planning and Level 4 autonomy, among many other advanced features. A connected vehicle platform is an essential aspect of the future of the automobile, whether it’s electric cars or not.
Volkswagen has had some high-profile issues with its software over the past few years. The launch of the ID.3 was delayed in 2020 because the software was not ready and features were missing even when the car arrived in 1st Edit form. These issues date back to 2019, long before any ID. the cars were released. Even now, if you frequent online groups dedicated to Volkswagen ID.3 and ID.4 cars, there are still problems, and it was not until September 2021 that live updates became available, months later than expected.
While electrification is the most obvious battle currently unfolding in the automotive sector, there are many parallels to the arrival of smartphones nearly 20 years ago when it comes to software as well. In the early 2000s, there were a few huge giant mobile phone brands that seemed unassailable, including Nokia, Ericsson, and Motorola. But then the iPhone came along and completely changed the game. From a device that was all about calling and texting on the go, we now joke that our smartphones “can make calls too” because this are the other functions and the app ecosystem that matter now. Once-famous cellphone brands have been spoofed, with Apple, Samsung and a host of Android-based handsets taking over. They are all about software.
There is a parallel trend brewing in cars. Electrification is only part of it. As any Tesla owner will tell you, the built-in software features are just as important as the battery-electric drivetrain, like the ability to get to a Supercharger device and just plug it in. Load and billing control are all taken care of automatically. . This experience is in a whole different league from the frustration other EV brands have with public charging. Being able to watch Netflix while you wait is another of the main functions, but the integration of satnav with charging (including battery preconditioning) and self-driving are more fundamental.
These are the areas that CARIAD is supposed to address. Noticeably, Volkswagen didn’t try to develop a car operating system entirely from scratch. The company has obtained a QNX license from BlackBerry for its advanced driver assistance systems (ADAS) and automated driving. But just like in the smartphone revolution, having a solid software foundation is a key element of success in the automotive industry today. Companies that don’t master this alongside electrification could end up the same way Nokia, Ericsson and Nokia did in the world of mobile phones.
CARIAD is therefore clearly a crucial technology for the Volkswagen Group, but the question remains whether its problems were the real reason for Diess’s departure. Germany has one of the most unionized automotive industries in the world, and the arrival of electric vehicles has boosted production as much as the driver experience. Diess has long faced friction from the unions, and if you read the messages from union representatives about his departure, it seems clear that they are happy that it helps protect their jobs.
Diess was replaced by Porsche chief executive Oliver Blume. On one level, this looks promising for electrification, as Porsche’s Taycan and its variants have been a huge success, overtaking the 911 in 2021. But Porsche is also exploring alternatives such as synthetic e-fuels, and there runs the risk that the push towards electric vehicles will also be diluted by a renewed focus on e-fuels for more mainstream VW brands.
This would be a major concern for those who see electric vehicles as an important part of the solution to our current environmental problems. In the first quarter of 2022, the Volkswagen Group ranked fourth in the world for sales of all-electric vehicles, after Tesla, SAIC and BYD. The company just launched the highly anticipated ID.Buzz van and has an ID.Life budget behind the scenes. If the company refocuses on electric vehicles, it could delay the transition for the entire market. Other brands will step up, but despite its issues, Volkswagen was clearly further along the EV journey than most companies other than Tesla. Herbert Diess led the Volkswagen Group’s revival after the Dieselgate shame, but his departure could mean a step back in the wrong direction. Perhaps it should be called Diess-elgate, in homage.
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