opinion
Car manufacturers under pressure
The wake-up call from the VW boss
Herbert Diess, Chairman of the Board of Management of Volkswagen AG
© Carsten Koall / DPA
Herbert Diess paints a gloomy scenario on the wall: 30,000 jobs could be lost at VW. Just a threat? Hardly, because the benchmark for efficiency is set by Tesla – and soon on the doorstep of the German car manufacturer.
By Nils Kreimeier
It wasn’t that long ago that electric cars were considered a niche product in German car companies, something that might be interesting one day, but that only a few took really seriously. Too much money was still made with the traditional combustion models, the petrol-guzzling SUVs, which are also part of the inventory in large cities, sold too well. Also at Volkswagen, the auto giant, which has one of the best-selling off-road vehicles in Germany, the Tiguan, in its range.
When the question came up a few years ago which of the Group’s plants should be converted to battery-powered vehicles in the future, the then works council chief Bernd Osterloh waved off the head office in Wolfsburg. The factory was well used. Instead, Zwickau was selected to build the ID.3 there – the first fully electric car under the VW brand. The successor model, the ID.4, also rolls off the production line in Zwickau.
This decision is now falling on the Wolfsburg’s feet – and causing an uproar in the group. Because since last year at the latest and as a result of lavish government subsidies, electric cars are no longer a niche thing, but are actually being bought. In September this year, pure electric vehicles already had a share of over 17 percent of all new registrations nationwide; together with the plug-in hybrids, it is heading towards 30 percent. So the demand is booming. In Wolfsburg, on the other hand, where the Golf and Tiguan in particular are manufactured, there is less and less going on. Instead of almost a million cars as originally planned, only 500,000 cars were built in the main plant in 2020, and the trend is pointing downwards.
This is not only due to the change to the electric car, Covid-19 and the lack of chips also play a role. However, Wolfsburg, this giganto factory that often looks like a city of its own, now lacks an alternative. The result: short-time work. For months.
Daniela Cavallo, Osterloh’s successor, has therefore recently sounded the alarm. On November 12th, the Volkswagen supervisory board in Wolfsburg bends over the investment planning for the next four years. For everyone who wants to break something in the company, it is important to get a foot in the door. It is already clear that the next generation of electric cars, the widely announced “Trinity” project, will take place in Wolfsburg. But that wouldn’t be until 2026. Cavallo, however, doesn’t want to wait so long until the main plant is at full capacity again. She would like to see the production of battery vehicles being relocated to the huge plant with around 60,000 employees beforehand – for example the planned ID.5.
This wish led to a real scandal in a supervisory board meeting at the end of September. As the “Handelsblatt” reported first and was confirmed by participants, CEO Herbert Diess took the floor and designed a horror scenario for most of them, completely surprising. Compared to the competition, according to the Volkswagen boss, production in the main plant and elsewhere is not efficient enough and will soon no longer be competitive. A reorganization of the core brand could lead to a reduction of up to 30,000 jobs. “After that the room smoked,” says someone who had an insight into the course of the meeting. Nobody in Wolfsburg had expected such an announcement.
Tesla shows how it’s done
Of course, Diess is also concerned with building pressure and wrestling concessions from the works council. It is also not the first time that the Austrian, who came from BMW to cut costs, has quarreled with the employee representatives. Basically in Wolfsburg, where the works council with the state of Lower Saxony behind it has more power than in any other German company, it is almost a good thing that such massive cracks occur again and again. A CEO who does not try to build up a position of power in this extraordinary constellation would hardly be taken seriously.
However, Diess has an argument up its sleeve that causes tortured faces in Wolfsburg – and that goes beyond the usual quarrel. In Grünheide in Brandenburg, only about two and a half hours by car from Wolfsburg, the electric car manufacturer Tesla has just built a plant that makes German carmakers sweat when it comes to efficiency. Tesla boss Elon Musk wants to have cars there, at least that’s the grandiose announcement, about three times as fast as VW can do with its electric cars. Not to mention the much more complex combustion models. This is the competition that Diess sees itself in, and Tesla is the industry nerd, with which the Wolfsburg-based company is to be driven to more reform zeal.
Now the Autostadt is waiting in anxious anticipation for November 12th, when the cards for investments in the group will be redistributed. And it seems that Diess and works council boss Cavallo will not be the only ones at the table. Elon Musk is now always a part of the German auto industry.