The company announced Friday that Volkswagen CEO Herbert Diess will step down as president of the world’s second-largest automaker, in a major reshuffle, and will be replaced by Porsche boss Oliver Blume.
The company announced that Bloom will replace Des in his role as Chairman of the Board of Directors on September 1. In a statement, Hans-Dieter Buch, who chairs the company’s Management Supervisory Board, thanked Dess for his service and his “key role in driving the company’s transformation.”
It was a surprising development, considering that Diess narrowly avoided being ousted by the VW Supervisory Board late last year. The German automaker has repeatedly clashed with trade unions and other key stakeholders over Volkswagen’s strategic direction and overall cost reduction, according to Bloomberg. The company was in the midst of raising more money with an initial public offering for Porsche to help propel its push toward electric cars and software services. (VW is governed by a supervisory board that delegates several seats to trade unions.)
In an interview with the edgeNilay Patel Editor in Chief earlier this year on untie Podcast, Dess talked about VW’s unique management structure and how that makes his job different from most automotive CEOs.
“It’s complicated,” he said, “and you need a lot more alignment and a lot of discussion.” “Random decisions are not allowed because you have to defend your case as a common interest in the future of the company.”
But as investors continued to express concerns about Volkswagen’s direction, it was clear that Diess’ position at the helm of the company was tenuous. He was hired away from BMW in 2015 with a mission to help restore consumer confidence in the wake of the Dieselgate scandal, in which VW was discovered installing cheat devices in millions of vehicles. Dis himself narrowly avoided prosecution for his role in the scandal.
Dess has been among the most aggressive in pushing the auto industry to embrace electrification, and has won respect from Elon Musk, Tesla’s CEO, among others. (He even tried tweeting like Musk for a while but couldn’t quite hack it.) It’s unclear what this change in leadership would mean for VW’s $100 billion investment in electric vehicles.
Dess was said to be intent on catching up with Tesla in selling electric cars, often imposing new directives on Volkswagen’s workforce on that mission. This means reducing the company’s production time per vehicle from the current 30 hours to 10 hours, which Tesla appears close to achieving at its Berlin facility. Factory workers pushed Dies to help weather larger industry crises, such as semiconductor shortages.
The company also faced hurdles in its efforts to expand into China, which is the world’s largest electric vehicle market. Earlier this year, the German Economy Ministry refused to offer guarantees to cover new investments in China due to human rights concerns, according to the Der Spiegel.
Bloom has been seen as a potential successor to Deiss for years, although he thought he still had much longer to wait, according to Bloomberg. He joined the company in 1994 and has held positions in a variety of its brands, including Seat, Audi, VW and Porsche, where he has held the position of Chairman (similar to a CEO role) since 2015.