VW Extends CEO’s Contract Until 2025, Backing Aggressive EV Push
(Bloomberg) -- Volkswagen AG extended Chief Executive Officer Herbert Diess’s contract by two years, giving fresh backing to the boss overseeing the most aggressive push into electric vehicles by an established carmaker.
Diess, 62, will remain CEO until October 2025, the supervisory board said Friday. Chairman Hans Dieter Poetsch praised the transformation overseen by the executive, who joined VW just before its diesel emissions scandal erupted and rose to the top job as it was still dealing with 30 billion euros ($35.6 billion) worth of damages.
“The supervisory board believes that under the leadership of Dr. Diess, conditions will be optimal for the continued successful development of the entire company,” Poetsch, 70, said in the statement.
The extension marks a victory for the former BMW AG executive who twice last year was unsuccessful in seeking an early extension to his contract. Internal tensions were defused in December with a broader agreement among key stakeholders on cost reductions and other appointments of top executives.
Diess, known for a hard-nose management style, has frequently clashed with VW’s powerful labor unions since joining the German industrial giant in 2015, weeks before the company’s cheating on emissions tests was exposed.
Disagreements spilled into the public last year over plans to trim costs and overcome what Diess described as “encrusted structures” at Volkswagen’s headquarters in Wolfsburg. The new contract bolsters his efforts to boost the group’s software operations and overtake Tesla Inc. as global leader in electric cars.
VW’s financial performance in recent quarters supported Diess’s case for an extension. The manufacturer has been relatively resilient amid the Covid-19 pandemic and earlier Friday reported strong preliminary earnings for the first half of this year. Its common shares rose 6% and have soared 65% this year.
VW’s rollout of EVs this year “should be a step toward overtaking Tesla’s EV crown in 2023 and catching up on software by 2025,” Michael Dean, a Bloomberg Intelligence analyst, said in a report. “This is welcome as VW attempts to shrink its valuation gap versus Tesla.”
VW will provide a detailed update on its strategy through 2030 next week. It will include a new development site near its headquarters in Wolfsburg for 800 million euros, VW’s works council head Daniela Cavallo, Diess and personnel chief Gunnar Kilian said in a letter to staff. The budget will be included in the next annual investment review that’s due to be presented this fall.
The updated strategy will also address new initiatives for battery cell manufacturing, according to the letter. Earlier this year, VW announced plans to build six battery cell factories in Europe alone.
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