He was backed up in his plans but not for a contract extension.

When we discussed if Tesla was willing to buy a legacy automaker or not, we told our readers Herbert Diess was facing a struggle at Volkswagen to carry on with his plans to electrify the company. Volkswagen’s CEO wanted to point people he trusted to executive positions and extend his contract beyond 2023. Achieving that was seen as a confidence vote. In the end, he won and lost at the same time.

Reuters reported that Volkswagen's supervisory board decided to allow Diess to get the people he wanted in the necessary roles. That said, Arno Antlitz will succeed Frank Witter in June 2021 as the group’s CFO, Thomas Schmall will be the board member in charge of the technology division starting on January 1, and Murat Aksel will become the head of procurement for the whole group, not only for the VW brand.

Herbert Diess - CEO of Volkswagen Group

These executives would be crucial for Diess’s electrification strategy. More than that, they were evidence of how empowered VW’s CEO really was in front of a supervisory board that has a huge presence of union representatives, such as Bernd Osterloh.

Being an IG Metall associate, Osterloh would be against lowering costs in Germany, which would necessarily imply a workforce reduction. Being simpler to build, EVs require fewer workers in production. More people can eventually be hired for software and technology teams, but they are not the metal workers IG Metall represents.

So far, what the supervisory board agreed to do was to reduce overhead costs by five percent and procurement costs by 7 percent until the end of 2022. Ironically, that is precisely when Diess’s contract as VW’s CEO ends.

If the executive could select his team, he did not manage to get a contract extension. That would be a sign that Diess has the board’s trust to carry on the changes he wants to implement at the VW Group. By not extending his contract, the message is clear: that will only happen if his plans go well enough to justify that.

Source: Reuters