Here's How Porsche's CEO Plans To Fix Volkswagen

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VW's software division, Cariad, led to the downfall of its previous boss.

In late July this year, Volkswagen announced that its Chairman of the Board of Management, Herbert Diess, would be replaced with Porsche's boss, Oliver Blume. Diess remained in his position until 1 September, leaving Blume with a title too long for a business card. Blume is now officially the "Chairman of the Volkswagen Group Board of Management and Chairman of the Executive Board of Porsche AG."

Blume faces an arduous task, having to clean up after Diess. Volkswagen's EV division is currently in a sorry state, and the reasons behind it can be traced back to the Dieselgate scandal. Following the eruption of the scandal in 2015, VW's then chief executive, Matthias Muller, set out a plan of action to fix the brand's reputation by 2025. The project included the broad adoption of EVs.

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After failing to implement the plan fast enough, Muller was replaced with Diess in 2018. Diess went on a spending rampage, going as far as creating an automotive software subsidiary, Cariad. Diess was inspired by Elon Musk, who demonstrated the power of over-the-air updates and creating in-house software for Teslas. Diess wanted VW to be an automaker and a technology company, but Cariad failed to meet its goal.

The Porsche and Piech families, who own the controlling stake in Volkswagen, were impressed with Diess's radical approach at first but lost faith in him after Cariad's failure led to delays across the group's entire portfolio. Bentley and Audi's products were pushed back by a few years, but Porsche was hit in the worst possible way. The Macan EV, expected to be a big seller, was delayed by a full year.


As expected, Blume's priority is to fix Cariad. Volkswagen's EV products, including the ID.4, are excellent, but owners have complained about software issues from the start. Elon Musk has publicly stated that he thinks VW is the number two EV maker on the planet, proving that he does see it as a possible threat. But not until VW can sort out its software issues, which range from problems as basic as slow and unresponsive touchscreens to advanced safety systems that malfunction entirely.

Unlike Diess, Blume is open to partnering with outside companies. Cariad was meant to be Diess's crowing achievement, and he wanted the German brand to do it without outside interference. In a recent interview with VW's in-house publication, Blume hinted at possibly teaming up with a partner.

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It's clear from Blume's history with Porsche that he's not afraid to be a team player or invest in companies that could improve its future products. Blume signed off on a deal to buy a stake in Rimac long before the company found fame and eventually became Bugatti-Rimac. It currently owns a 45% stake in the Rimac Group, which includes its technology department. This deal has yet to pay dividends, but looking at products like the Nevera and Rimac's continued work in the battery segment, one can easily see where this is going.

To fix Cariad, Blume needs to partner with a company that knows software. Blume has several options, with Apple and Google being the most obvious. Several products currently run Android Automotive, which Google created specifically for the automotive market. It's a lot more powerful than basic Android Auto. GMC currently uses the Android-based OS system in its Hummer EV, and Polestar is adopting it across its range, too.

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Speaking of his priority list at VW, Blume said, "First things first: setting up Cariad as the central competence center for software is absolutely the right approach. It's normal for the build-up of a company to be an onerous process. Now we have to keep evolving."

While Blume knows that big aspirations are important, he also knows to be realistic. "What software with what functions can we realistically implement in what timeframe? What does that mean for the cycle plans of our products? What core competencies do we want to have at Cariad, where are the right points of contact to the brands, and with what partners do we want to collaborate?" he says. "It's also a question of the ongoing development of our processes, tools, and organization. We will assess everything with an open mind and develop a swift implementation plan."

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Blume admits that he does have an excellent foundation to work with, but he issued what sounds like a clear warning. "Herbert Diess did a very good job both strategically and technologically. They laid the right groundwork. A good strategy is important. And it is always successful when it is translated into the company's everyday operations. Systematic, transparent, and accountable implementation of objectives is of great importance to me," said Blume.

Reading between the lines, Blume's primary mission is to get Cariad up and running smoothly and efficiently by possibly partnering with someone. It's also clear that he will keep a close eye on the division, and those who don't bring anything to the party will be held accountable.

CarBuzz / Ian Wright CarBuzz / Ian Wright 2021-2023 Volkswagen ID.4 Apple Car Play CarBuzz
2021-2023 Volkswagen ID.4 Apple Car Play

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