Turmoil In Wolfsburg As Volkswagen Ushers In ID.3 Era
Paul Harvey, a celebrated radio journalist, made a name for himself by presenting his listeners with what he called “the story behind the story.” The happy talk coming out of Wolfsburg, Germany — home to the headquarters of Volkswagen — is that starting June 17, people who have pre-ordered an ID.3 First will be able to turn those reservations into actual orders. That’s the good news.
The story behind the story is that there is a storm of turmoil roiling the boardroom at Volkswagen. The first cars will be delivered beginning September 1, but there’s a catch. Rumors about software issues with the ID.3 have been swirling for months. The ID.3 will be the first Volkswagen to feature over-the-air updates, a technology option that Tesla pioneered in automobiles 8 years ago, and apparently it is just not ready.
So, the cars delivered in September will have a software patch designed to get the cars out the door and on the road before too much more time elapses, according to Automotive News. Those who want a fully functioning car will have to wait until sometime in the 4th quarter.
Of all the legacy automakers, Volkswagen has perhaps been the boldest when it comes to transitioning from cars with infernal combustion engines to those with electric motors. In theory, it should be easy. Yank out the old powertrain, stuff in lots of battery cells, bolt in an electric motor, and you’re good to go, right? In practice, it is not that easy. Not by a long shot.
Tesla set the bar high. Not only did it introduce an electric car designed to be electric from the ground up, it pioneered over-the-air updates, advanced driver-assist technologies, real-time data connection from its cars, and a direct-to-customer sales model that avoids traditional dealers. It also began construction of its own dedicated charging network so owners would have a place to plug in while on the highway.
Faced with such an onslaught of new thinking, the existing car companies struggled to respond. Most tried to ignore Tesla, hoping it would fail, which would let them get back to business as usual. Then Mercedes, BMW, and Audi were stunned to find German drivers were buying more Tesla Model S sedans than their S-Class, 7 Series, or A7 luxury sedans combined. That really rocked the industry — particularly the German industry — back on its heels.
Then came Dieselgate, the horrific cheating scandal that nearly burned Volkswagen to the ground. It also gave the company an opportunity to reinvent itself, which the company did. It brought Herbert Diess over from BMW to run the show, gave him full authority, and told him to make it happen. The result was the MEB dedicated electric car chassis and the ID.3, an electric 5-door hatchback designed to take the place of the bestselling Golf and move Volkswagen forward into the future.
But dying is easy. Making electric cars is hard. We saw just how hard when Tesla flailed around for years trying to get its Model X to market and again when the company went through “production hell” with the Model 3. Now we are seeing it again as Volkswagen tries to get sales of its ID-branded cars off the ground.
There has been fallout. In recent days, Herbert Diess has been relieved of his duties as head of the Volkswagen brand, allegedly so he can concentrate on running the entire Volkswagen Group, where he is still CEO. A dispute has arisen within the company over who is responsible for the software problems, with a lot of fingers being pointed at Diess. He has also been the point man in discussions with the labor unions about how to trim costs so more money will be available for the company’s electrification program. Those discussions have reportedly been acrimonious.
Apparently, some sharp elbows were thrown inside the boardroom and Diess has been replaced by Ralf Brandstaetter, who has been with Volkswagen since 1993. You don’t need a Ph.D in business to see what is going on. Diess was brought in from a rival company to run the company, passing over lots of senior managers who had served the company well for decades. It doesn’t take a genius to figure out some of the old guard were less than pleased to see Diess sitting at the head of the table.
Also, never forget that Volkswagen is essentially a family-owned business, with bitter rivalries between descendants of Dr. Ferdinand Porsche jockeying for position in the background. One of them, Ferdinand Piëch, was at the helm when the diesel cheating scandal broke. He was pushed out in the ensuing fracas, but now the Volkswagen supervisory board has been expanded from 6 to 8 members and one of the new members is Hans-Michel Piëch. Shakespeare himself could never imagine a palace intrigue more bizarre than what takes place behind the scenes at Volkswagen from generation to generation.
In an odd twist, the company posted a cryptic press release this week. Here it is in its entirety: “At yesterday’s Supervisory Board meeting, which focused on personnel matters, the Supervisory Board and Dr. Herbert Diess also discussed statements of Dr. Diess at an internal event. Dr. Diess formally apologized for these statements towards the members of the Supervisory Board, declaring that these statements were inappropriate and wrong. The members of the Supervisory Board accepted the apology of Dr. Diess, and will continue to support him in his work.” Make of that what you will.
The upshot of all this is that the ID.3 is not ready for primetime. Not yet, anyway. But it will be, someday. Just as Tesla went through production hell, so will Volkswagen, and it will emerge from it as the leading German electric car manufacturer at a time when the country has instituted a new incentive plan for electric car sales that will be hard for folks to pass up. Neither Mercedes nor BMW has an electric car program designed to bring EVs to the masses that is anything like Volkswagen’s.
Herbert Diess may have been the victim of a palace coup, but he started the company down the road to electrification and for that he deserves praise. Not even accolades from Elon Musk could save him. Last year, Elon tweeted, “Herbert Diess is doing more than any big carmaker to go electric. The good of the world should come first. For what it’s worth, he has my support.” But Elon’s support wasn’t enough to save Diess from the long knives in the VW boardroom. “Viel Glück,” Herr Brandstaetter. You’re gonna need it.
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