Share
January 24, 2020 10:00 AM, EST

VW’s Herbert Diess Confident He Can Catch Tesla in Electric Car Race

Herbert Diess, Volkswagen AG CEO, pauses during a Bloomberg Television interview at the World Economic Forum on Jan. 24.Herbert Diess, Volkswagen AG CEO, pauses during a Bloomberg Television interview at the World Economic Forum on Jan. 24. (Simon Dawson/Bloomberg News)

[Stay on top of transportation news: Get TTNews in your inbox.]

Volkswagen AG CEO Herbert Diess is preparing to muscle Elon Musk out of the electric-car lead.

While Tesla Inc. is paving the way in sustainable mobility, the world’s biggest automaker is buying software companies and ramping up investments in electric vehicles and battery cells, Diess said Jan. 24 at the World Economic Forum in Davos, Switzerland.

RoadSigns: A Transport Topics podcast

In part one of a two-part exploration of autonomous technology today, our latest RoadSigns podcast revisits conversations with CEOs Alex Rodrigues of Embark and Cetin Mericli of Locomation. Hear them explain what testing automated trucks and developing platooning technology has taught them about the road ahead — and get new perspective with host commentary. Listen to a snippet from Rodrigues above, and to hear the full episode, go to RoadSigns.TTNews.com.

“It’s an open race,” Diess said in an interview with Bloomberg TV. “We are quite optimistic that we still can keep the pace with Tesla and also at some stage probably overtake” the U.S. carmaker.

Tesla’s market value surpassed Volkswagen’s for the first time this week, even as the U.S. company sells a fraction of the cars VW churns out and has yet to record an annual profit. Volkswagen rose as much as 1.7% in Frankfurt trading after Diess’ comments.

Still, Tesla has a competitive edge in electric cars and software, technologies that are underpinning a shift toward cleaner mobility. The threat is underscored by Musk’s plan to establish a factory near Berlin, in the heart of Germany’s automotive industry.

While they’re competitors, Diess and Musk have cultivated somewhat friendly ties. The German CEO in October hailed Tesla as a serious competitor that’s pushing the industry toward sustainability, just a few weeks after the South African-born billionaire tweeted that Diess is doing more than any big car CEO to go electric. Diess repeated his respect for Musk in Davos, saying Tesla’s product lineup “describes the future of the auto industry.”

Last week, the German CEO called on his top managers to speed up Volkswagen’s overhaul efforts to make the German industrial giant more agile or risk being pushed aside. Volkswagen has earmarked about $66 billion to invest in electrification, hybrids and digitalization, and in October plans to start churning out e-cars at a factory near Shanghai, where Musk opened a plant last year ahead of schedule.

“The company which adopts fastest and is most innovative but also which has enough scale in the new world will make the race,” Diess said Jan. 24.

Volkswagen electric car assembly line.

A Volkswagen electric car assembly line. (Krisztian Bosci/Bloomberg News)

Trade Threat

Tesla isn’t Diess’ only concern. The CEO was among executives who attended a dinner with U.S. President Donald Trump in Davos on Jan. 21. While the meeting was “positive,” the threat of U.S. tariffs on European carmakers hasn’t been averted, he said.

“It’s very difficult to read President Trump but he stated that he’s still not happy with Europe,” Diess said. “We’re doing what we can to avoid tariffs.”

Volkswagen has been relatively resilient so far to industry headwinds exacerbated by trade friction, higher tariffs and a slowdown in China, the German manufacturer’s largest market. The company also will have to comply with Europe’s new fleet emission targets, he said, meaning VW will have to sell more sustainable cars or face penalties.

“2020 for the auto industry will be a very difficult year,“ Diess said. “But we’re doing the right things to be competitive.”

Want more news? Listen to today's daily briefing: