The Tesla Effect

Success of electrification-leader causes heated debate among competition

(Photo: Pixabay)
It seems that “Tesla angst” is wreaking havoc in the automotive industry nowadays. 

Herbert Diess, chief executive of German car group Volkswagen, has called on the company’s top leadership to prepare for an increasingly difficult competition with Tesla.اضافة اعلان

Diess was quoted as saying at an internal conference in the Austrian city of Bach that the group’s headquarters in Wolfsburg should become “more efficient and faster.”

Herbert Diess addresses an audience at Volkswagen’s (VW) annual meeting 2020. (Photo: VW Media) 

“Yes, I’m worried about Wolfsburg,” Diess told workers at the world’s largest car-manufacturing site during the first employee gathering since the COVID-19 pandemic. “I want that your children and grandchildren can still have a secure job here with us in Wolfsburg. That’s my point today. That’s why I’m here.”

Amid rising concerns about job cuts, Diess stressed that this competition will not lead to job-related repercussions.

He added, “What matters to me is how we work with each other. We need a new way of thinking. The issue is no longer about the Volkswagen brand, but rather about the group and Wolfsburg.”

Lately, there have been speculations that tens of thousands of jobs were about to be cut off in Europe’s largest car manufacturer, causing uproar.

In the aftermath, Volkswagen’s management made it clear that it had no plans to implement further job cuts, but at the same time emphasized the need to discuss intensively the tense situation of costs and the benefit of some headquarters.

The inactivity caused by the chip supply crisis, as well as Volkswagen’s revenue goals and growing competition with Tesla, will play a role in this discussion.

It is worth noting that Tesla intends to start producing its first electric cars at its factory in Grunheide, near the German capital Berlin — the first Tesla Gigafactory in Europe.

During a meeting with around 200 other executives and directors participating remotely from China, Deiss said, “I know some of you hate this, but it’s Tesla first, and the difference is widening.”

He added: “They will be faster, they will import, and they will become better in manufacturing cars. They are the only brand that has achieved growth despite the COVID-19 crisis, and they also have a fleet that is fully connected to the network around the world, we are forced to accept this competition.”

Recently, Volkswagen called for an acceleration of the production of electric cars at the company’s main factory, given that the production capacity of the factory, located in Wolfsburg, had not been exhausted.

“The difficult situation at the Wolfsburg plant is the center of gravity in the current consultations for this year’s planning round,” Daniela Cavallo, head of the Volkswagen Group’s Workers Council, said in a recent statement.

She added, “With the conclusion of the planning round, investments in the group’s headquarters will be determined worldwide within six weeks,” noting that the impact of the decisions will extend to the second half of the current decade, according to Reuters. 

Cavallo and her deputy, Gerardo Scarpino, discussed the tense situation at the Wolfsburg plant, which threatens to record a historic decline in its production volume for a second year in a row. It is expected that the volume of production will drop from this level this year due to reduced working hours.

Tesla CEO Elon Musk speaks at Tesla’s annual shareholder meeting in 2019. (Photo: Steve Jurveston/ Flicker).

On a similar note, Ford CEO Jim Farley, who kept Tesla under scrutiny in his past tweets, recently thanked the company and Elon Musk for leading the way when it comes to electrification. The CEO also hosted a meeting with Ford employees during which he talked at length about the competition – Tesla, of course – and the realities ahead.

The Detroit Free Press says it got its hands on a video of Farley’s recent employee meeting. The CEO reportedly talked about the EV market, displayed charts and graphs, and compared Ford to Tesla. He also delved into Tesla’s strengths. The publication says Farley referenced VW and Rivian.

Farley told some 20,000 global Ford employees that it is time to take Tesla seriously. He stated: “If Ford was a trillion-dollar company, our stock would be worth about $250 a share. Think about the value creation of Tesla right now.

And they have resources, smart people, the Model 3 is now the bestselling vehicle in Europe. Not electric. Flat out. It was the bestselling vehicle in the UK. Most months, it’s the bestselling vehicle in California. Not just electric, but overall. If we’re going to succeed, we can’t ignore this competition anymore.”

Farley worked to convince his employees to change their mindset, going forward. He said that while Ford is making progress, it still has work to do. He noted that Rivian is already delivering its electric pickup truck, as well as a van for Amazon. Tesla just sold 100,000 Model 3 sedans to Hertz. He said that Volkswagen is the second-largest producer of EVs behind Tesla, which is a big deal.

It remains to be seen whether Ford and Volkswagen will consider teaming up against Tesla, or try to buy into the American company, even though Tesla could buy both companies if it chose to.

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