Diess has received some backing but no contract extension

Diess has received some backing but no contract extension

Volkswagen's supervisory board has said chief executive Herbert Diess had its full support as he heads a new executive team but stopped short of bringing forward a contract extension. The board also dispelled suggestions Lamborghini and Ducati might be sold off and said Wolfsburg (not Zwickau) would become its showcase electric vehicle plant.

Reuters noted that, in a power struggle leading up to a board meeting on Monday, Diess had demanded an early contract extension and more backing for his reform efforts from the non-executive board. He met resistance from powerful directors representing employees and unions.

After the meeting, the non-executive supervisory board also said in a statement the carmaker would cut overhead costs by 5% and procurement costs by 7% over the next two years.

Diess had sought to lower costs in Germany to free up resources for a mass electrification push and to transform the 83-year old automaker into a tech company modelled on Tesla, the report said.

That led to a clash with Bernd Osterloh, Volkswagen's chief labour representative, over issues including appointments to the management board and whether to extend Diess' contract beyond 2023, Reuters said.

The non-executive board, of which Osterloh is also a member, said it had unanimously voted to support the transformation to e-mobility and digital technologies.

"Over the coming years, the executive board would implement this strategy under Herbert Diess' leadership," the supervisory board said.

The statement also said Arno Antlitz would become group finance chief, succeeding Frank Witter, who would quit in June 2021 as previously announced.

Thomas Schmall would become board member in charge of a newly-created technology division from 1 January.

Also from next year, Murat Aksel, the head of procurement at the VW car brand, will in addition take on the same role for the entire group, Reuters added.

The supervisory board statement also said: "Lamborghini and Ducati will remain part of the Volkswagen Group. In the course of the reorganisation, it was further resolved that the Bentley brand will fall within the management responsibility of the Audi brand as of 1 March 2021 in order to allow for synergies to be achieved as part of the electrification strategy of the two premium brands."

The board also said: "In the medium term... Wolfsburg is to become the pioneering factory for the highly automated manufacture of electric vehicles. The future leading [VW brand] electric vehicle is to be built there on the basis of highly productive site conditions which are also competitive in terms of costs. To this end, a project will be set up, similar to the Artemis project at Audi, which bundles all activities from the development of the vehicle up to production."

So far, VW has emphasised the role of Zwickau, which has been converted entirely from ICE models to EVs, and is expected to build 300,000 electric cars in 2021 with support from the components plants in Brunswick, Kassel, Salzgitter and Wolfsburg. The ID.3 will also be built in Dresden from 2021 while Emden (ID.4) and Hanover are scheduled to begin building electric vehicles from 2022.

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