In-house fighting is stirring up rivalry between Volkswagen and its Audi and Porsche premium brands as the automaker cuts costs to face the diesel emissions cheating scandal.
Senior executives have spoken to Reuters about the internal conflict to develop and manufacture the next generation of electric cars as the company emerges from the “Dieselgate” scandal. Reuters used the analogy of international racing events, including Le Mans 24, as an analogy describing the rivalry over who will build its plug-in models.
Volkswagen Group has denied the rivalry is getting out of hand in the boardroom.
“There is a cut-throat battle for resources. Every brand with engine-manufacturing capacity now wants a leadership role when it comes to electric motors, battery packs and battery-cell expertise,” an executive at one of the VW divisions, who declined to be named, said to Reuters.
Cost cutting will include reducing jobs dramatically as the company faces as much as 30 billion euros ($32 billion) to pay global Dieselgate penalties and settle lawsuits. All brands could be affected, which also include Skoda, SEAT, Bugatti, Bentley, and Lamborghini. The company and its unions recently agreed to cut 30,000 jobs at the core VW brand in exchange for a commitment to avoid forced redundancies in Germany until 2025.
Reaching VW’s ambitious goal of launching 30 new electric vehicle models by 2025 – not to mention plug-in hybrids – will also impact labor. Electric cars are far less complex to assemble than traditional combustion engine vehicles and will need less workers to assemble. It’s expected to be a thorny issue in an industry dominated by a workforce with multi-year collective wage agreements.
Executives at Audi, VW and Porsche, who all declined to be named, said conflict between the brands is not new and healthy internal competition can push them to greater technical and commercial achievements. That’s been thrown off by leadership changes made in the past year, according to a source.
VW CEO Matthias Mueller, who previously worked as Audi’s head of product management and Porsche boss, has been facing these changes in the power structure. Since being handed the lead role after the scandal erupted last year, Mueller has yet to build the level of power once enjoyed by former chairman Ferdinand Piech, whose extended family controls the firm, according to Reuters.
Piech, who spent years cultivating ties to VW’s powerful labor leaders and turned Audi into one of the main research and development hubs at VW, eventually lost a separate power struggle, and quit his job as chairman last year.
VW’s corporate office dismissed comments, and denied that an unhealthy power struggle was underway at all.
“This is pure speculation which lacks any kind of foundation and is something which we emphatically reject,” spokesman Eric Felber said.
Audi has been the main group company contributing profit, but the luxury brand has lost some internal battles in recent years for developing vehicle components to the smaller Porsche brand. Audi is also competing with the VW brand to develop next generation zero-emission cars.
Audi is attempting to clear its own set of hurdles on the emissions reporting scandal. On Nov. 6, California’s Air Resources Board had discovered a new software-cheating device in Audi cars. That news broke as Audi tried to secure a final deal with U.S. regulators on compensating owners of cars with Audi-built motors.
On Nov. 11, Der Spiegel weekly said VW supervisory board members were discussing possible successors for Audi head Rupert Stadler, but a senior company source dismissed it. “There is no reason why Rupert Stadler cannot continue as Audi’s chief executive,” he said.
Audi has suffered leadership losses since the emissions scandal was revealed. The division has lost two research and development chiefs and the head of its automotive electronics division who did pioneering work in the area of autonomous driving and battery technology.
Porsche has emerged as a strong rival engineering center, which has been a sore spot for Audi to lose projects over.
Audi plays its own role on the technology front. It’s considered a leader for its sport utility vehicles, where it supplies platforms to Porsche and other brands such as Bentley. Audi also develops autonomous cars for the group, and will compete in the Formula E electric-car championship.
Engineering and designing electric cars, battery cells, battery packs, and electric motors is at the competitive forefront for now. Volkswagen sees it as the portal for preserving local jobs.
Porsche has developed the J1 electric cars platform, creating 1,000 jobs at its plant outside the southwestern city of Stuttgart. Volkswagen brand made its own MEB platform for conventional passenger cars in Lower Saxony, and pledged to create 9,000 jobs in developing autonomous and electric vehicles. Audi is working on its own electric car at its Bavarian base, but it is unclear whether it will develop its own electric car platform.