By Christoph Steitz and Ilona Wissenbach

FRANKFURT. (Reuters) – Volkswagen (DE: ) CEO Herbert Diess had a difficult week. There was disagreement about how drastic the changes at Europe’s largest carmaker should be to achieve electric vehicle dominance.

Both sides attempted to be united at Thursday’s staff meeting at Volkswagen Wolfsburg, where it was held for the first time in two years. However, there are no guarantees that this dispute can be quickly resolved – if at all.

According to sources, Volkswagen’s four-member mediation panel is actually planning to address Diess’s future within the next four months, creating uncertainty about the leadership of the automaker, just four months after its CEO was hired.

IS DIESS STILL THE MAN TO DO THE JOB

Daniel Schwarz, an analyst at Stifel thinks so.

He is consistent in his EV strategy. “He has a greater focus on capital markets that his predecessors which is helping the Volkswagen share,” said he.

Volkswagen’s preferred stock shares only gained 6% between April 2018 and Diess taking over as CEO. However, the common stock is up 68% – nearly half is held by Porsche SE top shareholder.

Diess’ contract was extended to 2025 in July. He is now working on the next investment plan for 2030. This process causes friction between stakeholders every year.

Arndt Elliott, Bernstein analyst, is more skeptical.

“Diess represents the drastic changes the company needs to undergo after the dieselgate emission scandal. He does not stand for implementation.

Oliver Blume (Porsche AG CEO), Markus Duesmann, Audi CEO and Ralf Brandstaetter, Volkswagen brand CEO were all named as possible successors in case Diess leaves or gets fired.

You need somebody in Wolfsburg that understands Wolfsburg and is willing to work with the workers council. Ellinghorst stated that Oliver Blume was not the best person for the job. “Ralf Brandstaetter might be better at this.”

WHY IS ALL THIS FUSS?

Volkswagen, second in car production after Toyota, faces pressure from the industry to change, especially with the rise of EVs.

The German carmakers (including Volkswagen) are not comfortable in these areas, which have for a long time dominated the age and design of internal combustion engine engines.

New competitors are emerging, including Tesla (NASDAQ:), who started from a blank sheet of paper but revolutionized production and supply chain management.

“In the world combustion engines, we lead. Diess said to workers that we are good at this, perhaps better than anyone else.” We are now facing competition Volkswagen has not seen before in this new world.

What’s itching the WORKS COUNCIL for?

Diess.

He has repeatedly been criticised by labour representatives for not listening to the concerns of 675k employees worldwide.

Diess was the most controversial of the workers, as he informed Volkswagen’s supervisory board that in September, approximately 30,000 jobs would be at risk if Volkswagen slows down its EV transition.

The same goes for some of Diess’ social media activities, including a video https://twitter.com/Herbert_Diess/status/1420700739677179906 of him thanking staff for record first-half results while surfing on the canal next to the Wolfsburg headquarters.

Daniela Cavallo, head of works council, said that “the way you have been presented in the last months makes me wonder if you are actually conscious of the situation here and how it is being perceived among the workforce.”

SHE IS DYING?

Tesla.

A U.S.-based automobile manufacturer has demonstrated that it isn’t just how many vehicles you build, but also the quality of your technology and software.

Tesla sold 627.350 cars during the first nine months in 2021. This is more than 8 times Volkswagen’s market value of 124 billion euro ($143 billion), even though it sold 11 times as many vehicles.

Tesla also produces more efficiently and quickly. Diess expects that the U.S. firm will take only 10 hours to build each car at Gruenheide near Berlin. This plant is expected to open in late 2015.

Diess explained that while we are at (our Zwickau plant) for more than 30 hours we expect to be there 20 hours next years – the original target of our project was 16 hours.

Is it YOU?

Porsche SE (which is half-owned by Porsche and Piech family members) is Volkswagen’s largest shareholder. Qatar and Lower Saxony have 14.6%, 11.8% and respectively, 13.4%.

Together they have more than 90% voting power. However, on Volkswagen’s supervisory board which approves strategic key decisions, labour representatives own half of the 20 seats.

The chairman, in this instance Porsche SE CEO Hans Dieter Poetsch, holds the power when there is a deadlock on the board.

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