Wolfsburg Vs Grunheide: VW Stepping It Up To Compete With Tesla

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Posted on EVANNEX on October 26, 2021 by Charles Morris

Recently, Volkswagen Group CEO Herbert Diess and VW brand chief Ralf Brandstätter called 120 top-level executives to company HQ in Wolfsburg for a crisis meeting. The two leaders announced the launch of a “struggle against Grünheide.”  

Grünheide is the town just outside of Berlin that’s the site of Tesla’s new German Gigafactory. But it represents only part of the threat that Volkswagen, and all the legacy automakers, are facing. Two Chinese automakers—Xpeng and NIO—are now delivering electric vehicles to European customers, and VW’s challenge could also be dubbed a “showdown with Shanghai.”

It’s become an axiom that Tesla is “more than a car company.” What many financial analysts still don’t understand (but Herbert Diess and his team understand very well) is that Tesla’s threat to the legacy auto industry isn’t just the fact that its cars use no gas. Tesla has made major innovations in its vehicle development and production processes. In comparison to Tesla (and some of the Chinese automakers), VW is not only falling behind its competitors in electrification—it’s also losing ground when it comes to productivity. Diess told his managers that, without radical changes, VW cannot remain competitive—and the Wolfsburg plant, and its jobs (over 63,000 as of 2018), could be in danger.

As Business Insider (German) reports, Diess and Brandstätter called their top managers to nothing less than a revolution in Wolfsburg. “We have great responsibility for this location,” said Diess. “We have to take on the new competition.” In practical terms, this will mean a radical rebuilding of the main plant at Wolfsburg—what BI characterized as “open-heart surgery at Volkswagen.” Old factory buildings will be demolished and new production halls will be built in order to make production processes more efficient.

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