New VW CEO Oliver Blume faces software challenges as he takes helm from Diess

Porsche boss Oliver Blume, who started as VW Group CEO today, is an all car guy rather than software guru and got the job by being a team player and pragmatist.

Herbert Diess’s master plan for beating Tesla hinged on replacing factory workers with 10,000 software workers who would transform Volkswagen Group into a tech player.

Instead, after two years of VW electric car customers angrily stabbing at screens, Diess has been forced out. Porsche boss Oliver Blume, who started as VW Group CEO today, is an all car guy rather than software guru and got the job by being a team player and pragmatist.

VW will accelerate its transition toward EVs where possible, Blume said at an internal conference on Thursday, the first day of his tenure.

Blume told top managers he had developed a ten-point plan focusing on topics including financial robustness, sustainability, the capital market, and development in China and North America.

“I am a fan of e-mobility and I stand by this path … we will keep the current pace and, where possible, increase it,” Blume said, according to a copy of his speech.

VW must find the right rhythm for a stable transformation by defining and following through on a clear strategy, he added.

However, the probability that Blume will make dramatic changes early in his tenure is low, and that risks prolonging the software problems plaguing VW customers.

Drivers’ car displays are seizing up and even going blank. For owners to gain the ability to get over-the-air software updates of certain features — some of which may be safety-critical — VW is requiring many to drop their EV off for a day at the dealership.

Infotainment systems reliant on software described as incomplete are making their way to more models, threatening VW’s position in sales and quality rankings.

‘Disease that is spreading’

“It’s the disease that is spreading,” Jake Fisher, senior director of auto testing at Consumer Reports, said in an interview. “I am talking about systems that, when you know how to use it, now it’s multiple steps to do something that used to be one button, and that is a shame. It’s moving backward and making these cars worse.”

Fisher was one of the more than a dozen testers or owners of VW’s ID series EVs and Tesla models in seven countries whom Bloomberg spoke with to get a sense of just how big a technological gap Blume has to close.

ID drivers complained about their cars suddenly braking because of a traffic sign detection system so buggy, they tend to just deactivate it; a smartphone app that is glitchy and lacking features; and challenges syncing their phone with their EV either wirelessly or with a cord.

“I had not expected to buy a car that was unfinished,” said Christopher Bergsten, a 31-year-old in Linkoping, Sweden, who sold his ID4 SUV after less than six months. “I expected way more.”

Diess started at VW in 2015, months before the diesel-emissions scandal that rocked the company to its core. He ascended to the top job three years later as the outsider who could clean up the mess. Almost immediately, Diess cut a check for an electric-vehicle battery order that almost matched Tesla’s market value at the time.

“I really liked what Diess did,” said Barry Holleran, a 47-year-old software engineer who was one of the first in Austria to take delivery of an ID4. “He really put his neck out to make this move, and I thought as a consumer I should support that.”

Holleran said his crossover is well-engineered and a good, comfortable family vehicle — VW’s long history of building automobiles shined through. But the software? “Dreadful.” Updates are infrequent and the navigation system does not work at all.

“The saving grace is Apple CarPlay,” Holleran said. “If it did not have that, to be honest, I would get rid of the car and I would go with a Tesla.”

Early in Diess’s tenure as CEO, Tesla was in what Elon Musk memorably referred to as “production hell,” struggling to mass-produce Model 3 sedans.

For all the challenges the EV maker was having — Musk has said the company was weeks away from failing in 2018 — Diess recognized VW needed to massively expand investment in software capabilities.