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Manager Magazin, a leading German business publication with excellent sources at the Volkswagen board, at VW, Porsche and Audi high level leadership, and at the two biggest shareholder families, the Porsches and Piëchs - has just published a bombshell article.
They are reporting about the cluster-sugar that the Volkswagen ID.3 has become, with a rich supply of anonymous insider sources from within the ID.3 project.
Here's an English translation posted to /r/teslainvestorsclub, it's long but worth reading the whole thing:
(Cc: @avoigt)
Note the countless number of red flags:
Every "ID.3 crisis group" working day begins with a 30 minutes meeting. Remember what Elon said about the pointlessness of meetings and the necessity of high-rate innovation to happen in flat meritocracies? It's all true ...
They are reporting about the cluster-sugar that the Volkswagen ID.3 has become, with a rich supply of anonymous insider sources from within the ID.3 project.
Here's an English translation posted to /r/teslainvestorsclub, it's long but worth reading the whole thing:
More Problems at Volkswagen [translation from Manager Magazine "Volkswagen – Showdown in Hall 74"] : teslainvestorsclub
The start into the electrical age is getting very bumpy for CEO Herbert Diess. More than 10,000 technicians are currently trying to solve the problems of the showcase project ID.3. There are already signs of the first personnel casualties.
Location: Volkswagen plant Wolfsburg, Hall 74, 8.30 a.m.
Every working day, software experts, engineers and top managers meet here for a half-hour morning round. Head of Development Frank Welsch (55) is a regular participant, as are Christian Senger (45), Member of the Board of Management for Digital Affairs, and Thomas Ulbrich (53), who is responsible for electromobility. Suppliers send top people. Almost all the board members were there; sometimes Volkswagen boss Herbert Diess (61) comes himself and shows the importance of the morning round.
Because even if the ID.3 marketing slogan ("Now you can") has been suggesting for months that it's about to start - the e-mobile is not ready for the masses. Many at the top of the company doubt that it will be ready by summer as planned.
If it goes wrong, the ID.3 could destroy careers, theoretically even that of Herbert Diess. New drivetrain, new software and electronics architecture: ID.3 stands for the transformation to an electrical and technology group. It is Diess' very personal project. The VW group CEO also manages the VW brand.
All the more important is the rescue round. This is where the technical problems are discussed, this is where orders are placed which are then processed by ID.3 teams throughout the group. More than 10,000 technicians and engineers are currently working on ID.3, including external developers, our sources in Wolfsburg say. They have just brought in hundreds of additional experts, top people from Audi and Porsche, for example; they are flown in on Mondays and out again on Fridays.
When Chancellor Angela Merkel (65) personally came to Zwickau at the beginning of November 2019 for the start of production, it looked as if everything was going according to plan. Only the cars are rolling, at the moment, according to the production schedule, there are a good 50 of them a day, stupidly parked. The software does not work as it should.
The basic architecture was developed too hastily, say VW experts, system parts often don't work with each other and have bugs. At some point in the next few months, when the quality is high enough, the green light will be given for the [new] software to be installed on the cars that were already built.
Did Diess want too much too fast? In addition to the electric drive, a completely new software organization was necessary? The Porsches and Piëchs, major owners and actually Diess' most important allies, have never really been convinced of their protégé's electric focus. Now they are getting restless. In small group discussions they expressed their displeasure, they say.
Employee boss Bernd Osterloh (63) and the IG-Metall parliamentary group remind internally that the VW group missed out on billions in 2018 because of the delayed changeover to new emission regulations - and now fear similar things in terms of CO2 penalties. The group must save 30 grams of CO2 per car in order to achieve the EU targets, as Herbert Diess himself recently said. 30 grams, that would be a fine of around ten billion euros in 2020. Indisputable.
Without the ID.3 CO₂ fines cannot be avoided. Purely electric vehicles will still be counted twice this year [under the 'SuperCredit' rules]. VW would have to sell 100,000 ID.3s in 2020 to meet the targets; this is how they originally calculated. They have now reduced this number; 80,000 must also be enough. The E-Golf and E-up, both of which have a compromising electric performance and are both in deficit, are supposed to make up for the shortfall a bit. Both are currently being squandered with high discounts. This speaks more for panic than for trust in ID.3.
Audis e-tron and Porsche's Taycan could also help, because the CO2 emissions are calculated for the group in Brussels. But there is a catch there too. Audi has already lowered the forecasts for the e-tron. They wanted to sell their electric SUV and a spin-off in 2020 up to 70,000 times. In the meantime, the scenarios have reached a good 40,000; battery experts consider this figure to be wishful thinking, which is how big the battery crisis is.
LG Chem supplies too few battery cells and is constantly reporting new production problems. Batteries from Samsung, which are to be added in the summer, do not yet have the necessary quality. Audi and Porsche, whose Taycan uses cells similar to those of the e-tron, are battling to make up for the low capacity. The matter went to the group board of directors. Porsche boss Oliver Blume (51) won.
Herbert Diess had an idea of how difficult the start into e-mobility would be. He said at a top management conference in January that compliance with the limit values for supplying, building and selling cars with batteries was "perhaps the most difficult task Volkswagen has ever had to face.
The problems are everywhere. They just postponed the Taycan delivery in Germany again for several weeks. The Ionity charging station joint venture, also supported by Volkswagen, is nowhere near as far as promised. And the teams responsible for the next electric VW ID.4 - scheduled to start at the end of 2020 - are urgently waiting for the people who now have to save the ID.3; a cascade of postponements is in the offing.
But the real battle will be fought in Hall 74. In the afternoon at 4 pm, the ID.3 rescuers will meet for the second time every day. What problems have they solved, what has remained open, where do they need to step up their efforts again? They are working in a disciplined manner on the electrical front, almost militarily, as contributors tell.
The hundreds of test drivers who are on the road in the evenings and at night report new bugs every morning in Hall 74; up to 300 would do it every day, says one of our sources who is participating in the meetings frequently. Negative scenarios of a delay of three to a maximum of twelve months are already circulating, which Diess' people dismiss as "complete nonsense".
But what to do if it doesn't work? Then it will have personnel consequences below the CEO level.
With foresight, Diess has expanded the VW brand board of directors to a council of eleven. In the event of a major ID.3 delay, he could fire various board members. Welsch, Head of Development, has been joined by Chief Technology Officer Matthias Rabe (57), who could take over. Another digital board member is also being sought, according to our sources at Wolfsburg. Herbert Diess has installed a firewall - at least as far as his CEO position is concerned.
(I have slightly improved upon the what I assume was a machine translation of Reddit user jandetlefsen. I have access to the original article in German which is behind a paywall, and the translation is accurate as far as I can tell.)The start into the electrical age is getting very bumpy for CEO Herbert Diess. More than 10,000 technicians are currently trying to solve the problems of the showcase project ID.3. There are already signs of the first personnel casualties.
Location: Volkswagen plant Wolfsburg, Hall 74, 8.30 a.m.
Every working day, software experts, engineers and top managers meet here for a half-hour morning round. Head of Development Frank Welsch (55) is a regular participant, as are Christian Senger (45), Member of the Board of Management for Digital Affairs, and Thomas Ulbrich (53), who is responsible for electromobility. Suppliers send top people. Almost all the board members were there; sometimes Volkswagen boss Herbert Diess (61) comes himself and shows the importance of the morning round.
Because even if the ID.3 marketing slogan ("Now you can") has been suggesting for months that it's about to start - the e-mobile is not ready for the masses. Many at the top of the company doubt that it will be ready by summer as planned.
If it goes wrong, the ID.3 could destroy careers, theoretically even that of Herbert Diess. New drivetrain, new software and electronics architecture: ID.3 stands for the transformation to an electrical and technology group. It is Diess' very personal project. The VW group CEO also manages the VW brand.
All the more important is the rescue round. This is where the technical problems are discussed, this is where orders are placed which are then processed by ID.3 teams throughout the group. More than 10,000 technicians and engineers are currently working on ID.3, including external developers, our sources in Wolfsburg say. They have just brought in hundreds of additional experts, top people from Audi and Porsche, for example; they are flown in on Mondays and out again on Fridays.
When Chancellor Angela Merkel (65) personally came to Zwickau at the beginning of November 2019 for the start of production, it looked as if everything was going according to plan. Only the cars are rolling, at the moment, according to the production schedule, there are a good 50 of them a day, stupidly parked. The software does not work as it should.
The basic architecture was developed too hastily, say VW experts, system parts often don't work with each other and have bugs. At some point in the next few months, when the quality is high enough, the green light will be given for the [new] software to be installed on the cars that were already built.
Did Diess want too much too fast? In addition to the electric drive, a completely new software organization was necessary? The Porsches and Piëchs, major owners and actually Diess' most important allies, have never really been convinced of their protégé's electric focus. Now they are getting restless. In small group discussions they expressed their displeasure, they say.
Employee boss Bernd Osterloh (63) and the IG-Metall parliamentary group remind internally that the VW group missed out on billions in 2018 because of the delayed changeover to new emission regulations - and now fear similar things in terms of CO2 penalties. The group must save 30 grams of CO2 per car in order to achieve the EU targets, as Herbert Diess himself recently said. 30 grams, that would be a fine of around ten billion euros in 2020. Indisputable.
Without the ID.3 CO₂ fines cannot be avoided. Purely electric vehicles will still be counted twice this year [under the 'SuperCredit' rules]. VW would have to sell 100,000 ID.3s in 2020 to meet the targets; this is how they originally calculated. They have now reduced this number; 80,000 must also be enough. The E-Golf and E-up, both of which have a compromising electric performance and are both in deficit, are supposed to make up for the shortfall a bit. Both are currently being squandered with high discounts. This speaks more for panic than for trust in ID.3.
Audis e-tron and Porsche's Taycan could also help, because the CO2 emissions are calculated for the group in Brussels. But there is a catch there too. Audi has already lowered the forecasts for the e-tron. They wanted to sell their electric SUV and a spin-off in 2020 up to 70,000 times. In the meantime, the scenarios have reached a good 40,000; battery experts consider this figure to be wishful thinking, which is how big the battery crisis is.
LG Chem supplies too few battery cells and is constantly reporting new production problems. Batteries from Samsung, which are to be added in the summer, do not yet have the necessary quality. Audi and Porsche, whose Taycan uses cells similar to those of the e-tron, are battling to make up for the low capacity. The matter went to the group board of directors. Porsche boss Oliver Blume (51) won.
Herbert Diess had an idea of how difficult the start into e-mobility would be. He said at a top management conference in January that compliance with the limit values for supplying, building and selling cars with batteries was "perhaps the most difficult task Volkswagen has ever had to face.
The problems are everywhere. They just postponed the Taycan delivery in Germany again for several weeks. The Ionity charging station joint venture, also supported by Volkswagen, is nowhere near as far as promised. And the teams responsible for the next electric VW ID.4 - scheduled to start at the end of 2020 - are urgently waiting for the people who now have to save the ID.3; a cascade of postponements is in the offing.
But the real battle will be fought in Hall 74. In the afternoon at 4 pm, the ID.3 rescuers will meet for the second time every day. What problems have they solved, what has remained open, where do they need to step up their efforts again? They are working in a disciplined manner on the electrical front, almost militarily, as contributors tell.
The hundreds of test drivers who are on the road in the evenings and at night report new bugs every morning in Hall 74; up to 300 would do it every day, says one of our sources who is participating in the meetings frequently. Negative scenarios of a delay of three to a maximum of twelve months are already circulating, which Diess' people dismiss as "complete nonsense".
But what to do if it doesn't work? Then it will have personnel consequences below the CEO level.
With foresight, Diess has expanded the VW brand board of directors to a council of eleven. In the event of a major ID.3 delay, he could fire various board members. Welsch, Head of Development, has been joined by Chief Technology Officer Matthias Rabe (57), who could take over. Another digital board member is also being sought, according to our sources at Wolfsburg. Herbert Diess has installed a firewall - at least as far as his CEO position is concerned.
(Cc: @avoigt)
Note the countless number of red flags:
- Sources indicate of an additional delay of 3-12 months, on top of the summer deadline.
- hundreds of test drivers (VW employees driving the ID.3) on the road, 300 of them reporting bugs on a daily basis.
- VW is cannibalizing their other development teams, such as the ID.4, E-Tron and Taycan teams. Software developers are flown in from their regular workplaces (where their homes are) on Mondays and they fly back on Friday. Those must be some super happy software developers browsing Tesla's GF4 list of jobs right now ...
- Note the low production rate of the ID.3 of only 50 per day, almost 4 months after the pompous "start of production" last year. That's 350/week, 1,400/month, 16,800/year ...which falls far short of the 80,000 ZEV units VW needs to make in 2020 to avoid 10 billion Euros of fines. BTW., maybe @Prunesquallor can explain that figure: how can 80,000 units save VW 10 billion euros? That's €120,000 per ZEV unit made - that sounds ridiculously high.
- Note the tidbit explaining the E-Tron production reduction: internally Audi and Porsche was fighting about battery supply, and the Porsche CEO won the infighting and the E-Tron got scaled down and the Taycan is getting the battery supply ...
- Sources at the shareholder families Porsche and Piëch expressed (anonymous) unhappiness with Diess as well. Those shareholders could depose Diess, if they wanted to.
- Diess has restructured the board to have "scapegoats" he could fire - but the responsibility for a ID.3 failure would squarely rest on his shoulders.
Every "ID.3 crisis group" working day begins with a 30 minutes meeting. Remember what Elon said about the pointlessness of meetings and the necessity of high-rate innovation to happen in flat meritocracies? It's all true ...
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