Comment vw’s u-turn: the end of diesel

The news in the run-up to VW’s annual general meeting is breathtaking. For the Wolfsburg-based company, the turbulent times are just beginning.

Sniffles? – Matthias Muller, Chairman of the Board of Management of Volkswagen AG, in Wolfsburg on Tuesday Photo: dpa

When Volkswagen coughs, Lower Saxony fears a wave of flu, and all of Germany has to dress warmly. The annual general meeting of Europe’s most important car company is scheduled for Wednesday in Hanover – and the news leading up to it is breathtaking. First, there are the public prosecutor’s investigations into market manipulation against ex-VW CEO Martin Winterkorn and a top acting manager.

In addition, acting Group CEO Matthias Muller is calling into question a technology that is the backbone of the company: the passenger car diesel engine. Both pieces of news have what it takes to shake up the Wolfsburg-based group – with all the consequences for locations, jobs and tax revenues.

The investigations into market manipulation relate to management’s handling of the affair surrounding the fraud software in diesel engines that falsifies emissions values. The accusation is that management should have made the fraud, which has a significant impact on the share price, public earlier.

For the Group, the individual criminal appraisal of the behavior of its ex-boss is less important. More important are the financial consequences. If Winterkorn is convicted, for whatever reason, this will increase the chances of damages being claimed by institutional investors from VW for share price losses suffered.

This would make the emissions scandal increasingly expensive. It’s a simple calculation: The many billions that VW has to raise to deal with its scandal are not available elsewhere. For example, for investments in the future.

E-cars are a challenge

But the Wolfsburg company would need every million for these investments if it were now to announce the end of the diesel. After all, the alternative, the electric car, is still far from being suitable for mass production. It is simply too expensive and has too short a range.

Nevertheless, VW must take up this challenge in order not to oversleep the development. If American or Chinese companies are able to build e-cars suitable for the masses, the governments of their countries will sooner or later ban diesel or gasoline cars from their cities. That would be the end of Volkswagen’s export successes.

Nor can VW avoid the development of a self-driving car, which is nothing more than a pointless technological war with the super-rich corporations from Silicon Valley. No driver needs such cars – but if the Americans succeed in making them suitable for everyday use, there will be so much hype about them that any corporation that doesn’t have them in its portfolio will look old.

In Wolfsburg, the turbulent times are just beginning.

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