AUTONEWS

VW CEO Oliver Blume faces growing pressure to boost electric sales

A year after CEO Oliver Blume defended a recovery plan for Volkswagen, investors are back to “square one”.

The German carmaker's shares have risen around 2.5% over the past 12 months, while those of other major European carmakers such as Renault and Stellantis have risen further, both up around 50%.

When Blume addressed shareholders at the company's annual meeting on Wednesday, he emphasized patience, saying Volkswagen's transition into the electric vehicle era comes as the industry "undergoes its biggest transformation yet." of all time".

Investors, however, want to see clear progress in tackling the company's difficult transformation to electrification, which has included a series of failed new model launches and the company's declining relevance in China, the biggest electric vehicle market.

And now, with Chinese manufacturers expanding across Europe, Volkswagen is under increasing pressure to produce an electric car that more people can afford.

Volkswagen “lacks a ‘people’s car’ for the electricity sector,” said Union Investment’s Janne Werning in prepared remarks ahead of Wednesday’s meeting. The company’s shares “urgently need a boost.”

Volkswagen plans to launch a 20,000-euro (about $21,700) electric vehicle in 2027 to compete with the likes of BYD. The Chinese manufacturer is setting up two factories in Europe and intends to bring its Seagull hatchback to the region next year at a price below 20,000 euros.

Both Renault and Stellantis have been looking to form partnerships to reduce the cost of their electric model offerings. Stellantis plans to sell electric vehicles developed in conjunction with Leapmotor, from China, in Europe from September onwards.

Renault, which cooperates with Volvo to produce battery-powered vans, last year presented a compact electric passenger car that will be sold from 2026 for less than 20,000 euros. Last year, Renault shares rose 57% in Paris, while Stellantis rose around 40% in Milan.

Meanwhile, Volkswagen's electric vehicle project with China's Xpeng, whose first models for the local market will be launched in 2026, is progressing at "enormous speed", Blume said. “In China alone, we plan to launch more than 40 new models over the next three years.”

Dual role...Blume took over as CEO of Volkswagen in 2022, holding the same role at Porsche, which puts him in the unusual position of leading not only the parent company but also one of its most important brands.

Some investors say his dual role leads to conflicts of interest and harms the company's performance.

“Choose a company. Listen to the capital markets. Focus on one task,” said Ingo Speich of Deka Investment, adding that the company’s share price performance was “poor” compared to European competitors.

Blume has not signaled that he is ready to leave one of his positions. His message to investors is that he has set ambitious goals and aims for double-digit returns.

"The goals are to increase profits, work on costs in all areas and at all levels of the company and explore additional sources of revenue," he said.

Volkswagen is prepared to increase the free float (amount of shares outstanding on the stock exchange) of truck maker Traton, said Blume, a move that increases the unit's chances of joining the mid-cap MDAX index.

The group is also exploring the sale of up to 1 billion euros in Traton shares, Bloomberg News reported at the beginning of May.

Although Blume embarked on a €10 billion cost-cutting program to boost profits for the company's namesake brand, Deka Investment's Ingo Speich said the results were "very meager."

Competitors, he added, have been more efficient with their investments and the transformation toward electric mobility, leading to “drastic changes in market shares.”

In addition to cost cuts, Volkswagen brands plan to introduce more than 30 models this year and are bolstering hybrid offerings to combat weaker demand for electric vehicles in Europe.

“VW’s plans are big, but the deciding factor may be operational execution, something the company is not particularly known for,” said Joel Levington of Bloomberg Intelligence.

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