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This article was published on October 19, 2021

Tesla and VW are the EV industry’s hottest frenemies

Guess who joined Volkswagen's conference in Austria...

Tesla and VW are the EV industry’s hottest frenemies
Ioanna Lykiardopoulou
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Ioanna Lykiardopoulou

Ioanna is a writer at TNW. She covers the full spectrum of the European tech ecosystem, with a particular interest in startups, sustainabili Ioanna is a writer at TNW. She covers the full spectrum of the European tech ecosystem, with a particular interest in startups, sustainability, green tech, AI, and EU policy. With a background in the humanities, she has a soft spot for social impact-enabling technologies.

Last Thursday, 200 Volkswagen executives gathered for a conference in Alpbach, Austria, to discuss the electric transform the Group, with special reference to the conversion of the Wolfsburg plant, the company’s headquarters.

Well that sounds pretty boring, but trust me, it gets better.

There was one special and utterly unexpected guest who joined the meeting from far-off Texas… Elon Musk.

Yep, you read that right. In fact it was Volkswagen’s CEO Herbert Diess himself who invited Musk to join the meeting via video call.

Turning your enemy into a friend?!

As participants of the conference reported to the German newspaper Handelsblatt, Diess lectured vigorously about why he considers Tesla alone to be Volkswagen’s greatest challenger.

In fact, Diess noted that Tesla is ahead of VW in many aspects, especially when it comes to engineering.

And as an example of the brand’s prowess, he mentioned its fast reaction to the chip shortage by developing its own software that could use different chips within just 2-3 weeks.

So, who would think that following these words Diess would actually bring to the stage the so-called “most dangerous competitor” Elon Musk?

And the situation gets even weirder…

Musk to the rescue?!

Musk went along with the flattery lovefest and extended the ‘sportsmanship,’ praising Volkswagen for being an “icon” and Tesla’s greatest competitor.

According to the paper, when Diess asked him why Tesla is more agile than its rivals, Musk naturally assumed responsibility for the success and said that it all comes down to his management style — he is “primarily an engineer” with an eye for “supply chains, logistics, and production processes.”

He was, nevertheless, confident that VW would achieve the desired (electric) transformation, and tried to dispel worries about possible job cuts.

More employees are required for vertical integration,” he noted.

Diess took the opportunity to make it clear once again that his announcement last Wednesday that the conversion of the Group into an electric car supplier would cost 30,000 jobs in German production was a false report. 

Reportedly, the CEO said the following at the conference:

When I think of Wolfsburg, I don’t have job cuts in mind. That’s not what it is about. For me, it’s about how we work together, we have to become more efficient, faster.

Tesla as a role model?!

Diess said that at the core of VW’s transformation strategy lies the Trinity project: a new series version of electric vehicles that will be produced with considerably fewer variants.

He noted that the aim is a “dramatic” reduction in the complexity of the offerings. Instead of up to ten million possible variants for the VW Golf alone, there should be fewer than a hundred in the future, given the difficulty this poses to dealers and purchasers alike. 

Tesla can work again as role model. For instance, the carmaker offers three drive variants, five different paint finishes, two rims, and two colors for the interior for its entry-level Model 3.

The new series version will roll off the assembly line in 2026 at the Wolfsburg plant, with which Volkswagen aims to compete with Tesla and its soon-to-be gigafactory in Gruenheide, Germany. 

What the hell is happening?

Elon Musk’s appearance at the VW conference as an expert and a role model for a company that considers Tesla its biggest rival is contradictory, to say the least.

Especially since Deiss  has previously thrown shade on IONITY — which is partly owned by VW — when he couldn’t find appropriate charging points.

So is this a weird kind of sportsmanship? Or is it an uncommon marketing strategy for both companies?

And given that Herbert Diess has announced on twitter that VW will “soon” visit Tesla in Gruenheide, are we to expect a cooperation between the two? 

If so, I’d like to give a suggestion to the CEOs: how about a Golf Model S?

Do EVs excite your electrons? Do ebikes get your wheels spinning? Do self-driving cars get you all charged up? 

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