Oliver Blume, VW and Porsche boss steering an EV strategy shift

Two decades ago Oliver Blume did a PhD in Shanghai under the supervision of Wan Gang, who as China’s minister for science and technology later became the driving force behind the country’s electric vehicle revolution.

Now Blume, chief executive of both Volkswagen and Porsche, must safeguard two of Germany’s biggest industrial names from the achievements of his former professor, which gave rise to Chinese EV industry champions from carmaker BYD to battery giant CATL.

The key challenge Blume faces is how almost century-old companies that pride themselves on the quality of their hardware reinvent themselves for the coming age in which vehicles are electric and reliant on software.

The 56-year-old this week made one of his boldest moves yet as Volkswagen announced an investment of up to $5bn in Californian EV start-up Rivian. The two groups will form a joint venture to develop new software and Volkswagen will immediately gain access to Rivian’s EV architecture.

“In terms of a big tech transformation, you can’t do it all on your own”, he told the Financial Times. “It should be a win-win situation . . . The motivation from our side is to speed up software transformation at Volkswagen in all our brands. Rivian has best in class architecture . . . Volkswagen has the scale”.

Volkswagen, which owns most of Porsche, is struggling with intense difficulties in the shift to electric vehicles just as it faces a rapid decline of its dominance in China and a struggle to make serious inroads in the US.

The Rivian deal has been hailed by the US company’s investors as a lifeline, sending its shares up more than 30 per cent, but some Volkswagen shareholders are concerned over the scale of the investment — almost half the group’s estimated net cash flow for the year.

However, observers said the move showed an acceptance that Volkswagen’s attempts to develop software had not succeeded, and that the company needed to look elsewhere to catch up with digital native carmakers such as Tesla and BYD. 

Born in Braunschweig, a short drive from VW’s Wolfsburg headquarters, Blume studied mechanical engineering at the city’s technical university before joining Audi in 1994 as an intern. Over the following years he worked his way up through the VW group, including a stint as head of production for the Seat brand in Spain, where he still has a house.

He is held in high esteem by many of his colleagues. Daniela Cavallo, chair of Volkswagen Group’s works council — the body representing the interests of the company’s 680,000-strong global workforce made up of elected workers and management — calls him a “true team player”, hailing his “clear strategy” and trustworthiness.

When the Porsche CEO was handed the reins of its parent company in 2022, becoming the only person to head two Dax 40 companies simultaneously, Blume inherited Volkswagen’s halting attempt to build out EV software in Germany with its subsidiary Cariad. 

“From an investor’s perspective, the whole Cariad solution was basically associated with delays, failure, extensive cost, and an environment which caused quite a stir within the Volkswagen world,” said a senior executive at one large European asset manager. “In contrast to his predecessor, Oliver Blume did not see the benefits of ‘Software made in Wolfsburg’.”

Blume in January also spearheaded a historic partnership with Chinese EV maker Xpeng to jointly develop a new generation of EVs, essentially moving the company’s Chinese software development out of Germany too. 

“We have taken a lot of important decisions in the last year and a half,” Blume said. “It’s up to us to combine our heritage with this future technology.”

The Rivian partnership is an effort both to address the company’s software development problem and give the company a larger foothold in the US premium market, where rivals Mercedes, BMW and Tesla do better.

“Blume may be looking to be the first CEO to divert more attention to North America than his predecessors,” said Matthias Schmidt, an independent auto analyst. “If he can succeed here it could arguably be just as large a step as when former Volkswagen CEO Carl Hahn [from 1982 to 1993] decided to double down on China.”

The strategy is all the more essential given that Volkswagen is rapidly losing market share in China, going from almost 20 per cent in 2020 to 15 per cent last year.

“We need especially this [move] in North America in order to be better balanced between the regions,” said Blume, referring to the three main sales markets of China, Europe and North America.

His predecessor Herbert Diess thought the solution was to revive Scout, a cult American marque of the 1960s and 1970s whose brand VW acquired in 2021, to push into the US. Blume will be hoping the outdoorsy Rivian brand, whose SUVs and pick-up trucks start at roughly $80,000, could be a better entry point.

Blume is a keen player and watcher of tennis. One colleague and tennis partner told the FT Blume was a methodical player, first exchanging three or four shots before building to a winner.

Industry insiders say he is unlike previous Volkswagen bosses, who through sheer force of personality managed to exert their will on the various factions in Wolfsburg. 

“VW is a company that thrives on the strongman — full of towering egos and strong brands,” said one carmaking veteran who knows Blume. “Oliver is softly spoken, and actually listens to people. The question at VW is, can a nice guy prevail? Especially when he has more difficult decisions to make than his predecessors?”

Additional reporting by Mari Novik and Kana Inagaki