VW’s boss warns the troops: We don’t want to end up like Nokia

Volkswagen AGis at a critical juncture. It hasweathered the pandemic relatively well but is fretting about cases going up again. It has electric cars rolling out but is well behind Tesla Inc.And it has massive manufacturing scale but desperately needs to rethink its vehicles as rolling software devices.

It’s this last issue thatChief Executive Officer Herbert Diessdriveshome with VW’s more than 635,000 employees. The transition in competencies from industrial might to software prowess will be an immense challenge for automakers that are vast, deliberate and some say ripe for disruption. Car companies that get it wrong risk ending up like Nokia Oyj—failedhardware makers doomed by more nimble and technologically adept upstarts.

“Nokia is probably a good example of how such a change can happen—if you’re not fast enough, you’re not going to survive," Diess, 62, told Bloomberg at VW headquarters in Wolfsburg, Germany. “I’m always telling our people this example."

During an almost hour-long virtual event a week before VW’s supervisory board meets for its annual review of spending plans, Diess discussed how he’s readying thecompany for Covid-19’s next wave, a possible new occupant of the White House and the riseof electric vehicles.

The following excerpts from the interview have been condensed and edited.

How has the pandemic altered VW?

“We are very tense, very concerned all around the world because the cases are increasing again. We are better prepared than for the first wave because we established a lot of testing. For instance, alone here in Wolfsburg, we have test capacity of 2,000 tests per day. So we’re trying, really, if we have cases, to fence everything in. We want to make sure that our people are safe and confident if they come to work."

How does a Trump presidency or a Biden presidency affect your planning?

“There are different programs from the Democrats and president Trump’s leadership is different. A Democratic program probably would be more aligned with our worldwide strategy, which is really to fight climate change, to become electric.

“On the other hand, I would say over the past years we have established a really trustful relationship with the Trump administration and government. We did a lot also to contribute to build America. We are investing a lot."

How do you keep people within the organization focused on this transformation when you have all these distractions around them?

“Everybody thinks probably day in andday out about what happens with Covid, but in the long run climate change will be the biggest change mankind is facing and I would say nobody is losing sight. Even with Covid, we’ve seen that there’s more focus on electric cars, on keeping climate change in mind, preparing societies for the change.

“Both themes are in our mind—short term, Covid, and long term, climate change."