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VW chief calls for negotiated settlement to end war in Ukraine

Volkswagen’s chief executive has called for a negotiated end to the war in Ukraine to protect worldwide free trade, as the carmaker grapples with the war’s effects on its supply chain.

Herbert Diess also warned the German group would struggle to overtake Tesla as the world’s biggest maker of electric cars by the company’s target of 2025 in remarks at the FT’s Future of the Car 2022 summit on Monday.

Diess made the plea for a negotiated settlement as the war in Ukraine has dragged on for more than two months, hitting supply chains and disrupting the global economy.

“I think we should do the utmost to really stop this war and get back to negotiations,” Diess said.

“I think we should not give up on open markets and free trade and I think we should not give up on negotiating and trying to settle.”

Problems with the supply of a wiring harness manufactured in Ukraine have been a particular problem as carmakers have struggled to keep up with demand for cars in Europe and the US. Waiting lists for some models have reached about a year.

VW boss Herbert Diess is interviewed by the FT’s Joe Miller at the Future of the Car 2022 summit
VW boss Herbert Diess, right, is interviewed by the FT’s Joe Miller at the Future of the Car 2022 summit

VW, the world’s second-largest electric vehicle manufacturer by volume, has also “sold out” of battery-powered models in the US and Europe for this year because of supply chain bottlenecks.

However, Diess said VW’s own problems with sourcing components from Ukraine, which had focused on the wiring harness made in the country, were “under control”.

“We’ve set up alternative sourcing for the wiring harness we had there,” he said.

He was also uncertain whether VW would succeed in becoming the world’s biggest producer of electric vehicles by 2025, saying that the growth rate of Tesla, the US electric car pioneer, had surprised the German company.

“I didn’t expect our main US competitor’s growth to be so fast,” said Diess.

He told the conference only that there was “a chance” the company would be the market leader in the electric segment by 2025.

“At the very least, we are second,” he said.

He added: “It will be very tight, but we will not give up on it.”

He also accepted that it was “very, very ambitious” for the company to have set a target for 50 to 60 per cent of its vehicle sales to be electric by 2030. The figure is at present only 7 to 8 per cent in Europe.

“Many people now are over-optimistic because this is a change which is a systematic change,” Diess said.

VW, like many large carmakers, has staked its future on heavy investments in new electric technologies.

Diess said the project to develop a small electric vehicle was going “really, really well”.

He expected the vehicle to be profitable by 2025, in line with targets.

“Yes,” he replied to a question on the subject. “We’re confident that they’re going to be profitable.”

Nevertheless, Diess accepted that large cars remained more profitable — a consistent problem in the industry.

It was, however, the “right time” to make progress on small cars, he added.

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