Volkswagen CEO says he wants to ‘get close and then overtake’ Tesla

The underbody of an ID.3 electric vehicle is assembled at a Volkswagen facility in Dresden, Germany, on January 29, 2021.
Matthias Rietschel | picture alliance | Getty Images

Volkswagen Group’s CEO has dismissed the notion that his firm could join forces with Tesla, telling CNBC that the German automotive giant was looking to go its own way.

Speaking to “Squawk Box Europe” on Tuesday, Herbert Diess was asked if he would rule out any future deal with Elon Musk’s electric car maker, in which VW could manufacturer its cars, or if the Tesla and VW brands would ever unite.

“No, we haven’t considered (that), we are going our own way,” he replied. “We want to get close and then overtake.” 

“We think that we can – we need our own software stack, our own technology,” he added. “And also, I think Tesla, or Elon, is very much thinking … (about) his way forward. So no, there are no talks between Elon Musk and myself regarding joining forces.”

The shift in focus to electric vehicles comes at a time when authorities around the world are looking to increase the number of low- and zero-emission vehicles on their roads in a bid to tackle air pollution and move away from the internal combustion engine. 

The U.K., for example, has announced plans to stop selling new diesel and petrol (gasoline) cars and vans from 2030. The European Commission’s “Sustainable and Smart Mobility Strategy,” meanwhile, wants at least 30 million zero-emission cars on the road by 2030.

It’s against this backdrop that VW, and many other major carmakers, are looking to compete with — and eventually challenge — Elon Musk’s Tesla.

On Monday, VW announced plans to establish six “gigafactories” in Europe by the end of the decade and ramp up charging infrastructure in Europe, North America and China.

On the battery front, the Wolfsburg-headquartered company will also focus on the development of a “new unified cell” which is slated to be rolled-out in 2023 and used in up to 80% of the group’s electric vehicles by 2030.

In his interview with CNBC, Diess said the next 15 years would see electric cars take the lead and software become the core driver of the automotive industry. He also predicted that cars would become autonomous within the same timeframe.

“To manage this change is probably the most important task we are facing,” he explained. “And we think we are on the way, we are making good progress.”

On the gap between what Tesla and European car manufacturers are doing, and whether it can be bridged, Diess was also upbeat.  

“I think so, because you know, the race is open – this is not the industry which you can conquer within a few years or so, this is not tech,” he said.

“So you need life cycles, you need product, you need plant capacities, you need market, you need to earn the trust of the customer,” he added.

“So this is a long run and yes, there are a few startups which we are watching closely and Tesla for sure is … in the lead in some aspects there. But we are not so far behind and we are gaining momentum.”