Volkswagen CEO praises Musk’s SpaceX success to motivate top executives

Volkswagen CEO Herbert Diess evoked the historic rocket launch by rival electric automaker Tesla’s CEO Elon Musk to motivate top executives at the automaker as they seek to overcome the auto industry’s biggest market decline in decades, people familiar with the matter said.

Musk’s Space Exploration Technologies has become the first private company to launch humans into space, and Diess informed a gathering of the company’s top management that they should draw inspiration from the achievement as the German manufacturer strives to massively increase its software operations while cutting expenses, said the people, who asked not to be identified as the gathering on Thursday wasn’t public.

Volkswagen’s push to overcome the advantage held by Tesla in electric car sales has run into difficulties beyond the coronavirus-induced market downturn. Tesla overtook VW in market value previously this year.

Diess has referenced Musk’s achievements before as well. On the sidelines of the Golf’s world premiere last October he stressed that the profitability of Tesla’s Model 3 had catapulted the manufacturer out of a market niche and admitted the U.S. automaker had a competitive edge in software. Since then the Covid-19 pandemic has pushed plans throughout the industry to roll out electric cars.

“We must significantly cut R&D expenditure, investments and fixed costs compared with the previous planning,” Diess reportedly said. Volkswagen’s cash buffer is set to drop until at least July because of weak demand, and some of the group’s brands might suffer a loss this year, Diess stated at the management meeting, according to the report.

Volkswagen’s brand Bentley has announced cutting 1,000 jobs in the UK.