© Reuters. FILE PHOTO: Herbert Diess, CEO of German carmaker Volkswagen addresses the media during the annual news conference at the Volkswagen plant in Wolfsburg

BERLIN (Reuters) – Volkswagen (DE:) replaced Herbert Diess as chief executive of the VW brand on Monday and installed chief operating officer Ralf Brandstaetter to lead cost cutting efforts at the company’s largest plants in Germany.

The management reshuffle comes after weeks of squabbling between Volkswagen’s powerful labour leaders and managers over the pace and scale of cost cutting plans to free up resources for a radical shift toward electric cars.

Volkswagen said Brandstaetter would take over on July 1 to give Diess, who remains group chief executive, more leeway to run the rest of the company, which includes brands such as Audi, Bentley, Skoda, Lamborghini and Porsche.

“Ralf Brandstaetter is one of the company’s most experienced managers,” Diess said in a statement. “I am therefore very pleased that Ralf Brandstaetter will be forging ahead with the development of the brand as CEO.”

Volkswagen said Diess retained overall responsibility for Volkswagen passenger cars and that the management reshuffle would also result in the departure of procurement and components chief Stefan Sommer.

Sommer joined VW in 2018 and oversaw ambitious procurement plans, including the construction of large factories to power Volkswagen’s ambitious electrification shift as the carmaker encountered supply bottlenecks.

Earlier on Monday, sources told Reuters that Volkswagen’s supervisory board was hosting an extraordinary meeting to discuss replacing Diess as CEO of the VW brand.

Diess is trying to get the company’s powerful labour leaders, who control nine of the 19 seats on the supervisory board, to agree to painful costs cuts.

The savings are designed to help pay for a 34 billion euro ($38 billion) investment in electric and autonomous cars and 50 billion euros for EV battery procurement.

Diess also came under pressure after Volkswagen was forced to halt sales of its newest VW Golf model because of software glitches at a time when the company is preparing to mass produce VW’s ID.3 electric car.

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2020-06-08