In Good Company with Nicolai Tangen - Porsche and Volkswagen CEO: Leadership, iconic cars & Chinese competition

Episode Date: May 15, 2024

Join us for an exciting drive with Oliver Blume, the CEO of Porsche & Volkswagen! Oliver talks about his love of cars, the magic of the Porsche 911, Chinese competition in the EV market and how he splits his time leading two companies. When Porsche got listed in 2022, we were a cornerstone investor, and today we own over 1% of Porsche and Volkswagen. We are in the race together, so let us go for a ride.The production team for this episode includes PLAN-B's Pål Huuse and Niklas Figenschau Johansen. Background research was conducted by Kristian Haga.Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi, everybody. Today, we're going for an exciting drive with the CEO of Porsche and Volkswagen, Oliver Blum. Now, Porsche is one of the most recognized brands on the planet, and we own more than 1% of Porsche and Volkswagen. When Porsche got listed in 2022, we were a cornerstone investor, so we are kind of in the race together here. So, herzlich willkommen, Oliver. Yeah, hello. It's a great pleasure to be together with you and joining your podcast series, Nikolai. So, Oli, are you a petrolhead? I am, I am. I'm working in the automotive industry since 30 years. I'm passionate for cars and I love it to drive.

When did you buy your first Porsche? I bought my first Porsche when I started at Porsche almost 12 years ago. And it was a 911. What's the magic with 911? I mean, your ticker code on the stock exchange is P911. You have 911 million shares an issue so what is it with this number yeah the 911 is is our icon our first edition we launched in 1963 and since then we had numerous successes and victories in motorsport. And the 911 expresses what Porsche stands for.

It's a unique design. It's a great performance of the car. And it's the great lifestyle of Porsche our customers love. So you, real professional petrolhead, you basically open the door of a car and you sit down and you start the engine. How do you know it's a good car? So when you drive, you start to drive, you know, second, third, fourth gear, just how do you know that you love this car? What is it you're looking for?

Yeah, first of all, we have the key on the left hand side at porsche and then i know that i'm at home and feeling the car for for me is um how is the drivability of a car what does that mean what is it how do you steer the car right if it handles like like a go-kart with a direct steering. Then the handling, how you're taking the curves, how the chassis is reacting, how is your seating position. And all these factors are important for the drivability of a car. And at the end, at Porsche Porsche to have a real sports car. And for Porsche, it is important having on the one hand side, the sportiness, the performance, and on the other side, the abilities as a daily driver.

So you add all these together, this kind of drivability, how does Porsche differ from other cars? Yeah, for Porsche, it's not only the acceleration. For us, it's putting into the acceleration um for us um is um putting into the car a lot of innovations um coming from motorsports because we think um that um the racetrack is the hardest testing field for our innovations for example our pdk um the braking systems and um the hybrid systems and a lot of innovations coming from motorsport. And that is important to differ from the competition. It's not about acceleration.

It's about the driving abilities. And our hardest measure is the time we are achieving on a racetrack. For example, the Nürburgring Nordschleife, the famous one in Germany, or Laguna Seca, is the time we are achieving on a racetrack for us. For example, the Nürburgring Nordschleife, the famous one in Germany, or Laguna Seca. And there we know every second is important to build the perfect sports car. What about the brand?

What is implied in the Porsche brand? The brand is very important as Porsche. We were able to develop an iconic brand during the over seven decades. And it's a heritage of our brand for what our brand stands for. The contradictions in between usability and design, for example, play a big role. Then the Porsche culture play a big role. And at the end, the iconic product with 356, our first model, then the 911 and all the other models over the 718, Cayenne, Panamera. Then McCarn play an important role.

And this combination is what our customers love because we are the brand for those who follow their dreams. Who is your target customer? their dreams. Who's your target customer? We haven't got this special target customer. Important for us to fulfill dreams. What kind of dreams?

To have a life dream. We have people who stand for success and at the end to fulfill their own dream and um so uh our our customers um are our people um who love to to drive sporty cars who love um brands and um at the end um to have um a high level of individualization, exclusivity. And so our customer profile around the world is like this. But, for example, the share of diversity is different.

In Asia, we have a share of 50% male, male and female. In the Western world, it's more 80-20. Why do you have a higher penetration in Asia in terms of female drivers? Yeah, because they love the luxury positioning of Porsche. We have a lot of very successful young ladies in Asia, entrepreneurs, and that describes the customer profile perfectly, that they are hardworking and they are aiming for success. And then at the end, they are spending in luxury goods like Porsche, loving the heritage of our iconic brand. And on the other side the modern technology well i mean you have kind of branched out with the likes of macan and you mentioned exclusivity

but you do produce a lot of cars how do you balance exclusivity with the amount of cars you sell porsche is positioned uniquely in the automotive industry. On the one hand side, we are a luxury player by achieving an average sales price over 100,000 euros. On the other side, we have the opportunities of scale. We sold over 300,000 units last year. And we are benefiting from the scale effects in between our brand but we have on the other side also the opportunity to benefit from the scale effects and volkswagen group where we are collaborating in terms of modules parts purchasing volume and so on and what is important for us being able on the other side to offer exclusivity

whatever our customers ask us we are able to implement into into our cars so we can say that no Porsche you can compare with the other who is leaving our production line. leaving our production line. Now, we're going to focus mainly on Porsche today, but you are also the CEO of Volkswagen. And so just remind us, what is there in the Volkswagen Group in addition to Porsche? I mean, Volkswagen, of course, but what else?

Volkswagen Group is much bigger. In Volkswagen Group, we are over 680,000 people working there. And Porsche is a company with 40,000 people. Each of the brands in Volkswagen Group are different. And for us, it's important. We are a very international group. We have the culture of each brand where we are positioned, like Lamborghini or Bentley.

We have the Italian culture, the English culture for Bentley, for example. Then we have Audi and Volkswagen in Germany, Skoda in Czech Republic. And the big difference is the complexity we do have to handle in Volkswagen Group. But the great issue is that we are able to manage all these fantastic brands in Volkswagen Group. And so I think each of these brands,

something positive, where can you learn? And in my history, I were able to work at Audi, at Volkswagen and at Seat, for example. And in each brand, I've seen very positive practices I was able to implement also in Porsche. Well, I'm a happy driver of an Audi, so that kind of suits my temperament, you know. Oh, yeah. Happy to hear it. Now, if you look at the value of the group, and we will not spend much time on this, but it's fair to say that most of the value in the Volkswagen group is kind of tied up in the Porsche brand. What do you think that is telling us about the rest of the group?

Yeah, with Porsche IPO, we have shown the value of the Porsche brand. And we were able to unleash the potential of our brand with a very, very successful IPO with very difficult circumstances at this time. And the positive development shows what potential we do have in Porsche with our robust financial profile. And in Volkswagen Group, I think there is still a lot to improve in terms of the capital market value.

And we have shown a very robust result in 2023, implemented a clear strategy, a clear restructuring plan. And this year we will bring over 30 new products to the market. And I think it has a lot to do with trust and delivering our results. And then there's a big potential also on the Volkswagen group stocks. A big market for you is China. How do you see the Chinese market now? In China, we see a big development in terms of innovations,

a fantastic speed. And so for us, it was a clear decision in Porsche to build more technology and innovations in China for China for examples our Porsche digital to offer our Chinese customers the Chinese ecosystem especially in terms of digitalization. We are very well positioned in China in the luxury segment, over 500,000 renminbi with an average sales price of a million renminbi. This is a segment of 600,000 units. Up to now, there are only international brands in this segment no

chinese brands we think with our engine positioning um the mix of ices plug-in hybrids and bevs we are well well positioned for for the market there's a strong demand. But what is very important for us is also value over volume. And so, especially last year, we reduced our volume, not joining the discount and pricing war we are faced in China. And that was very, very successfully maintaining our luxury positioning there. What about the electric vehicle market in China? How do you see that? How do you see competition? Yeah, a lot of new competitors are entering in the market,

but most of them more in the volume and premium segment. The luxury market for electric mobility isn't built yet. We have shown a market share over 30% for the Taycan in the luxury electric segment. Now we are entering with a new Macan and the new Taycan, and that's a big opportunity for Porsche, especially build this luxury segment on electrification. Important is that you're coming with big innovations. We are offering now,

for example, our new product there in the market and having great opportunities to build the market. When you drive the Chinese competing cars, what do you think? They are very good in terms of digitalization. They are very good in terms of digitalization they are very good in terms of voice recognition some of them have very good advanced autonomous driving abilities and so i think the chinese have learned during the last decade to build cars they are advancing very fast and so i think we don't have to hide for the competition in china but it's worse to have a look on chinese car makers and that's my experience in my work life wherever you are you can learn something and to make yourself better. And so we don't fear competition.

We are from the racetrack and competition makes you better. And at the end, competition drives innovations and innovations are positive for the customer. Absolutely. You mentioned digitalization. So the whole infotainment system, how important is that in today's car? More and more important. The customers expecting their digital ecosystem, they use from their mobile phones, for example, often their cars.

And therefore, in Porsche, we decided a own new board resource driven by Sajat Khan, caring about all the car it issues and infotainment is one important um offer we are developing for for our customers and there as i mentioned before also developing solutions in the regions of the world in this case in China for China, but also in the US. We have partnerships and activities to provide to our customers the perfect infotainment system. What about batteries? How do you see the battery technology moving? The battery technology has seen a big advancement during the last years especially in terms of chemistry

which led to bigger ranges then for us fast charging play play a big role Porsche was the first serial manufacturer with an 800 volt system which brought us to charging times 20 minutes from 10 to 80 percent charging level and we are aiming for a even more improved charging time of around 15 minutes for the upcoming cars and so we see a lot of potential in the electrification and therefore in the electrification and therefore we have a very ambitious target to achieve by 2030 80 percent of our cars fully fully electric because we think that electromobility is superior than the combustion engine cars because of the strong development during the last years and the still unleashed potential of electric cars. At the same time, you invest in e-fuels. What is the e-fuel? We think decarbonization from a global approach and we take over responsibility. And we think

also to all the combustion engine cars around the world, but also chips and aircraft. Synthetic fuels play an important role when you're able to produce them in regions of the world where renewable energies are unlimited. The need of energy is higher comparing to hybrids or to full electric cars. But when you produce them there, there isn't the argument anymore about the need of energy. And that's a combination of hydrogen and CO2 coming by air capturing from the air.

And the big advantage of so-called e-fuels is that the transport is very very easy without cooling or putting them under pressure like you have to do it with hydrogen you can use the net of the existing filling stations you can mix them with traditional fuels and you can use existing combustion engines and so it's a additional argument for decarbonization especially in the transformation and thinking about the regulation in europe maybe 2035 when they won't release any more combustion engine cars you will have the existing cars still on the roads and therefore we need a solution and therefore in addition to a strong electrification strategy we are investing also in e-fuels

now only when we last met you were super excited about the the launch program for next year tell me about it what are you launching what should we be waiting for here that's that's the biggest launching program in the history of of porsche um we are now um fully in the market with the new cayenne uh we have had already um the market premiere for um the new panamera then the new makan in january in singapore and four weeks ago we were able to launch the new Taycan and there especially the Taycan GT for completely new model lines for Porsche and at the end of the year we expect in a new 911 in the first time of the history with hybrids and so we are renewing five model lines of Porsche of our existing fix and that is a great ambition for our team,

a great challenge we have to handle this year, but a great opportunity for our customers. Which of these are you going to drive? I'm in a good position to test all of them. I bet. I love the 911. It's good to be the boss, huh? That's a great advantage.

The 911, i love and um i own nine nine elevens and um especially the new 911 and i test them with a hybrid engine and the um tremendous acceleration and still having the six cylinder boxer in the rear is fantastic um and today i'm driving a taikan the new one with more range in wltp we are close to 700 kilometers of of range fantastic charging times tremendous acceleration and what you have seen with the taikan gt is also on the racetrack a a very, very cool car with records on the Urban Green Lodge Life or Laguna Seca. And so both of these cars are fantastic. And then in the second half of the year will come the Macan. And that will bring the Macan to a completely new level. Full electric Macan with offers of infotainment, charging navigation or augmented head-up display.

There's a lot of features where we play in the Premier League. Sounds cool. Now, talking about the Premier League and coming back to motorsport, what are the innovations from motorsport that you're integrating into these new models? Motorsport is at the core of Porsche. We are counting 19 victories in Le Mans, for example. This year, we were able to win the 24 hours of daytona the heritage race in the us and for us motorsport is a toughest testing

field for our innovations and for example the new hybrid for the 911 is a motorsport hybrid which came from the 918 but also the oil cooling we are using for our new battery systems we developed first for for motorsport the 800 volt system is coming from the motorsport is only three example what we are doing there we will continue to do so because we think motorsport is the core of Porsche and from motorsport are coming the best innovations. Changing tack a bit and moving on to corporate culture, just generally speaking, how do you feel it is to do business in Germany?

In Germany, we are in a situation where we are looking back to decades of success, welfare in the community. And that's not given for the future. It's like in sports. When you win a cup, you haven't got the guarantee that you will win it the next year. And so that is the situation in Germany, always thinking about to fight for the success in the country. And so we have some circumstances which are not so easy to drive the business

in terms of industrial regulations, energy pricing. But we are proud being a German company founded in Stuttgart-Soffenhausen. And we produce the majority of our cars in Germany because we think that German quality is still an important brand mark, especially in terms of cars. And so we are in close contact also to the German government to improve the industrial regulations. And then we think we have very qualified people in Germany. We have perfect engineering capacities and so germany especially has got

a big future when we are prepared and and able to focus on our strengths we were able to show in the past if you could change three things with the german industrial policy what would it be first of all our our industry is driven by speed and we have a lot of regulations not only in germany and europe as well to reduce regulations and coming to faster decision making in between politics and industry, then what we can change is the support for the industry, especially when you're investing. There are also decision making processes, but also subsidies,

especially when you're going in new technologies. And that is important for Europe and for Germany to having a clear master plan on which new technologies we want to focus. And then in terms of electromobility, I think it is important, besides of the new products the industry is bringing to the market, also to support in terms of charging infrastructure, in terms of new renewable energies. And these three points I would like to speed up and to change. It speeds technology and charging infrastructure. You have a long tradition in Germany of very high union and employee engagement

at board levels and so on. Just what are the pros and cons of working in this way? Yeah, we are acting as a family, working together. And for me, it's always important getting a close feedback, also from the labor side. And we are driving the companies together with an entrepreneurial spirit. And there counts the same as we talked about the politics. We shouldn't increase

our regulations and agreement processes we need the speed for taking decisions I have a very positive experience working together with the worker unions when you deal fair and deal with full transparency

you can solve every problem and that's my working experience of three decades. And that's how I'm handling the process together with our partners. Now, you are CEO of two companies, right? So both Porsche and Volkswagen. How does this work? How do you split your time?

Yeah, for me, it was very important when I have taken the decision also to take over the responsibility in Volkswagen group to drive at the same time Porsche, because for me it's important to be very closely linked to technology, to processes

with a close contact to the people, being able to take the right decisions on the strategic group level it is a challenge very clear in terms of organization but when you take the right priorities it works and now i'm driving this for over one and a half year and up to now we haven't got a conflict in between i think it's very supportive driving both at the same time and it's not new in volkswagen group that i see oh driving a um a brand like ferdinand piech or martin winterkorn um have driven um also the brand of volkswagen so

i'm driving porsche and volkswagen group and um my um um feedback up to now after one and a half years it works perfectly and it's supportive. Do you have to change the way you behave when you go from one company to the other? Do you have like a Porsche cap and your Porsche shoes and then you move room and you put on something else? yeah leading leading um both shops is very very different um in in porsche um i'm very um deeply involved in the operative processes and volkswagen group is more strategic um there i'm leading 12 brands and um the technical issues are similar, but on the end, I have partners, CEOs of all brands who are responsible for the other brands. And we are taking more decisions how we can improve our scale effects in between the brands, how we are driving together the performance programs and taking strategic technology decisions. programs and taking strategic technology decisions.

And there it's very helpful that I'm very closely linked to the car business and being able to evaluate technologies and taking these decisions. And so both of these jobs are very different. One is more operative and the other one is more strategic. When you are so involved with technicalities and the technology in Porsche, how do you avoid becoming micromanaging the whole thing? Or do you? It's all about priorities. I'm used since many years to work with a so-called top 10 plan. What are the most important topics to solve in a year?

And that helps to focus on the right things. And I implemented this systematic. And that's not important if you're talking about 10 points, 5 points, 7 points. You need the right priorities. And beside of this, this embedded in a long-lasting strategy. And I built my strategy in terms of 10 years and so i have a clear focus where to lead the company but also with the operative program year by year with the right priorities now i know that you are skiing from time to time with Axel Lundsvindal, my fellow Norwegian guy.

He's one of the best skiers of all time. So I asked him how your skiing was. And he said you were pretty fearless and very fast. So is that the way you run the company as well? Yeah, I love it to drive fast. And Axel is a great skier, but also a great, great person. He's the ambassador of Porsche, and I love it to be together with him and hiding out for skiing and also on the racetrack.

He's a great, great racer. And that combines us. So I'm on the racetrack. He's a great, great racer. And that combines us. We are coming from sports. And I love it to drive the company like a sports team. On the one hand side, focused on performance, on speed. On the other side, on team spirit.

And to working together, helping each other, winning and losing together. And taking the right decisions uh with a um same mindset i asked him whether you uh whether you skied faster than a porsche and he said thankfully not uh so i guess that's the good news but um you totally right how do you um remain grounded uh kind of uh to the factory floor when you have such important positions? Yeah, I spend the most time in my professional life in production. And so I'm still very closely linked to especially people in production. And when I'm walking around in the factory, there's still a very close contact. And people there tell you the honest things and the truth

and what's going on in a company. And that's very, very important for me. And I think as a CEO of a company, it's very important to be touchable for the people. And with this, you're getting the right feedback for taking the right decisions. And so in Porsche, we like it to work very closely with the team and also having events together and they're being touchable and being very close to the team. Now you have a PhD in Mechanical Engineering. Do you think you would have had the credibility with your colleagues if you didn't have that?

didn't have that at the end is um uh your um your input in in the company and and your impact um you you have um for me it was a good opportunity um when i when i started working at audi doing a parallel a phd and also i did it in in china um over over years ago, and it was a great experience as a young man going to China and feeling the engineering and innovation spirit. They started in these times with electric vehicles where nobody else thought in the success of electric vehicles. And so for me, it was a great experience working there in the Automotive Institute of Tongji University in Shanghai. But in terms of credibility, it helps to understand and to deep dive into technologies.

But at the end, it's more important how you act, how you decide and how you work together with the team. How much do you work? A day, around 12 hours, depending sometimes in the evening and one day on the weekend.

But for me, it's also important to have the right balance between work and personal life. I love sports. And that's also important, being fit and having the right physics to being able to drive the company. And in addition to skiing, what kind of things do you do? I'm soccer, used to play soccer.

And now from here, I prefer to run, to jog and then mountain bike. Biking is my favorite sport and sometimes I'm going to play tennis. Right. So, Olli, we got tens of thousands of young people on the podcast here. So, if you were to give them an advice and that's not to go and save up to buy a Porsche, but something else. What kind of advice would you give them? Yeah, I'm in the situation as a family father i have two daughters and they started the last years studies at university and i told them listen to your heart what you want to do and when you love things um your your passion for them and at the end they are coming the the right results and um

that was also a my spirit in my whole career and that's my advice to to young people when they start a career for me it's um impossible to plan a career and um always focus what you are doing at the moment and at the end um the success will pay off well ollie seems like you have certainly listened to your heart and a lot of engines also i suspect during the years but a big thanks for being on and and good luck in the fast lane yeah thank you very much nicolai for the good talk and thank you very much for the great partnership in the porsche stocks fantastic thank you very much, Nikolai, for the good talk. And thank you very much for the great partnership in the Porsche stocks. Fantastic. Thank you.