The Decisions That Changed Volkswagen

This post is a companion to the latest 3DLANES podcast episode, and derived from its transcript.

I keep coming back to Volkswagen (VW). Not because I want to, but because I can’t help it. I love the brand, and that’s exactly why watching it during the last decade has been so frustrating. So here we are again, kicking the same dead horse, this time looking at the actual chain of decisions that got VW from Dieselgate to the restructuring plan sitting on the table right now.

How we got here

Volkswagen wanted Toyota’s crown. Around 2013, the plan to become the world’s largest automaker by volume ran through diesel. Diesel was supposed to be the edge. Instead, it became the hole they dug themselves into.

Year	What happened
2015	Emissions cheating software exposed. CEO Martin Winterkorn resigns; Matthias Müller takes over.
2016	$6.7B set aside for recalls. $14.7B U.S. settlement agreed.
2017	Guilty plea to criminal charges in the U.S., $2.8B federal fine, six executives indicted. Roadmap E unveiled: 1M EVs/year and 80 new EV models targeted by 2025.
2018	Müller is out, Herbert Diess in as CEO. Reorg into volume/premium/super-premium clusters plus a dedicated China structure. Diess tells shareholders VW will be more transparent and compliant going forward.
2020	Cariad founded, a software subsidiary meant to unify software across VW, Audi, and Porsche.
2021	Reports surface of a restructuring into four brand clusters: volume, premium, sport/luxury, commercial. Framed as faster decision-making.
2022	Diess departs, Oliver Blume (Porsche CEO) succeeds him, reportedly after disagreement over software direction, with Porsche and Audi pushing back on Cariad’s technical demands.
2023	Cariad delays push EV launches for the Porsche Macan and Audi Q6 e-tron by up to three years. 2,000 Cariad jobs cut.
2024	VW’s tech C-suite is replaced. Cariad posts a €2.64B operating loss on €1.44B revenue. Cumulative Cariad losses top €7.5B against €3.5B revenue since 2022. Peter Bosch takes over as Cariad CEO. Late in the year, VW agrees to cut 35,000+ German jobs by 2030, via voluntary departures.
2026	VW’s executive board presents a four-year restructuring plan: model range cut by up to 50%, product complexity down 75%, production capacity aligned to 9M vehicles a year, up to four German plants possibly closed, up to 100,000 jobs at risk.

That’s thirteen years, four CEOs, two major reorganizations, and a software subsidiary that lost more money than it made. If you’ve followed VW even loosely, none of this is new information. What’s more interesting to me is how differently VW and the people watching it explain what actually happened.

Two different stories

Volkswagen’s own Leadership has framed Dieselgate as engineers failing to hit regulatory targets within an unrealistic timeline, not fraud ordered from the top. Cariad’s failures get framed the same way: a software execution and delivery timeline problem. And the 2026 restructuring is framed around external pressure, mainly Chinese competition, forcing VW’s hand.

Outside analysis tells a different story. Academic and legal reviews point to a management culture that rewarded aggressive goal-setting without real accountability, a systemic governance issue rather than a one-off technical failure. And the idea that this was contained to lower-ranking engineers didn’t survive the U.S. federal investigation, which found that Winterkorn himself knew about the emissions conspiracy as early as 2014 and didn’t report it. That’s not a rogue engineering problem. That’s a leadership problem.

The Diess-to-Blume transition in 2022 gets the same treatment. Publicly, it was about software delivery timelines. The more credible read is an internal power and strategy disagreement, with Porsche and Audi refusing to align with Cariad’s technical direction. Again: not a technology problem, an organizational one.

And the 2026 plan follows the pattern. VW frames it around Chinese competitors. Industry commentary argues the real story is a company that failed to master software-defined vehicle architecture years earlier and is now paying for it. Chasing rather than leading.

Toyota’s bet

Toyota saw the same signal everyone else did: rising EV expectations triggered by Tesla. Toyota didn’t chase it. The company doubled down on hybrids and plug-in hybrids as the practical bridge, and got called slow, sluggish, and behind for years because of it.

Then EV demand cooled in 2024 and 2025, and buyers shifted back toward hybrids to manage fuel costs. Toyota’s sales and profits rose. The same commentary that had spent years calling Toyota timid started calling it patient and disciplined. Nothing about Toyota’s strategy changed in that window. The market just caught up to where Toyota had already positioned itself.

That’s the contrast that makes this subject worth writing about. Two companies looked at the same industry shift. One, reorganized four times, burned billions on a software subsidiary that couldn’t ship, and is now cutting a hundred thousand jobs to right the ship. The other picked a lane early, held it under years of criticism, and is being rewarded for the consistency now.

What this actually comes down to?

Strategy is rarely the problem. Volkswagen wasn’t short on ambition, capital, or engineering talent at any point in this timeline. What it was short on was accountability at the top and the discipline to hold a direction once it was set. Every reorg since 2015 has been framed as the fix, and everyone has been followed by another reorg. That’s not restructuring, that’s a company still looking for its footing.

Toyota’s advantage wasn’t a better bet on hybrids versus EVs. It was conviction on their own strategy. They picked a position and didn’t flinch when the market temporarily disagreed with them. Toyota worked as a single unit and are now good with their hybrid strategy and representing the people with the cars they are putting out, but that’s a story for another time.

Thank you for stopping by,

DL