VW is reinventing itself to take on Tesla

How can VW beat Tesla?

Herbert Diess, the C.E.O. of Volkswagen AG, took the stage Sunday at a four-day investor conference in Detroit to unveil a plan for the Wolfsburg-based carmaker to aggressively upgrade its technology, start new partnerships, revamp product development and divest itself of least profitable businesses.

The reinvention is part of the two-year-old strategy dubbed “One Volkswagen,” which calls for structural changes in product and service that could make VW Europe’s largest by 2022.

“We are a company that has developed largely in reaction to the external environment,” Diess said at the presentation, which was webcast. “Our time has come. Let’s go.”

The German carmaker’s board of management on Wednesday will approve the company’s midterm plan, and that could outline how VW will compete with new technology vendors like Tesla. Not long ago, VW was the world’s biggest carmaker but is now a distant third after the U.S. electric-car pioneer with high-volume production.

Diess, a one-time BMW development chief who now leads VW’s mass-market division, said the plan involves even greater investment than previously announced. He didn’t elaborate. Earlier this year, VW said it would invest more than $50 billion through 2022 in sport-utility vehicles, electric cars, new mobility services and autonomous driving and could spend another $10 billion per year beyond 2022.

For Volkswagen and other makers of luxury and luxury-infotainment systems, upgrading technology is crucial as customers increasingly do much of their app-oriented, or driver-assist, tasks while in their cars. With the demand for entertainment and guidance services still in its infancy, some designers are still casting about for alternative ways to sell, while avoiding the labor costs of maintaining standalone electronics units.

VW’s cooperation with Audi, the luxury unit it controls, focuses on infotainment. By working with rivals in France and Germany, VW can now upgrade every part of the Audi A8 sedan with technology from one common platform.

VW AG, which has annual sales of over 8 million vehicles, isn’t alone in its ambitions to transform from an economic powerhouse to a high-tech pure-play as it works to recover from a diesel-emissions scandal that led to billions of euros in fines and vehicle recalls.

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