The rise and fall of Porsche’s Wendelin Wiedeking

Wendelin Wiedeking was a savvy manager who saved Germany's Porsche from the brink and transformed it into a firm as impressive as one of its roaring sports cars.

The rise and fall of Porsche's Wendelin Wiedeking
Photo: DPA

But the cigar-chomping 56-year-old, one of the best paid executives in Germany, bit off more than he could chew last year when he made an audacious attempt to go for an ever bigger prize: Volkswagen.

On Thursday, with Porsche €10 billion ($14.2 billion) in the red and with VW having dramatically turned the tables, Wiedeking, an engineer by training, threw in the towel.

The pill will be sweetened for the flamboyant and snappily dressed Wiedeking, who had been sitting in the ejector seat for several weeks with newspapers baying for his blood, with a €50-million “golden parachute.”

In an attempt to stave off any public anger, however – Germany is being hit by its worst recession in decades – Wiedeking has said that half of his enormous payoff would go to charity.

He is to be replaced by production director Michael Macht, 48.

After turning Porsche around in the 1990s, Wiedeking plunged the company into one of the most serious crises in its more than 60-year history. In a bid to take over VW, Europe’s biggest car maker, Wiedeking drew up a plan that used unconventional tactics which made Porsche look at times like more like a hedge fund than a car maker.

Along with finance director Holger Härter, a seemingly talented strategist who also resigned Thursday, Wiedeking managed to increase Porsche’s VW holding to almost 51 percent at a relatively modest cost.

A series of so-called cash settlement options in VW shares earned Porsche billions as the shares climbed in value and were at one point quoted at more than €1,000 a share. That briefly made VW the world’s biggest company by market capitalisation, though on Thursday they traded for less than €250.

Up until a few months ago, Porsche was making more money with its financial transactions than it was by selling its iconic 911 sports cars and other models, as analysts tried to explain how one car maker was doing well while others were slammed by a collapse in global auto markets. But the strategy spectacularly backfired on Porsche and left it with €10 billion in debt and unable to buy the VW shares it needed to take its stake to more than 70 percent.

Wiedeking had not gambled on the arrival of the credit crunch, which sharply curtailed Porsche’s access to credit, while access to VW’s hefty cash reserves was blocked by Lower Saxony.

The state where VW is based holds a blocking minority of 20 percent of VW, something which has caused Germany problems with European competition authorities, and which Wiedeking sought to overturn.

In a desperate bid to stave off a humiliating takeover by VW, Wiedeking turned to Qatar as a potential saviour ready to invest billions in Porsche without seeking to take it over.

Porsche’s supervisory board accepted late Wednesday his proposal to hold talks with the Gulf state on taking a major stake in Porsche, along with a capital increase of at least €5 billion.

VW has offered meanwhile to buy 49 percent of the shares in Porsche’s core auto making unit, and possibly the rest later, making the once proud firm the 10th in Volkswagen’s stable of brands.

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From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin