BERLIN — Herbert Diess, who helped restore Volkswagen’s reputation after a costly and embarrassing diesel emissions scandal and bring the company into the electric age, resigned unexpectedly Friday after a tenure marked by friction with the carmaker’s powerful labor union.
His abrupt resignation at a critical juncture for Volkswagen is sure to raise fresh questions about the company’s convoluted governance structure, an uneasy balance of power among labor representatives, local government and descendants of Ferdinand Porsche, who oversaw construction of the Beetle in the 1930s.
The giant automaker said Mr. Diess would leave at the end of August, without giving a reason for his departure, which the supervisory board said was by “mutual agreement.” He will be replaced on Sept. 1 by Oliver Blume, the chief executive of Porsche, the company’s profitable sports car unit.
While Mr. Diess clashed with labor representatives, it is unlikely he would have resigned if he still had the trust of the Porsche and Piëch families, which own a majority of the voting shares in Volkswagen. Mr. Pötsch is a confidant of the families, and family members hold four of the 20 seats on the company’s supervisory board.
The holding company for the Porsche and Piëch families thanked Mr. Diess for his service but also lavished praise on Mr. Blume, saying in a statement that he “enjoys our special trust.”
Hours before the announcement late Friday afternoon in Germany, Mr. Diess, 63, posted a message on his social media channels thanking employees for their work in the first half of the year and wishing them a good vacation. He made no mention of his impending departure.
“After a really stressful first half of 2022 many of us are looking forward to a well-deserved summer break,” he said.
Mr. Diess’s future at Volkswagen had been in doubt on multiple occasions during his four years as chief executive, a post that predecessors typically held for a decade or longer. Last fall, he clashed with the company’s powerful works council about his electrification strategy and management style.Mr. Blume was often mentioned as a potential successor.
Labor representatives did not bother with the usual perfunctory praise for the outgoing chief executive in statements they issued Friday. Daniela Cavallo, chairwoman of the Volkswagen Works Council, which represents employees, said that jobs and profits should have equal weight in management decisions. “No co-workers should be left behind,” Ms. Cavallo said. “Today’s decision contributes to that.”
Mr. Diess joined Volkswagen in July 2015, less than three months before the company confessed to rigging diesel cars to conceal illegally high emissions. He had been a high-ranking executive at BMW. Initially, Mr. Diess was the head of the unit that makes Volkswagen brand cars.
In October 2015, he presided over a meeting in which he and the other demoralized executives wrestled with how to restore Volkswagen’s good name. They decided that the best way to shake Volkswagen’s reputation as a cynical polluter would be by developing cars without tailpipe emissions.
The decision gave Volkswagen a head start over rivals like Toyota or General Motors in offering cars that were designed from the ground up to run on batteries. Volkswagen sells more electric cars in Europe than Tesla, the all-electric automaker that recently opened an assembly plant outside Berlin.
But Mr. Diess’s outspoken admiration for Tesla and Elon Musk, its chief executive — which led to rumors several years ago that Volkswagen would merge with Tesla — unnerved some people within the company.
And Volkswagen’s electric models have been plagued by software problems that raise questions about its ability to compete with Tesla. Mr. Diess was blamed for failing to get the software problems under control.
The software “simply had too many problems,” Ferdinand Dudenhöffer, a longtime observer of the German auto industry, said in an email. “So far only Tesla has succeeded in developing its software independently. All the other carmakers, including VW, seem to have big problems in making the transition to software-defined cars.”
Last year, Mr. Diess set off a battle with labor leaders when he mentioned that up to 30,000 jobs could eventually be cut as the company turned toward making more electric vehicles, which require fewer parts.
That prompted a committee within the supervisory board to address the tensions between the two sides. There was speculation that Mr. Diess’s job could be on the line, and lists of possible successors circulated. Eventually, in December, he won new backing from the board, but some of his responsibilities were stripped away.
Mr. Blume, Mr. Diess’s successor, is likely to continue Volkswagen’s push into electric vehicles. At Porsche, Mr. Blume oversaw development of the all-electric Taycan, which has been a hit.
But Mr. Blume, 58, will confront the same conflicts that have long made it difficult for anyone to manage Volkswagen, a sprawling global company with 660,000 employees in China, Europe, Latin America, the United States and other locations. The company has a factory in Chattanooga, Tenn., that will soon begin producing the ID.4, an electric sport utility vehicle.
Volkswagen worker representatives hold half the seats on the supervisory board, as is the case at all large German companies. But they have special power at Volkswagen because the state of Lower Saxony, the company’s home base, owns 20 percent of the voting shares, has two seats on the board and usually backs labor.
Mr. Blume will remain chief executive of Porsche, which is preparing to sell shares in an initial public offering.
The dual roles make “a bad governance situation worse,” analysts at Bernstein said in a note to investors. “Both organizations will need clear and present leadership in upcoming months.”
Mr. Blume was born in Braunschweig, Germany, not far from Volkswagen’s headquarters in Wolfsburg, and has worked for the company since 1994. That may give him an advantage that Mr. Diess, who was a relative newcomer, did not have.
Outsiders have often struggled at Volkswagen. The last Volkswagen chief executive to come from outside the company was Bernd Pischetsrieder, another former BMW executive. He was named to the job in 2002 and lasted less than four years.