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Volkswagen ousts CEO Herbert Diess amid push to EVs

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Yahoo Finance's Pras Subramanian discusses news that Volkswagen CEO Herbert Diess will step down on September 1 and will be replaced by the current Porsche CEO

Video Transcript

BRIAN SOZZI: Volkswagen is climbing the Yahoo Finance Trending ticker page as more details emerge on the ouster of the company's CEO. Yahoo Finance Senior Auto Correspondent, Pras Subramanian, has been digging into this one for us. And Pras, interesting weekend piece by the "FT" really detailing why VW ousted its CEO. But again, now you have a lot of analysts out here this morning saying this was bad corporate governance.

PRAS SUBRAMANIAN: Yes, Soz. My take is it's a really surprise move here Friday right before the weekend. Herbert Diess is a major player VW pushing extremely aggressive EV strategy-- $90 billion over the next decade. But apparently, according to some reports, he caused some rifts with powerful labor unions in Germany. Job cuts were discussed. These unions hold half the seats on the board.

And the final straw, Soz, was, apparently, he's in charge of the software EV unit that was going to basically make the software across a number of cars for EV cars. And they were-- some process there were delayed causing the delay of the Macan EV. This is, finally, the last straw, I guess, for the billionaire Porsche and Piech family who run the-- who basically own the most shares of the company.

Diess is out. Porsche's new-- Porsche CEO Oliver Blume is now taking over. He was supposedly groomed for this role to be the next VW CEO, and now it's happening a lot sooner.

BRIAN SOZZI: Let's talk a little bit more about Oliver Blume-- championed synthetic fuels as an alternative to going fully electric. So is that another possible path forward here?

PRAS SUBRAMANIAN: You know, Porsche's been big on synthetic fuels for a while, now. Basically, how it works is you combine carbon dioxide with water and electricity. You make this low-carbon-based steel. Sounds great because you can use it in gas-powered cars, diesel cars.

But it's unbelievably expensive right now. I think some analysts say it costs $1,000 a gallon to make the synthetic fuel. So not exactly viable right now. But Porsche's invested in this, and companies like sister brands like Lamborghini and VW will be happy to use this to continue their gas-powered powertrains for a while, now.

But I think that the future for VW is they're not going to stop at the EV push. They're going to keep going with that. We'll have stuff like alternative fuels in the background, synthetic fuels to invest in.

But I think the major point here is that I think hybrid powertrains will be the way to go for VW and other companies in the future because of the fact that we're seeing that this push to full EV is causing a lot of rifts both politically and also within some of the major shareholders at various automakers.

- Yeah, so we'll see what happens next there and at other automakers, to your point. Thanks so much, Pras. Appreciate it.