Dear Volkswagen: you are probably doomed (but not because of diesel)

What a week it's been. You've admitted to the world that you have sold 11 million vehicles that are much more polluting than what you advertised them to be. You've admitted that you've installed software in your cars that specifically detects when a car's emissions are being measured (i.e. the engine is running but the car is not moving) in order to fake the measurements. You've set aside 6.5 billion Euros to deal with this scandal, and have replaced your CEO.

This episode will go down in corporate history as a textbook example of large-scale industrial fraud for a number of reasons. First, there is the fact that the mechanism of deception was software-based. Second, you haven't just duped millions of people into buying a product they would never have bought had they known the truth - in the process, you've contributed to massive pollution that's affecting everyone's health, not just that of your customers. Third, the betrayal of trust is at an unparalleled scale - you've sold polluting machines specifically to a group that's sensitive to environmental issues. Many who bought a VW diesel bought it precisely because they assumed it to be less polluting than the competing products. Fourth, we're not just talking about selling candy - we're talking about products that cost tens of thousands of dollars. In other words, we're talking about tens of billions of dollars of products sold under completely false advertising.

Frankly, it's hard to see how you can come out of this alive. The fines you will have to pay will be in the tens of billions of dollars. The class action law suits will be equally high. Many of your top executives will go to jail. You currently have 30 billion euros in cash reservers, which probably won't even begin to cover your liabilities. And all of this is just the tip of the iceberg. Not only are the 11 million people you lied to less likely to buy another VW in the future, but you've probably also lost everyone else who was considering buying one. As someone who just recently bought at VW diesel - my first VW ever, and almost certainly my last - I can of course only speak for myself. But everyone I've talked to feels pretty much exactly as I do. And if after some more independent analysis, the numbers come back and they are even close to what we currently read in the press (10-40x more pollutants than advertised), I will sell the car immediately even if it is at an almost total loss.

Such a shame. You've spent all this energy over the years and decades to make people like me buy your products. And just as you seem to succeed, the world comes crashing down on you. I feel particularly sorry for the vast majority of your employees who are completely innocent, but who will lose their jobs over this. I feel sorry for every world-class German engineer whose reputation you are dragging down with you, and who doesn't deserve any of it. 

Some cynics say that's just the name of the game. In a couple of weeks, no one will talk about it anymore. They couldn't be more wrong. Every time VW diesel owners start their engines, they will think of how you betrayed them. I've noticed it myself - even though there is less press on the scandal with every passing day, I actually get angrier with every passing day. This is not just a temporary thing. For the first time in my life, I am willing to join groups who take legal action against a company.

But there's hope. As the saying goes, a crisis is a terrible opportunity to waste. 

There is one, and only one reason why I would consider buying a VW in the future: massively beat Tesla at their game. Abandon all fuel-powered development today and invest every single cent into long-range electric cars, and build the electric charging infrastructure throughout Europe and the US (and the rest of the world). In addition, the development of the self-driving car has to be your top priority. The car of the future has no human driver in it, and of course you know this (anyone at VW who doesn't, let go of them immediately). Lobby your government and that of the EU to change regulation that allows for safe self-driving vehicles the day they roll out of your factories. Since you are in an existential crisis, and with you the millions of jobs that indirectly depend on you, they'll listen. 

The strategy can be summarized in two words: batteries & software. Everything else is gone. It may be difficult for some of the more traditional, non-software engineers (like your ex-CEO), to embrace the very thing - software - that brought you down to your knees. But there is simply no alternative. Europe is already lagging behind in the software-powered technological revolution. Aggressively start hiring the most brilliant software engineers away from Tesla, Google, Apple, and Uber to make your new strategy come true. If any resources remain, give them to those universities that are building - or expand existing - world-class software engineering curricula.

So why the title of this post? Because all of this is probably not going to happen. The new CEO, Matthias Müller from Porsche, thinks autonomous vehicles are an unjustifiable hype. I wish I was kidding, but I'm not: the VW board thought that the best person to replace the guy who oversaw the cheating software scandal (or was unaware of it) is a guy who seems to have even less appreciation of the ongoing software revolution. As far as I can tell, now VW CEO Matthias Müller is the only CEO of a large car maker who has gone on record saying that autonomous vehicles are a hype. 

Unless Müller makes a 180 degree turn, it's quite obvious to me that VW is doomed. They may survive as the Foxconn of car making - a pure hardware manufacturer with extremely low margins and mostly terrible, low wage jobs. If that's what they want, they are on the right trajectory. But for Europe, this is extremely bad news, as another major economic player will go down the road of Nokia, and the economy will suffer badly.