Volkswagen Shareholders Demand Governance Overhaul Amid EV Transition Struggles

Volkswagen’s shareholders intensified their push for corporate governance reform at the company’s virtual annual general meeting on May 16, 2025, citing conflicts of interest and a lack of board expertise as barriers to the automaker’s success in the electric vehicle (EV) market, reports Reuters. With the company’s share price falling nearly 25% over the past year, investors are urging CEO Oliver Blume to relinquish his dual role leading both Volkswagen and Porsche AG, a structure they argue hampers the company’s ability to navigate fierce global competition and electrification challenges.

Governance Conflicts Under Scrutiny

The Porsche and Piech families, who control Volkswagen through their holding firm Porsche SE, have long dominated the company’s decision-making. Shareholders, including major investors like Deka Investment, criticized the “highly problematic” governance structure, particularly Blume’s dual leadership of Volkswagen and Porsche AG since Porsche’s separate listing in September 2022. “Mr Blume, once again we make the urgent appeal: give one of your board positions up,” said Ingo Speich of Deka Investment, highlighting how conflicts of interest cause “grave damage to reputation and enormous financial losses”.

The supervisory board also faced criticism for lacking expertise in critical areas like electrification and digitalization. “The impression is becoming stronger that power, rather than the market, dominates at VW,” stated Hendrik Schmidt from asset manager DWS, reflecting investor concerns that the board’s composition hinders Volkswagen’s ability to compete in the rapidly evolving EV sector.

Financial and Competitive Pressures Mount

Volkswagen’s challenges extend beyond governance. The company’s share price has dropped from 140.40 euros ($148.14 USD) to 105.6 euros ($111.43 USD) over the past year, underperforming Europe’s autos index and Germany’s DAX. Last month, Volkswagen warned it would likely hit the lower end of its annual profit margin forecast, grappling with high production costs in Europe, steep U.S. tariffs, and intense competition in China’s EV market. These pressures underscore the urgency of aligning governance with the demands of the global EV transition.

Dual Role Defended, but Not Forever

Blume and supervisory board chair Hans Dieter Poetsch defended the CEO’s dual role, arguing it supports cost-cutting efforts across Volkswagen and Porsche AG. “The dual role is a recipe for success,” Blume asserted, though he acknowledged, “It was clear from the beginning that [my dual role] was not intended to last forever” (Reuters). However, investors remain skeptical, with Janne Werning of Union Investment warning, “Instead of shrugging off shareholder criticism year after year, you should finally address and remedy these blatant governance deficiencies before VW slides even deeper into crisis.”

Implications for Volkswagen’s EV Strategy

For EV enthusiasts and industry observers, Volkswagen’s governance woes could slow its electrification ambitions. The company has invested heavily in models like the ID.3 and ID.4, aiming to capture a significant share of the global EV market. However, without a board equipped with expertise in electrification and digital technologies, Volkswagen risks falling behind competitors like Tesla and BYD. Regulatory pressures, such as stricter emissions standards in Europe and potential U.S. tariff hikes, further complicate the company’s path forward.

As Volkswagen navigates these challenges, shareholders’ demands for a more independent and specialized board signal a critical moment for the automaker. Addressing governance issues could strengthen Volkswagen’s position in the EV market, ensuring it can deliver innovative, cost-competitive vehicles to meet growing consumer demand.