Hi everybody, today we're going for an exciting drive with the CEO of Porsche and Volkswagen, Oliver Blume. Porsche is one of the most recognized brands on the planet, and we own more than 1% of Porsche and Volkswagen. When Porsche got listed in 2022, we were a cornerstone investor, so we are kind of in the race together here.

Blume said it's a great pleasure to be together with Nikolai and joining his podcast series. When asked if he was a petrol head, Blume confirmed, "I am. I'm working in the automotive industry since 30 years. I'm passionate for cars and I love it to drive."

He shared that he bought his first Porsche when he started at Porsche almost 12 years ago, and it was the 911. Nikolai pointed out that the ticket code on the stock exchange is P911, and they have 911 million shares in issue, asking what the magic is with this number. Blume explained that the 911 is their icon, their first edition, launched in 1963. Since then, they have had numerous successes and victories in motorsport, and the 911 expresses what Porsche stands for: it's a unique design, a great performance of the car, and it's the great lifestyle of Porsche. Their customers love it.

Nikolai asked Blume, as a real professional petrol head, when he basically opens the door of a car, sits down, and starts the engine, how he knows it's a good car. When driving, for example, in second, third, fourth gear, how does he know that he loves this car, and what is he looking for? Blume replied that first of all, they have the key on the left-hand side at Porsche, and then he knows that he's at home.

For him, feeling the car is about its drivability. What does that mean? How do you steer the car? If it handles like a go-kart, with direct steering, then the handling, how you're taking the curves, how the chassis is reacting, how your seating position is—all these factors are important for the drivability of a car. And at the end, at Porsche, to have a real sports car. For Porsche, it is important to have on the one hand side the sportiness, the performance, and on the other side, the abilities as a daily driver. So you add all these together, this kind of drivability, what how does Porsche differ from other cars.

Blume explained that for Porsche, it's not only the acceleration. For them, it's about putting a lot of innovations into the car, coming from motorsports, because they think that the racetrack is the hardest testing field for their innovations. For example, their PDK, the braking systems, and the hybrid systems, and a lot of innovations coming from motorsport. That is important to differentiate from the competition. It's not about acceleration, it's about the driving abilities, and their hardest measure is the time they are achieving on a racetrack, for example, the Nürburgring Nordschleife, the famous one in Germany, or Laguna Seca. And there they know every second is important to build the perfect sports car.

Regarding what is implied in the Porsche brand, Blume said the brand is very important. As Porsche, they were able to develop an iconic brand over seven decades, and it's a heritage of their brand, for what their brand stands for: the contradictions between usability and design, for example, play a big role. Then the Porsche culture plays a big role, and at the end, the iconic product, with the 356, their first model, then the 911, and all the other models over the 718, Cayenne, Panamera, then Macan, play an important role. And this combination is what their customers love, because they are the brand for those who follow their dreams.

Blume stated that they haven't got a special target customer; it's important for them to fulfill dreams. And what kind of dreams? That's to have a fulfilled life dream. They have people who stand for success and at the end to fulfill their own dream. And so, their customers are people who love to drive sporty cars, who love brands, and at the end, to have a high level of individualization and exclusivity.

So their customer profile around the world is like this, but for example, the share of diversity is different. In Asia, they have a share of 50% male and female, in the Western world it's more 80/20. When asked why they have a higher penetration in Asia in terms of female drivers, Blume explained that it's because they love the luxury positioning of Porsche. They have a lot of very successful young ladies in Asia, entrepreneurs, and that describes the customer profile perfectly: that they are hardworking and they are aiming for success, and then at the end, they are spending in luxury goods like Porsche, loving the heritage of their iconic brand and on the other side, the modern technology.

Nikolai mentioned that Porsche has branched out with the likes of Macan and emphasized exclusivity, but they do produce a lot of cars. He asked how they balance exclusivity with the amount of cars they sell. Blume responded that Porsche is positioned uniquely in the automotive industry. On the one hand, they are a luxury player, achieving an average sales price over €100,000. On the other side, they have the opportunities of scale. They sold over 300,000 units last year, and they are benefiting from the scale effects in between their brand. But they also have the opportunity to benefit from the scale effects in Volkswagen Group, where they are collaborating in terms of modules, parts, purchasing volume, and so on.

What is important for them is being able on the other side to offer exclusivity. Whatever their customer asks, they are able to implement into their car. So they can say that no Porsche you can compare with the other who is leaving their production line.

Nikolai stated that they would focus mainly on Porsche today, but Blume is also the CEO of Volkswagen, and asked him to remind them what else is in the Volkswagen Group in addition to Porsche and Volkswagen. Blume explained that Volkswagen Group is much bigger, with over 680,000 people working there, and Porsche is a company with 40,000 people. Each of the brands in Volkswagen Group are different, and for them it's important, as a very international group, that they have the culture of each brand where they are positioned, like Lamborghini or Bentley, with Italian culture and English culture for Bentley, for example. Then they have Audi and Volkswagen in Germany, Skoda in Czech Republic.

The big difference is the complexity they have to handle in Volkswagen Group. But the great issue is that they are able to manage all these fantastic brands in Volkswagen Group. Blume thinks that each of these brands has something positive where you can learn. In his history, he was able to work at Audi, at Volkswagen, and at Seat, for example, and in each brand, he's seen very positive practices that he was able to implement also in Porsche. Nikolai said he's a happy driver of an Audi, so that kind of suits his temperament, and Blume was happy to hear it.

Nikolai noted that if you look at the value of the group, most of the value in the Volkswagen Group is kind of tied up in the Porsche brand. He asked Blume what he thought that was telling them about the rest of the group. Blume replied that with the Porsche IPO, they had shown the value of the Porsche brand, and they were able to unleash the potential of their brand with a very, very successful IPO, even with very difficult circumstances at that time. The positive development shows what potential they have in Porsche with their robust financial profile.

In Volkswagen Group, Blume thinks there is still a lot to improve in terms of the capital market value. They have shown a very robust result in 2023, implemented a clear strategy, a clear restructuring plan. And this year, they will bring over 30 new products to the market. He thinks it has a lot to do with trust and delivering their results, and then there's a big potential also on the Volkswagen Group stocks.

A big market for them is China. Blume said that in China, they see a big development in terms of innovations, a fantastic speed. And so for them, it was a clear aim in Porsche to build more technology and innovations in China for China, for example, their Porsche Digital to offer their Chinese customers the Chinese ecosystem, especially in terms of digitalization.

They are very well positioned in China in the luxury segment, over 500,000 RMB, with an average sales price of a million RMB. This is a segment of 600,000 units up to now, where there are only international brands in this segment, no Chinese brands. Blume thinks with their engine positioning, the mix of IC, plug-in hybrids, and BEVs, they are well positioned for the market.

There's a strong demand, but what is very important for them is also value over volume. And so, especially last year, they reduced their volume, not joining the discount and pricing war they are faced with in China, and that was very successfully maintaining their luxury positioning there.

Regarding the electric vehicle market in China and competition, Blume said a lot of new competitors are entering the market, but most of them are more in the volume and premium segment. The luxury market for electromobility isn't built yet. They have shown a market share over 30% for the Taycan in the luxury electric segment. Now they are entering with a new Macan and the new Taycan, and that's a big opportunity for Porsche, especially to build this luxury segment on electrification.

Important is that you're coming with big innovations. They are offering now their new product there in the market and having great opportunities to build the market. When driving the Chinese competing cars, Blume thinks they are very good in terms of digitalization, they are very good in terms of voice recognition, some of them have very good advanced autonomous driving abilities. And so, he thinks the Chinese have learned during the last decade to build cars, they are advancing very fast.

Blume stated that they don't have to hide from the competition in China, but it's worth having a look at Chinese car makers. His experience in his work life is that wherever you are, you can learn something and make yourself better. And so, they don't fear competition; they are from the racetrack, and competition makes you better, and at the end, competition drives innovations, and innovations are positive for the customer.

Nikolai mentioned digitalization, so the whole infotainment system, and asked how important that is in today's car. Blume said it's more and more important. The customers are expecting their digital ecosystem, they used from their mobile phones, for example, in their cars. And therefore, in Porsche, they decided an own new board resort driven by Sajjad Khan, carrying about all the car IT issues, and infotainment is one important offer they had for their customers. And there, as he mentioned before, also developing solutions in the regions of the world, in this case in China for China, but also in the US, they have partnerships and activities to provide to their customers the perfect infotainment system.

Regarding batteries, Blume said battery technology has seen a big advancement during the last years, especially in terms of chemistry, which led to bigger ranges. Then for them, fast charging plays a big role. Porsche was the first series manufacturer with an 800-volt system, which brought them to a charging time of 20 minutes from 10% to 80% charging level. And they are aiming for an even more improved charging time of around 15 minutes for the upcoming cars.

And so, they see a lot of potential in the electrification, and therefore they have a very ambitious target to achieve by 2030, 80% of their cars fully electric, because they think that electromobility is superior than the combustion engine cars because of the strong development during the last years and the still unleashed potential of electric cars.

At the same time, they invest in E-fuels. Blume explained that they think about decarbonization from a global approach and take over responsibility. They think also for all the combustion engine cars around the world, but also ships and aircraft, synthetic fuels play an important role when you're able to produce them in regions of the world where renewable energies are unlimited. The need of energy is higher comparing to hybrids or to full electric cars, but when you produce them there, there isn't the argument anymore about the need of energy.

That's a combination of hydrogen and CO2 coming by air capturing from the air. And the big advantage of so-called E-fuels is that the transport is very, very easy without cooling or putting them under pressure like you have to do it with hydrogen. You can use the net of the existing filling stations, you can mix them with traditional fuels, and you can use existing combustion engines. And so, it's an additional argument for decarbonization, especially in the transformation. And thinking about the regulation in Europe, maybe 2035 when they won't release any more combustion engine cars, you will have the existing cars still on the road, and therefore they need a solution. And therefore, in addition to a strong electrification strategy, they are investing also in E-fuels.

Nikolai asked Blume about his excitement for the launch program for next year, and what they are launching. Blume said that's the biggest launching program in the history of Porsche. They are now fully in the market with the new Cayenne, they have had already the market premier for the new Panamera. Then the new Macan in January in Singapore, and four weeks ago they were able to launch the new Taycan, and there especially the Taycan GT, for completely new model lines for Porsche.

And at the end of the year, they're expecting a new 911 in the first time of the history with hybrids. And so, they are renewing five model lines of Porsche of their existing range, and that is a great ambition for their team, a great challenge they have to handle this year, but a great opportunity for their customers.

When asked which of these he was going to drive, Blume said he's in a good position to test all of them. He loves the 911, and he owns 911s, especially the new 911, and he tested them with a hybrid engine, and the tremendous acceleration and still having the six-cylinder boxer in the rear is fantastic. And today he's driving a Taycan, the new one, with more range; in WLTP, they are close to 700 km of range, fantastic charging times, tremendous acceleration. And what you have seen with the Taycan GT is also on the racetrack a very, very cool car with records on Nürburgring Nordschleife or Laguna Seca. And so, both of these cars are fantastic. And then in the second half of the year will come the Macan, and that will bring the Macan to a completely new level, a full electric Macan with the offers of infotainment, charge navigation, or augmented head-up display with a lot of features where they will play in the Premier League.

Talking about the Premier League and coming back to motorsport, Blume said motorsport is the core of Porsche. They are counting 19 victories in Le Mans, for example. This year they were able to win the 24 Hours of Daytona, the heritage race in the US. And for them, motorsport is the toughest testing field for their innovations. And for example, the new hybrid for the 911 is a motorsport hybrid, which came from the 918. But also the oil cooling they are using for their new battery systems, they developed first for motorsport. The 800-volt system is coming from motorsport. These are only three examples of what they are doing there. They will continue to do so because they think motorsport is the core of Porsche, and from motorsport are coming the best innovations.

Changing the topic a bit and moving on to corporate culture, Nikolai asked generally speaking how it is to do business in Germany. Blume replied that in Germany, they are in a situation where they are looking back to decades of success or welfare in the community, and that's not given for the future. It's like in sports: when you win a cup, you haven't got the guarantee that you will win it the next year. And so, that is the situation in Germany, always thinking about to fight for the success in the country. And so, they have some circumstances which are not so easy to drive the business in terms of industrial regulations, energy pricing.

But they are proud of being a German company founded in Stuttgart, and they produce the majority of their cars in Germany, because they think that German quality is still an important brandmark, especially in terms of cars. And so, they are in close contact also to the German government to improve the industrial regulations. And then they think they have very qualified people in Germany, they have perfect engineering capacities. And so, Germany especially has got a big future when they are prepared and able to focus on their strengths they were able to show in the past.

If he could change three things with the German industrial policy, Blume said first of all, their industry is driven by speed, and they have a lot of regulations not only in Germany but in Europe as well. He would like to reduce regulations and come to faster decision-making between politics and industry. Then what they can change is the support for the industry, especially when investing; there are also decision-making processes, but also subsidies, especially when going into new technologies. And that is important for Europe and for Germany to have a clear master plan on which new technologies they want to focus.

And then in terms of electromobility, he thinks it is important, besides the new products the industry is bringing to the market, also to support in terms of charging infrastructure, in terms of new renewable energies. And these three points he would like to speed up and change: speed, technology, and charging infrastructure.

Nikolai noted that Germany has a long tradition of very high union and employee engagement at board levels, and asked what are the pros and cons of working in this way. Blume replied that they are acting as a family, working together, and for him, it's always important to get close feedback also from the labor side. And they are driving the companies together with an entrepreneurial spirit. And there counts the same as they talked about politics: they shouldn't increase their regulations and agreement processes; they need the speed for taking decisions.

Blume has very positive experience working together with the worker unions: when you deal fair and deal with full transparency, you can solve every problem. And that's his working experience of three decades, and that's how he's handling the process together with his partners.

Nikolai asked how Blume manages to be CEO of two companies, both Porsche and Volkswagen, and how he splits his time. Blume replied that for him, it was very important when he had taken the decision to also take over the responsibility in Volkswagen Group to drive at the same time Porsche, because for him, it's important to be very closely linked to technology, to processes, to have close contact to the people, being able to take the right decisions on the strategic group level. It is a challenge, very clear, in terms of organization, but when you take the right priorities, it works. And now he's driving this for over one and a half year, and up to now, they haven't got a conflict in between. He thinks it's very supportive driving both at the same time, and it's not new in Volkswagen Group that a CEO driving a brand like Ferdinand Piëch or Martin Winterkorn have driven also the brand of Volkswagen.

Blume stated that he's driving Porsche and Volkswagen Group, and his feedback up to now after one and a half years is that it works perfectly and is supportive. When asked if he has to change the way he behaves when going from one to the other, Blume said leading both shops is very, very different. In Porsche, he's very deeply involved in the operative processes, and Volkswagen Group is more strategic; there he's leading 12 brands. The technical issues are similar, but at the end, he has partners, CEOs of all brands, who are responsible for the other brands. And they are taking more decisions on how they can improve their scale effects in between the brands, how they are driving together the performance programs, and taking strategic technology decisions. And there it's very, very helpful that he's very closely linked to the car business and being able to evaluate technologies and taking these decisions. And so, both of these jobs are very different: one is more operative and the other one is more strategic.

When he is so involved with technicalities and the technology in Porsche, Nikolai asked how he avoids becoming micromanaging the whole thing. Blume replied that it's all about priorities. He's used since many years to work with a so-called top 10 plan, what are the most important topics to solve in a year, and that helps to focus on the right things. And he implemented this systematic, and that's not important if you're talking about 10 points, five points, seven points, you need the right priorities. And beside of this, this is embedded in a long-lasting strategy. He built his strategy in terms of 10 years, and so he has a clear focus where to lead the company, but also with an operative program year by year with the right priorities.

Nikolai mentioned that Blume skis from time to time with Aksel Lund Svindal, his fellow Norwegian, one of the best skiers of all time. He asked Svindal how Blume's skiing was, and Svindal said he is good but almost more fearless than he is good, he goes fast. Nikolai asked if that's the way he runs the company as well. Blume replied that he loves to drive fast, and Aksel is a great skier but also a great person; he is an ambassador of Porsche. He loves to be together with him and going out for skiing and also on the racetrack; he's a great racer. And that combines them, they are coming from sports. And he loves to drive the company like a sports team, on the one hand side focused on performance, on speed, on the other side on team spirit, and working together, helping each other, winning and losing together, and taking the right decisions with the same mindset.

Nikolai asked Svindal whether Blume skis faster than a Porsche, and Svindal said thankfully not. Nikolai asked Blume how he remains grounded to the factory floor when he has such important positions. Blume replied that he spent most time in his professional life in production, and so he's still very closely linked to especially people in production. And when he's walking around in the factory, there's still a very close contact, and people there tell him the honest things and the truth in what's going on in a company. And that's very, very important for him. And he thinks as a CEO of a company, it's very important to be touchable for the people, and with this, you're getting the right feedback for taking the right decisions. And so, in Porsche, they like to work very closely with the team and also having events together and there being touchable and being very close to the team.

Blume has a PhD in Mechanical Engineering. Nikolai asked if he thought he would have had the credibility with his colleagues if he didn't have that. Blume replied that at the end, it's your input in the company and your impact. For him, it was a good opportunity when he started working at Audi doing a parallel PhD, and also he did it in China over 20 years ago, and it was a great experience as a young man going to China and feeling the engineering and innovation spirit they started in these times with electric vehicles where nobody else thought in the success of electric vehicles. And so for him, it was a great experience working there in the Automotive Institute of University in Shanghai. But in terms of credibility, it helps to understand and to deep dive into technologies, but at the end, it's more important how you act, how you decide, and how you work together with a team.

Blume works around 12 hours a day, sometimes in the evening, and one day on the weekend. But for him, it's also important to have the right balance between work and personal life. He loves sports, and being fit and having the right physics is important to be able to drive the company. In addition to skiing, he used to play soccer, and now he prefers to run, to jog, and mountain biking is his favorite sport, and sometimes he plays tennis.

Nikolai said they have tens of thousands of young people on the podcast, so if Blume were to give them advice, not to go and save up to buy a Porsche, but something else, what kind of advice would he give them. Blume replied that he's in the situation as a family father, he has two daughters, and they started last year's studies at university. And he told them, "Listen to your heart, what you want to do, and when you love things, you're passionate for them, and at the end, the right results are coming." And that was also his spirit in his whole career, and that's his advice to young people when they start a career. For him, it's impossible to plan a career, and always focus what you are doing at the moment, and at the end, the success will pay off.

Nikolai concluded that Oliver has certainly listened to his heart and a lot of engines also, he suspects, during the years, but big thanks for being on and good luck in the fast lane. Blume thanked Nikolai very much for the good talk and for the great partnership in the Porsche stocks.