Volkswagen CEO Herbert Diess told top managers the automaker will pit its largest plant against the Tesla factory that is under construction near Berlin, according to people familiar with the matter.
Diess said during an internal video conference that VW's home plant in Wolfsburg, Germany, will be upgraded with the latest electric-vehicle technology and software operations, said the people, who asked not to be identified as the meeting was not public.
The plant is the biggest carmaking facility worldwide, having built more than 800,000 cars annually.
Diess's goal is for the Wolfsburg plant to match Elon Musk's target of reducing production time per car to 10 hours, the people said. That would be less than half the estimated time it takes to assemble a VW Golf or Tiguan, Wolfsburg’s main products.
Musk has said it will use Tesla's plant that is due to open inext summer in Gruenheide, near Berlin, to demonstrate a radical overhaul of how its cars are built.
Wolfsburg will become "the pioneering factory" for the highly automated manufacture of electric vehicles and will build a VW brand electric flagship, VW said in a statement on Monday. VW gave no more details about the car except to say that it will be set up similar to the Artemis technology project at Audi, which is developing electric flagships for Audi, Porsche and Bentley under the codename Landjet.
Diess also reiterated that VW must substantially reduce fixed costs in order to remain competitive as the fallout from the COVID-19 pandemic showed that some rivals are leaner.
A VW spokesman declined to comment.
Diess, 62, spoke a day after receiving a fresh vote of confidence for his strategy to make the German industrial giant more nimble.
VW's supervisory board also managed to defuse a conflict over management appointments with a range of agreements on cost savings and a decision to keep the Ducati and Lamborghini brands. The divestment of the Italian luxury brands had been under discussion to streamline the group's brand portfolio.
Diess said during Tuesday's meeting of top executives that VW plans to create a management board position for information technology. The company is reviewing potential candidates and plans to make a decision next year.
The CEO said that while VW has navigated the COVID-19 crisis relatively well so far, its costs are still too high and earnings at some rivals have proven more resilient.
VW announced a plan on Monday to lower fixed costs 5 percent by 2023.
Automotive News Europe contributed to this report