The race among auto companies to serve an EV market that doesn’t yet fully exist is one of the most fascinating business stories of our times. In the upcoming issue of Fortune magazine, Vivienne Walt looks at how one CEO—Volkswagen’s Herbert Diess—is dealing with that challenge. Diess came close to losing his job in December, after suffering a sales slowdown in 2021 due to a lack of computer chips. But in his conversation with Walt, he makes clear that hasn’t slowed him down. He’s moving ahead with a plan to invest $180 billion over the next four years to build the capacity for 5 million electric vehicles a year by 2030: 10 times the number of EVs he sold last year. “The world is changing very, very fast,” Diess insists.

But what if it isn’t? What if consumers don’t change as fast as he—and his fellow auto chiefs—think they will? Well, it’s clear the auto CEOs are being motivated less by the “pull” from consumers than by the “push” from competitors—and one competitor in particular: Elon Musk. Investors seem to think Tesla will rule the auto roost a decade from now and leave the legacy giants in the dust. For Diess, that threat was driven home in December of 2019, when Musk flew into Berlin and announced he was building his first European Tesla Gigafactory just 90 minutes from Volkswagen’s headquarters. Diess now insists that action was a godsend—helping him convince the German government, labor unions, and public that the race to an electric future is very real.

You can read Walt’s fascinating story online this morning here. And to look at how another auto giant is dealing with the existential challenge, check out the New Yorker’s recent piece on Ford, here. Also worth your reading time this morning: Erika Fry’s deep dive into Moderna’s efforts to keep ahead of coronavirus variants, and what that may mean for the future of vaccines—available here.

Other news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Rate hikes

Wall Street is predicting as many as seven (thanks, BoA) Fed rate hikes this year. As Fortune's Bernhard Warner writes: "That would bring the federal funds rate to 1.75%-2% by year-end, essentially hiking up borrowing costs for Americans after years of rock-bottom lending rates." Fortune

Team Permanent

Inflation is here to stay and investors should be ready for low returns in the coming years, according to Nicolai Tangen, CEO of the world's largest wealth fund (Norway's $1.3 trillion oil fund). Tangen: "How will it pan out? It hits bonds and shares at the same time…for the next few years, it will hit both." Financial Times

Citrix Systems

Citrix Systems is reportedly about to go private, with Elliott Management Corp and Vista Equity Partners lined up to pay $13 billion. The cloud play would be the biggest leveraged buyout in months. Wall Street Journal

COVID subvariant

More news on BA.2, the subvariant of Omicron known (somewhat misleadingly) as "stealth Omicron": according to evidence from the U.K. and Denmark, it is somewhere between 30%-50% more transmissible than the classic BA.1 Omicron substrain that we've spent, ooh, a whole two months getting to know. Fortune

AROUND THE WATER COOLER

Spotify fiasco

Spotify has pledged to label podcast content that discusses COVID-19, as it grapples with the backlash against Joe Rogan's lucrative and misinformative podcast. Joni Mitchell has joined Neil Young in removing music from the platform, in protest at the misinformation. And now Rogan himself has finally apologized, saying he plans to include non-contrarian voices to contradict his inevitably contrarian guests. Fortune

Antiviral pills

New York City will give high-risk COVID infectees free antiviral pills from Merck and Pfizer. The Omicron surge that battered the city appears to have significantly tailed off recently. (Bonus read: Details are scarce, but the Japanese pharma company Kowa claims ivermectin—yes, the dewormer—has an "antiviral effect" against Omicron). Fortune

Rosario Dawson

The actress Rosario Dawson has invested in EBY, a women's empowerment and tech apparel brand. "I am focused on supporting brands that are standout products, ethical and sustainable, which are also firmly rooted in defining fashion as an agent of social change, just as I am," she told Fortune's Rachel King. Fortune

Buffett's luck

The only one of the world's 10 richest people not to see billions evaporate this month was… Warren Buffett. That's probably because Berkshire Hathaway's portfolio isn't as tech-reliant as those of the others. CNBC

This edition of CEO Daily was edited by David Meyer.