A few days ago, Zachary Shahan wrote about the trials and tribulations confounding the folks at Volkswagen as they struggle to get the first ID.3 cars out the door and into the hands of customers, as did Alex Voigt from almost an insider’s account. Frankly, to the casual observer, it might appear the company is in chaos, having just unceremoniously removed Herbert Diess from his role as head of the Volkswagen brand (he remains the chief ramrod of Volkswagen Group, however) and saying its first cars will have a “get me over” software patch until things get sorted out, hopefully before the end of this year.
Elon Musk and his band of merry pranksters didn’t just spark the electric car revolution. They simultaneously set off several other revolutions, among then a direct-sales-to-customers model, a no-paid-for-advertising model, and perhaps most important of all, the automobile-as-computer-on-wheels model. The auto industry has been slow to grasp how all those changes are occurring at once.
Industry stalwarts like Volkswagen are champions at cranking out millions of new cars year after year but flummoxed when it comes to all that “computer on wheels” stuff. This week, Christian Senger, who is in charge of what Volkswagen calls its Car.Software organization, attempted to clarify just exactly where the company is headed when it comes to software development and how it intends to get there.
As Zachary pointed out, a company like Volkswagen can either purchase software services from a supplier the way it buys tires or brake components or it can create its own software package. Senger admits that right now at Volkswagen, only 10% of the software puzzle is derived from internal sources. Fully 90% of it is obtained from suppliers, and the many different components of the car are basically disconnected from each other on the software side. Senger wants that to change and says, by 2025, 60% of the computer software used to operate all Volkswagen products will be sourced internally.
Relying on outside suppliers is “out of the question for us,” Senger says. “We can and we want to develop our software platform ourselves,” citing three reasons why doing so is important for the company.
- Experience: “We are familiar with the complexity of the automobile — this distinguishes us from competitors outside the industry,” Senger says. “This is a strong undertaking,” he adds, one that will benefit from an investment of more than €7 billion in coming years.
- Control: “Volkswagen wants to retain control of the entire vehicle architecture — that includes the electronics,” Senger adds. “For this reason alone, we cannot give third parties complete access to data in our vehicles.” He believes future digital value creation should remain within the company.
- Economies of Scale: “Software develops its potential with the increasing number of vehicles. This applies to cost advantages, but also to learning from data. We have this scaling advantage on our side,” says Senger. Building more than 12 million vehicles a year means “Volkswagen is in the best position to develop its own software platform.”
VW.OS will provide a standardized operating system for the Group’s car brands — with the Volkswagen Automotive Cloud as the technical backbone, Senger claims. “The Automotive Cloud is technically ready to go. We are expanding its range of functions and preparing to connect the first vehicle models.”
He claims that, by 2025, 5,000 software experts will be working under one roof for Volkswagen in Germany. Thereafter, the Car.Software team will expand operations to China, North America, Israel, and India. “Our goal is a culture for doers. The brightest minds will find working models with us that are consistently oriented to the requirements of modern software development. We want to develop Volkswagen into a software-driven automotive group.”
Actions speak louder than words, of course. All the happy talk and bold pronouncements in the world won’t make Volkswagen a leader in the brave new “car as computer on wheels” world. Volkswagen is putting its shoulder to the wheel but the results so far have been mixed. It has about 6 months to show it has a handle on the software problems that have beset its ID.3.
Part of the problem is that Tesla is not only building a factory in Germany, but also an engineering and design center in Berlin. The question for Volkswagen and other companies is, where will the most talented software engineers of the future prefer to work? Once again, Tesla seems to be in the lead and pulling steadily ahead of the field. Will Volkswagen be able to effectively get into the software side of the automotive business? Some are much more skeptical than others, but one thing is clear: Volkswagen is the only legacy automaker that has committed (publicly at least) to trying to take over the software that increasingly controls their cars and collects data on their drivers.
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