June 17, 2021

Gp Delivers

The excellent automotive artisans

VW’s hopes of catching Tesla hinge on a $30 billion tech reboot

“This would be the ‘brain’ of the car, and we don’t want to give it to other parties,” CEO Diess told Bloomberg in November. “We see that probably as the most important race and decisive point for our industry in the next five to 10 years.”

In its latest five-year investment plan, the company doubled spending on digitalization efforts to 27 billion euros ($32 billion), even as the overall budget remained flat. While that represents significant resources, Google parent Alphabet spends almost that much in a year.

Sprawling effort

Infighting has dogged VW’s effort. Car.Software was initially envisioned as an agile standalone unit, but internal rivalries got in the way, triggering the departure of high-ranking software specialists including former SAP executive Bjoern Goerke. The company then changed tack and put Audi in charge.

Meanwhile, the need for VW to step up its game has become painfully evident.

In the early days of the coronavirus crisis with parallel launches of the Golf hatchback and the ID3 full-electric compact hatchback going wrong, Diess summoned senior managers for a fresh round of war-gaming.

The Golf’s emergency-call feature had to be fixed. Other glitches delayed the ID3 for months, and the first owners had to drive to their dealerships for a software patch because over-the-air updates were not working yet.

Diess and his team concluded the efforts were proving too little, too late.

The result is Project Artemis. Under the more aggressive strategy, VW plans to build its own software stack for vehicles starting in 2024. The first Artemis car — code-named Landjet — will be assembled in a smaller factory in Hanover before the technology is scaled up two years later with a more affordable VW-branded electric car out of Wolfsburg.

Big Tech is not waiting. While VW’s Car.Software unit entered a labor pact with unions regulating salaries and working hours, Apple’s car project appears to be moving forward and Alphabet’s Waymo is widely believed to be leading the pack in self-driving technology.

The efforts could lead to software companies controlling the relationships with car users, said Anja Hendel, a former Porsche official who joined Diconium, a digital advisory acquired by VW. “It’s a big change for the auto industry,” she said during a podcast this month.

For tech companies, replicating the takeover of the mobile-phone industry will not be so easy when it comes to cars. While a glitch might be a nuisance during a video chat, it could be deadly on the Autobahn. That gives automakers some leeway, and Volkswagen is putting the pieces in place.

Alongside Car.Software, the company has teamed up with Amazon for an industrial cloud for its factories and with Microsoft for a separate data network for its vehicles.