Converting a car manufacturer into a software company is complicated on several levels. With the large-scale Cariad project, things are jerking in the Volkswagen Group. Management wants to get this under control.

VW CEO Herbert Diess has asked for understanding that building your own software business may take more time than initially thought.

“It’s not just the software itself. It’s also the entire software architecture as a key component for many other things around it,” he said on Wednesday at a specialist conference in Bochum.

The Cariad IT division also had to deal with related topics, such as the integration of control devices, networking or connection to the cloud. In addition, there will soon be communication between cars and with the traffic system for autonomous driving. “That is certainly the most difficult task,” said Diess. “We try to understand and map these functions around the car.”

criticism as an incentive

There have been reports of delays, cost increases and internal resistance to expanding the division. Cariad boss Dirk Hilgenberg wrote in a letter to the employees at the beginning of May: “I see the criticism as an incentive and encouragement to keep working hard and to deliver what we promised: our uniform software and hardware platform. A mammoth project under massive time pressure. (…) It is not unexpected that not everything goes according to plan.»

When asked by industry expert Ferdinand Dudenhöffer whether self-directed development of software systems wasn’t too much, Diess justified his approach. “You can’t delegate that,” he said, weighing up his own programming and purchasing. «We don’t have to do everything ourselves – only what is really critical. But we notice that it no longer works in the old system.”

For example, real-time traffic data will be needed on an ongoing basis for the new driving functions and car-related services. On the other hand, the vehicle manufacturers remained responsible for safety, liability, customer access to the system and regular updates. “The software has to be kept running continuously. You can no longer buy everything from large suppliers.” Volkswagen is working with Bosch, for example, on autonomous driving and on equipping future battery cell plants.

Diess: “We do it ourselves”

Construction of the cell factory in Salzgitter is due to start in July. With a location of the partner Northvolt in Skellefteå in northern Sweden and a plant planned in Valencia, Spain, it is the third of six such locations in Europe. There will now be a new gigafactory about “every year and a half”, said Diess at the Bochum conference – each with investments of up to 3 billion euros.

From the summer, a separate board will be responsible for the VW battery division. “We need a European manufacturer here,” said Diess. “I would not rule out that we will eventually bring it to the stock exchange.” After many discussions with potential suppliers, Volkswagen decided: “We’ll do it ourselves.” The group intends to cover the entire value chain from the procurement of raw materials through research, development and production to recycling.