Cariad: VW subsidiary largely discontinues its own software development

Volkswagen is pulling the emergency brake on its ambitiously launched Cariad software division and has heralded a radical change of course. Instead of relying on the largely failed in-house development of programs and systems for cars, VW is now relying on cooperation, Group CEO Oliver Blume explained recently at the "Auto x Software Summit" of the Financial Times (FT) in Munich. Cariad will be downgraded to a coordinator and integrator of external partners, in particular Rivian in the USA and Xpeng in China.

For years, the Wolfsburg-based company's internal software unit has been one of its most pressing problems. There have been repeated setbacks and delays, especially with new e-cars. Blume, who has headed the company since 2022, then initiated a complete reboot of the software strategy to catch up with competitors such as Tesla and new Chinese players.

According to Blume, the "make strategy" (develop everything yourself) has given way to a purchase option that relies heavily on partnerships. The new approach follows the company's own disastrously failed endeavors, which led to product delays and cost overruns under Blume's predecessor Herbert Diess. The market launch of the all-electric Porsche Macan and the Audi Q6 e-tron, which was two years late due to Cariad issues, now utilized the latest software architecture already developed with partners.

Redefinition of tasks and reorganisation

Cariad itself has survived, but the role of the division has changed drastically, writes the Financial Times. It is now primarily responsible for maintaining and updating the existing VW software platforms and for integrating new architectures, which are mainly developed by Rivian. In addition, Cariad will retain responsibility for the development of core technologies such as autonomous driving, infotainment systems, and cloud computing services, which are crucial for customer data acquisition. VW and Bosch announced in August that they wanted to democratize robo-driving functions.

Cariad CEO Peter Bosch expressed his relief that the "massive transformation" had been achieved within two years. The reorganization, which lasted until the beginning of this year, resulted in a charge of 400 million euros, largely due to restructuring at Audi and Cariad.

Dissolution leads to dependency

As part of the reorganization, the Cariad team, which was originally tasked with developing its own architecture, was largely disbanded. It was to merge with the Rivian development group. Several employees, including chief software engineer Sanjay Lal, who was poached by Rivian in 2023, left the company as a result.

Blume defends the course and now sees VW in a strong position with economies of scale. Analysts believe it makes sense to retain Cariad as a gatekeeper and architect. But there are also critical voices that criticize the high dependence on Rivian with a promised investment of over 5 billion US dollars. It is unclear where Cariad will stop and when Rivian will take over. The US company's top priority is currently the architecture for the R2 SUV. Only then will Rivian be able to focus on VW models, whose new software – for example, due to the increased "technological openness" of the subsidiary Porsche – also needs to be adapted for petrol engines and hybrids.

According to market observers, the coming years will show whether VW will be able to play a more important technological role in the future: a new model with Xpeng software is due to be launched in China in 2026 and a 20,000 Euro electric car with a Rivian platform in 2027.

(wre)