Last Friday, July 22, the Volkswagen Group announced unexpected news: Herbert Diess, its CEO, was fired. In the official statement it could be read that the company’s top manager until now was leaving his functions “by mutual agreement” with the business group, but most sources suggest that it was a dismissal In all rules. The most important reason: the software of their cars.
For a long time, Volkswagen has been having significant problems with the development of its software. Months ago they already indicated that their plan for the development of these systems involved an investment of 3,000 million euros, as they confirmed during the presentation of their ID family.
But Cariad, the subdivision of the Volkswagen Group that is dedicated to software development, has been having problems for a long time to carry out its projects. In December, Herbert Diess was already asked to try to turn the situation around. Now the software has ended its career within the Group.
Much more than infotainment
When we think of software development, we most often focus our attention on equipment and infotainment systems. In fact, those responsible for Volkswagen have pointed out that the ecosystems of the cars will be decisive at the time of purchase. They point out that in an increasingly standardized market, software support and updates will be an added value.
On the horizon, all kinds of new features. Streaming, to play content while the car works autonomously, is one of them. Cariad has even had to focus on hiring Chinese engineers to help them understand this market, since it is so different from ours that, for example, karaoke in cars is common.
The activation and deactivation of services or functionalities is also one more avenue of business that opens with the software. BMW has launched an a la carte heated seat program. Mercedes extends the range of action of its steerable rear axle if you pay for it in its EQS SUV. And from Cariad, in an interview with Bloomberg, they already point to video calls in progress or even pay for kilometers of level 4 autonomy in vehicles, the one in which the driver can completely ignore driving.
But Porsche’s latest major update shows that connected car software development goes far beyond add-on vehicle services. In it also improves load management and of autonomy. And it is that a large part of the capabilities of our cars will go through the development that the brands have made of their electronics.
It is one of the advantages that Tesla has over its rivals. At the moment, it is not only the one that is getting the most out of its batteries. In addition, its software makes it possible to anticipate the available electrical autonomy better than any other company and to have its batteries ready in an optimal state to charge at the maximum power always available.
Software is the key to the future
— Elon Musk (@elonmusk) July 24, 2022
revolutionizing the industry
Software development is so important that the Volkswagen Group is currently experiencing a very difficult situation.
Cariad fails to get its products to work properly with the MQB and MEB platforms that support the current products of, almost all, the entire Volkswagen Group. Porsche was already dissatisfied with its performance and decided to go its own way in developing its Taycan. In fact, he has paid a million dollar fine to the rest of the automobile conglomerate to be able to go it alone.
And the future of Volkswagen’s upcoming releases is uncertain. The company wants to develop a single platform that allows expanding the autonomous driving functionalities of its vehicles and, above all, serves as the basis for all the group’s models to have scalable software, saving significant costs.
A little more info about the departure of Herbert Diess from Volkswagen in mini thread format, now that it’s coming up 👇
— Guille G. Alfonsín (@GuilleAlfonsin) July 28, 2022
The problem is that the MEB platform that came to support its electric cars has its days numbered. As of 2025, the intention was to release this new platform (SSP) on top of which the future releases of the brand, with a very advanced degree of autonomy. And, along the way, a third platform (PPE) with a very short life that would serve as the basis for the development of the future electric Porsche Macan and Audi Q6 e-tron.
To bring the SSP platform to market, Cariad needs to release a 2.0 version of its software, key to the launch of innovations and autonomous driving reference models from Porsche, Audi and Bentley. At the moment, these models that should be the standard-bearers of what the Volkswagen Group is capable of doing, have been delayed. And the same has happened with the electric Porsche Macan and the Audi Q6 e-tron, which hoped to base their software on a 1.2 update released by Cariad and which, however, has forced them to be delayed a full year, according to Insideevs.
Beyond the Volkswagen Group
The Volkswagen Group is not the only brand that has seen its foundations shaken with the connected car, although it is experiencing a moment of uncertainty just as Porsche hopes to go public.
Another of the reasons attributed to the departure of Herbert Diess from the Volkswagen Group is that his relationship with unions It was null since he pointed out that the conglomerate needed to face 30,000 layoffs to remain competitive. It is a warning that the Spanish plants have also been receiving, both those dependent on the Volkswagen Group and those that are not.
The electric car will force large manufacturers to restructure their workforce if they want to remain competitive in a market where Chinese start-ups are gaining ground.
The Ford CEO, Jim Farley announced yesterday that the firm needs to lay off 8,000 employees. The company’s route plan has also forced it to split in two and completely separate its electric and connected car divisions from combustion so that the latter finances the development of the first until the balance weighs more on the side of the electric.
Ford’s strategy has also been contemplated in Renault. In fact, this firm already has its own brand called Mobilize dedicated exclusively to new mobility and which already covers its first car, the Mobilize Limo. In this company, software plays a fundamental role.
In fact, during the presentation of this Mobilize Limo, those responsible for Renault pointed out that they expect the car as property to be significantly reduced and believe that, past 200,000 kilometersthey will be able to take delivery of the car, recondition it (including upgrades) and put it back on the market.
Stellantis expects all of its vehicles to receive OTA updates by 2024 and expects 34 million connected vehicles to be on the road by 2030.
And they are not the only ones. Toyota also announced earlier this year that it will have its own software from 2025. Honda An important restructuring plan has already advanced, with Sony as one of its great allies, and which contemplates a total investment of 59,000 million euros for its reconversion into a completely electric and connected firm.
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