Alien Sighting VW Cariad on the road
EkaLore profiles companies that enter adjacent or even different markets rapidly, taking market share and profit, catching marketplace incumbents flatfooted by using unheard of approaches in its new marketplace.
VW Cariad, Volkswagen’s software and technology company has been under an executive management review with the change in VW Group CEO. The resulting changes from this review indicate significant changes to the platform and product strategies at all VW Brands. Geopolitical forced variations in technology, partners, and software complicate the situation.
Strategic risks include:
1) Focus on China as the largest global market for VW risks further complications in regulatory, domestic content, hardware and software product architecture, and market timing
2) Technological difficulties from distinct computing, cloud, and feature architectures isolated in specific markets will increase costs and risks (market, agility, and sustainability)
3) Multiple partners increase operating friction, strategic management distractions, and accumulates development and deployments risks
4) Increased costs and delays will result from inefficiencies of multiple parallel efforts dictated by variances in hardware (compute and sensors), software (multiple parallel implementations in different marketspaces), and communications (regulatory and technical changes for clouds)
5) Delays in time to market and feature implementations will risk VW brand positions in multiple marketspaces as competitors and media focus on market and brand confusion
6) Uncertainties on how to service key marketspaces will delay decision making and add additional costs in markets like the Middle East, India, and South America
7) Redundant efforts will create additional costs and pressures from governments, regulators, and competitors for reconciliation of technology (safety considerations, green tech, supply chains)
Cariad announced adjustments in strategy in January 2023. During the management of the prior CEO (Diess), VW Group Cariad announced:
· Plans to invest up to EURO91B in software and EV technologies in the coming 5-year period (Cariad received EURO2.5B support from VW Group alone on top of other partnerships and supplier costs)
· 10,000 staff in just software positions, with 5,000 in place by early 2022
· Initial new architectures (VW.OS/VW.AC) in-vehicle from 2025
The results of the strategy adjustments announced have changed major architectural and software planning for VW Group vehicles across multiple brands:
Product and Platform Plans altered in multiple markets
o Delays for Artemis EV (Audi) until at least 2027
o Delays for Bentley going all EV by at least 2030
o Autonomous driving software (akin to Tesla’s FSD) will be delayed from 2026 to 2028 or later
o Initial architecture launch in Porsche Macan SUV in 2024
Division of partnerships between markets:
o Partnership with BlackBerry for unified approaches for VW.OS and VW.AC (cloud)
o Advanced driver and automated functions using a partnership with Bosch before future implementations (outside China).
o Partnerships with Qualcomm, Bosch, STMicro, and Horizon also serve VW in other markets.
o Changed architecture to go with “unified system on a chip” approaches instead of distributed architecture using Qualcomm SnapDragon RIDE SOC and Intel MobilEye (outside China) and Horizon Robotics (China)
Focus on China as VW’s single largest global market at about 40% of sales and 50% of profits from China
o Investment and collaboration with Horizon Robotics (China), with VW investing at least EURO2.4B for 60% of the venture
o Distributed R&D to increase speed and reduce time to market with development in Beijing, Shanghai, Chengdu, and Heifi
o Doubling existing teams totaling 600 staff in China by the end of 2023 with >90% local staff growing to “thousands” of software and product developers in China
o Focus for China R&D on Chinese driving experiences, user interfaces, and features specific to the Chinese marketspace
Horizon Robotics is already a VW/Audi, Continental, Li Auto, and SAIC supplier. Investors include BYD, Intel, and Great Wall.
Previous attempts by VW have not all gone smoothly, with failures at ARGO AI and the launch of the ID.4 platform of EVs.
Qualcomm already partners with BMW, Stellantis, GM, and Renault on automotive electronics and 5G communications.
VW’s Cloud activity was restricted for the Chinese market by regulatory rules limiting the transfer of Chinese driving information from vehicles to data centers outside China.
Alien Invasions are not always simple. VW’s move to EVs from ICEs seems like an easy transition. VW has ample resources, money, expertise, and people, yet this new market carries restrictions that greatly complicate its entry into the marketplace. You can learn more about Alien Invaders, including easier entries by Alien Invaders at www.ekalore.com/alien-invaders
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