VW’s software chief envisions pay-as-you-go autonomy

Volkswagen AG can remain a leading auto manufacturer and bypass Tesla Inc. if it steps up its software game, says its CEO Herbert Diess. That makes the company’s Cariad unit a linchpin of its long-term success.

So far things haven’t gone smoothly. The division, set up in 2020 after a previous digital push went awry, introduced a toolkit for VW’s ID series of electric cars, the first model of which debuted with missing features. Development of a premium software architecture has been plagued by infighting, delaying models, including a battery-powered version of Porsche’s Macan compact sport utility vehicle (SUV).

VW is working to build an operating system that’s scalable across its brands and capable of frequent over-the-air updates to enable enhancements such as driver-assistance features, areas in which Tesla is well ahead. VW’s supervisory board, which is scheduled to meet on Friday, is concerned about shortcomings at Cariad and seeking an overhaul of the business to speed up decision-making, German media has reported.

Bloomberg’s Monica Raymunt spoke to Cariad’s CEO Dirk Hilgenberg about VW’s software push. Here’s an excerpt from the interview, edited for length and clarity.

You were appointed CEO of VW’s software unit two years ago. What has changed since then?

When I came, people had just started at Cariad. Everyone was fully committed and eager to make things come true. But there was also a big backpack with a lot of tasks in it that needed to be sorted out. We did that and we’re still doing that because it’s part of the mission. Some ideas did materialise and some we needed to correct because reality hits and you need to deliver software.

The layout for our next group-wide architecture is similar to what Tesla had initially brought in, but we wanted to jump a step further ahead. That means high integration, more compute power and a different scope. We have vehicles starting from the entry level to the latest luxury Bentley, which have very different software and hardware needs.

What are some of the challenges you’ve encountered developing this architecture?

We don’t want to develop functionality twice; we want to have timely delivery on the standard operating procedures and that means we have to pursue a different software development path. Not for every platform to be new again, but continuously developing software to the next stage based on what’s already there, allowing you to piggyback on what you’ve already done well.

But the vehicle is much more complex than business applications, so we have to make sure data protection, security and safety is on a completely different level.

Is there a way to monetise these different features?

There’s a new business model already out there, a subscription model or function-on-demand, where the AI will tell you you can drive autonomously if you want for the next 80 kilometres. We would support that. We could give you autonomous driving for the next 80 kilometres so you can relax or sleep or do whatever.

We don’t have Level 4 autonomy yet, but you can see that in some areas driver-assistance functions can be offered by AI. And this kind of service can create time in the vehicle — to work, relax, watch a movie or communicate with the other people. That experience space is one where you can also earn money if you offer services. You have to have what we call a digital services platform that lets the outside world in — Google, Apple, Amazon — where you can bring your accounts to stream and be entertained or where you can work with office products, do a video conference or prepare yourself for the next meeting. This is the product we want to sell. The product is our platforms. 

Cariad has the ambition to deliver over-the-air updates every two weeks. How is that going?

Small updates of platforms can be done within a week. If you really want to do a function release, then that package is pretty big. We don’t want to disturb the customer too often and you want to make sure it’s running with a very low failure rate. Our volume and premium architectures enable continuous updatability. 

With the next group-wide architecture we can even speed up the update cycles and will enable daily updates of smaller features like the infotainment system and the apps. Cariad’s role is to work continuously on the releases and the brands can then choose from this development and select their update cycles. But it has to be done in due process. We also don’t want to overwhelm customers with an update every week.

Cariad inherited different software structures that already were in development from VW. Did you need to deliver on some of them in the short term and at the same time shape the architectures of the future?

Yes, in ironman terms, we’re just getting out of the water and now we’re on the bike. We still have a marathon ahead of us. Transformation is an active process; it’s a lot of friction. But it’s 20% technical challenge and 80% change — mental change, cultural change.

The classic automotive industry always worked in modules. In software, that doesn’t work any more, you need a seamless toolchain. You need to think end-to-end.

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