VW CEO Herbert Diess has taken over the helm at the Cariad software division. The risk is high – both for the car manufacturer and for Diess itself. Failure could mean the end of an era.

When Cariad was lifted out of the corporate baptismal font in early 2020, the ambitions were high. A powerful software company is to be created in which thousands of experienced engineers will deliver programs and applications for the entire VW group. After all, the software is crucial for autonomous driving and an important differentiator of the automobiles of the future. In the best VW manner, they wanted to take their destiny into their own hands and not make themselves dependent on Google or Apple. Don’t make a mess, but pack big was the motto.

Two years later, the sounds from Wolfsburg have become quieter. But the criticism of Cariad (a word created from Car and I am digital, by the way) is all the louder. Because the VW software is still lacking. At the start of sales, the infotainment in the VW Golf 8 was a collection of IT construction sites, screens froze or failed completely, and things didn’t go much better with the electric future model VW ID.3 for a long time.

Meanwhile, the executive chair at Cariad developed into an ejection seat: Christian Senger, who had built up the division, had to hand over the keys to Dirk Hilgenberg. Initially, Audi boss Markus Duesmann was in charge of supervision, but now group boss Herbert Diess has taken the helm himself. If something becomes a top priority, then something is amiss.

The main problem is that you want too much at once. Cariad is supposed to be the group’s software headquarters and turn the products of all brands into state-of-the-art rolling computers. Anyone who dances at many weddings tends to get bogged down. Cariad engineers report hectic and unorganized workflows. “We fly on sight. I may have to work on another project tomorrow,” says one. There are just too many fires for Cariad to put out.

In addition, in a large corporation like VW, each brand has its own agenda and first of all has its own success in mind. So it shouldn’t matter to Porsche whether Audi can stick to its product planning or not, even if both are forced to work together on the Premium Platform Electric (PPE). Everyone is next to themselves, especially since one or the other brand boss in the Volkswagen Group wants to climb even further up the career ladder and first of all want to keep their shop clean.

Despite the 5,000 employees, the concept of the jack of all trades software does not deliver the desired results. “A standalone organization solely focused on the new revolutionary vehicle and software architecture would function more effectively. Toyota, for example, chose this path. The bottleneck and the resulting ineffectiveness arise from the fact that the same experts are needed for current series production and for the new architecture,” says Jan Becker, CEO of Apex.AI, who develops automotive software himself.

Apparently, the task of developing your own software, operating systems and apps was completely underestimated in Wolfsburg. “We have to state here, however, that access to platforms via the purchase of the most progressive “start-up” companies was an economically advantageous, developmentally very simple and successful step by the two leading American car manufacturers. The step taken by some German manufacturers to go from being a customer of conventional software to a developer of complex AI under extreme time and pressure to succeed has proven to be a very big step,” analyzes Klaus Schmitz, partner in the Automotive Practice of the management consultancy Arthur D. Little.

Ingo Speich, Head of Sustainability, is even clearer

A lack of self-confidence has never been Herbert Diess’ problem. The wiry manager wants to ensure that Cariad finally delivers results. If Cariad doesn’t finally make progress, entire product plans could falter. A dangerous whirlpool that should not only drag Diess down, but the entire group. The first effects can already be seen. The introduction of the Cariad software has been postponed. The Audi A8 successor, the Audi Grandsphere, which is due to come onto the market in early 2025, is said to have a technological firework display, including revolutionary infotainment. The software for this should come largely from Cariad. It is currently doubtful whether the IT specialists can fulfill the grandiose plans.

In an act of violence, Herbert Diess still wants to achieve the intended goals and gets help from the house. For an alpha animal like the CEO, who wants to solve everything on his own and for whom dependencies in crucial driving functions are an abomination, this is tantamount to going to Canossa. But time is pressing. So the American chip manufacturer Qualcomm jumps into the shaky boat and supplies so-called system-on-chips (SoC) for the scalable Cariad software platform. “Customized SoCs are crucial for Cariad to provide competitive automated driving functions for all passenger car brands of the Volkswagen Group,” says a press release. It seems that a lesson has been learned in Wolfsburg.

Nevertheless, Herbert Diess takes a big risk with the takeover of Cariad, because he links his fate with the success of the software division. A failure would add another blemish to the already tarnished status of the manager and fuel discussions in the supervisory board as to whether the contract, which expires in 2025, should be extended or a new solution should be sought. The Porsche families in particular watch Diess’ actions with eagle eyes.

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