Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      The satellite broadband operators taking on Starlink

      9 July 2025

      Yaccarino out: Musk’s handpicked CEO quits X suddenly

      9 July 2025

      AI gold rush propels Nvidia to record $4-trillion market cap

      9 July 2025

      Price hike for .za domains

      9 July 2025

      China’s Temu ups ante with South African warehouse launch

      9 July 2025
    • World

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025

      Jony Ive’s first AI gadget could be … a pen

      30 June 2025

      Bumper orders for Xiaomi’s YU7 SUV heighten threat to Tesla

      27 June 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025

      TCS+ | First Distribution on data governance in hybrid cloud environments

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Motoring » VW’s future hinges on a $30-billion tech reboot

    VW’s future hinges on a $30-billion tech reboot

    By Agency Staff15 March 2021
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Volkswagen CEO Herbert Diess

    Max Senges traded the visionary buzz of Silicon Valley for an old-school German industrial centre bracing for a dramatic overhaul.

    As head of a new coding school in Wolfsburg, the former Google researcher is a small but important part of Volkswagen’s massive push into software. The strategy — involving more than US$30-billion in investment and multiple projects and partnerships — is critical to catch up to Tesla and counter the existential risks posed by the automotive ambitions of Apple and Alphabet.

    “The car industry is changing from a focus on, ‘faster, stronger,’ to becoming more sustainable and smarter,” said Senges, who worked at Google for more than a decade. “What matters for us here is to foster a mindset” that can bridge the tech and auto worlds.

    While VW is one of the largest car producers, it’s now pitted against companies that have routinely disrupted industries

    While VW is one of the largest car producers, it’s now pitted against companies that have routinely disrupted industries, casting former leaders aside in the process. And they’re coming with deep pockets and big plans to own car data — a $400-billion opportunity, according to McKinsey & Co estimates.

    VW’s management is keenly aware of the challenges. CEO Herbert Diess regularly cites Nokia’s fall as the world’s dominant mobile phone maker because it failed to keep up with the iPhone as a cautionary tale. He’ll provide an update on the company’s tech transition at events this week, including the group’s annual press conference in Wolfsburg.

    Biggest hurdle

    The biggest hurdle for Volkswagen may be its firmly entrenched culture, built around seven-year automotive cycles. Line and brand managers traditionally have almost total control over what goes in their vehicles, while VW’s powerful unions weigh in on nearly every decision.

    That structure helped manage more than 100 factories around the world, but it’s ill-suited for handling vast amounts of data and constantly tuning code. Initial forays haven’t gone well, with UBS Group determining the company is years behind Tesla from a software perspective.

    The brimming confidence of top executives isn’t shared by everyone at the German auto giant. Some view a plan to finally start over-the-air updates this month as daunting rather than a promising milestone, according to discussions with people involved in the automaker’s operations.

    The bruises from last year’s scramble to rescue a new line of software-heavy electric cars — with hundreds of specialists working in sprints — haven’t all healed.

    Senges’s school is an agent of change in Wolfsburg. It’s located in a new building that borrows the utilitarian red brickwork of the nearby plant, but with open-floor working areas for collaboration. The facility is equipped with a virtual-reality lab and 3D printers for making prototypes. Coursework starts with 150 students in May, rising to 600 by the end of next year.

    “It requires a quantum leap for automakers to close the gap to Tesla when it comes to software,” said Wolfgang Bernhart, senior partner at consultancy Roland Berger. “Just adding headcount won’t be enough.”

    It requires a quantum leap for automakers to close the gap to Tesla when it comes to software. Just adding headcount won’t be enough

    Already dwarfed by Tesla’s $650-billion market value, VW can ill-afford its teething problems. Its new generation of electric cars, anchored by the ID.4 sport utility vehicle, is going global this year.

    Traditional rivals are also seeking to adapt to the digital age. Unlike VW, which poached an auto executive to run its software unit, Toyota tapped a Silicon Valley star to finalise an operating system that allows features to be installed in a car’s existing hardware over the air.

    With similar transitions under way at Mercedes-Benz and BMW, the engineering backbone of Germany’s powerhouse economy is exposed. The efforts have become even more urgent after the implosion of Wirecard showed Europe’s lack of global tech champions.

    Car.Software

    VW has set a target of boosting the share of its software that is developed in-house to 60% from 10% currently. To pull this off, it established a unit — dubbed Car.Software Org — with about 4 000 employees to develop a system that can manage vehicle data flows and connect them to the cloud.

    “This would be the ‘brain’ of the car, and we don’t want to give it to other parties,” CEO Diess said in November. “We see that probably as the most important race and decisive point for our industry in the next five to 10 years.”

    In its latest five-year investment plan, the company doubled spending on digitalisation efforts to $32-billion, even as the overall budget remained flat. While that represents significant resources, Google parent Alphabet spends almost that much in a year.

    Infighting has dogged VW’s effort. Car.Software was initially envisioned as an agile standalone unit, but internal rivalries got in the way, triggering the departure of high-ranking software specialists including former SAP executive Bjoern Goerke. The company then changed tack and put Audi in charge.

    Meanwhile, the need for VW to step up its game has become painfully evident.

    In the early days of the coronavirus crisis with parallel launches of the Golf hatchback and the ID.3 electric car going wrong, Diess summoned senior managers for a fresh round of war gaming.

    The Golf’s emergency-call feature had to be fixed. Other glitches delayed the ID.3 for months, and the first owners had to drive to their dealerships for a software patch because over-the-air updates weren’t working yet. Diess and his team concluded the efforts were proving too little, too late.

    For tech companies, replicating the takeover of the mobile phone industry won’t be so easy when it comes to cars

    The result is Project Artemis. Under the more aggressive strategy, VW plans to build its own software stack for vehicles starting in 2024. The first Artemis car — code-named Landjet — will be assembled in a smaller factory in Hanover before the technology is scaled up two years later with a more affordable VW-branded electric car out of Wolfsburg.

    Big Tech isn’t waiting. While VW’s Car.Software unit entered a labour pact with unions regulating salaries and working hours, Apple’s car project appears to be moving forward and Alphabet’s Waymo is widely believed to be leading the pack in self-driving technology.

    ‘Big change’

    The efforts could lead to software companies controlling the relationships with car users, said Anja Hendel, a former Porsche official who joined Diconium, a digital advisory acquired by VW. “It’s a big change for the auto industry,” she said during a podcast this month.

    For tech companies, replicating the takeover of the mobile phone industry won’t be so easy when it comes to cars. While a glitch might be a nuisance during a video chat, it could be deadly on the autobahn. That gives automakers some leeway, and Volkswagen is putting the pieces in place.

    Alongside Car.Software, the company has teamed up with Amazon.com for an industrial cloud for its factories and with Microsoft for a separate data network for its vehicles.

    Senges’s 42 Wolfsburg is part of the long-term solution. The VW-sponsored school — with a planned budget of $2.4-million/year — is designed to create a new breed of engineers in the shadow of the factory’s smokestacks.

    “The difference between the software and car industries isn’t as big as one might think,” he said. “The potential we have here is enormous.”  — Reported by Christoph Rauwald, (c) 2021 Bloomberg LP



    Herbert Diess Tesla top VW
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleWhich is the best Covid vaccine to get? It’s complicated
    Next Article IoT.nxt CEO Nico Steyn steps down with immediate effect

    Related Posts

    Without US subsidies, Musk would be back in South Africa – Trump

    1 July 2025

    Tesla shares soar after first robo-taxi rides hit the road

    24 June 2025

    EV bloodbath in China

    9 June 2025
    Company News

    Samsung unfolds the future with thinnest, lightest Galaxy Z Fold yet

    9 July 2025

    Huawei supercharges South African SMEs with over 20 new eKit products

    9 July 2025

    Webtonic cracks the talent code with AWS-powered TonicHub

    9 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.