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Volkswagen's Cariad Faces Delays Amidst Layoffs, What It Means for the Future

Volkswagen's software division, Cariad, has hit a speed bump on its journey to unveil its software architecture
November 1, 2023

Volkswagen's software subsidiary, Cariad, finds itself navigating turbulent waters, announcing yet another setback in the launch of its eagerly anticipated software architecture. Just three years since its inception and following a recent executive reshuffle, Cariad has embarked on a significant round of layoffs. The unit, in an effort to streamline operations, has decided to cut 2,000 jobs, leading to further delays in the launch of VW's software architecture 1.2 by 16 to 18 months.

Originally slated for completion in 2022 and poised to empower the Porsche Macan EV and the Audi Q6 E-Tron, the software 1.2 platform encountered its first delay, pushing the release date to the end of 2023 under the stewardship of Peter Bosch. Now, it appears that this pivotal software won't find its way into VW vehicles until at least 2025.

While VW's vehicles are already equipped with the software 1.1 version, Cariad is also hard at work on a 2.0 version, a revolutionary operating system designed to encompass all VW Group brands. Initially expected to debut in 2025, the recent layoffs have prompted Cariad to embark on a ground-up redevelopment of this essential software.

These changes, laden with uncertainty, raise questions about the launch date of the highly anticipated Macan EV, scheduled for early 2024. Volkswagen's response to these developments remains unclear at this stage, leaving industry observers eager for further updates.

The repercussions of Cariad's restructuring will also reverberate across VW's next-gen Scalable Systems Platform, a versatile architecture aimed at revolutionizing the EV lineup, from VW's iconic hatchbacks to sleek Porsches.

As VW faces challenges in rolling out software, it finds itself racing against the tide of software-defined vehicles pioneered by Tesla and adopted by Ford and General Motors. Beyond enhancing vehicle intelligence, software-defined vehicles open doors for automakers to explore additional revenue streams through in-car entertainment and services. Back in 2021, VW Group had projected that Cariad could potentially generate an impressive €1.2 trillion ($1.4 trillion) in revenue by 2030, predominantly through subscriptions and other sales.

A series of delays and missteps have already triggered multiple shakeups within Cariad. Notably, in May, the subsidiary's board replaced CEO Dirk Hilgenberg with Peter Bosch, formerly responsible for manufacturing at VW's Bentley brand. Bosch's tenure witnessed the reduction of 2,000 staff members as part of a broader restructuring plan.

While VW Group's board of directors has greenlit this downsizing plan, set to unfold between 2024 and late 2025, it still hinges on approval from VW's works council, which has safeguarded jobs for workers until mid-2025. The coming months are poised to be pivotal for Cariad and VW as they navigate this turbulent phase.

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