Volkswagen Plans To Replace Cariad Management

To those of us on the outside, Volkswagen appears to be a well oiled machine, placidly plunking out passels of passenger cars like clockwork. But the latest news from Wolfsburg indicates that, behind the scenes, there is an ongoing war taking place between the various brands in Volkswagen Group. According to reports by Business Insider and Reuters, CEO Oliver Blume, who took over the reins at Volkswagen Group last September after Herbert Diess was tossed overboard, has succumbed to pressure from Porsche and Audi to clean house at Cariad, the software division created in 2020.

What Is Cariad?

Cariad has its own website, where it extols its virtues thusly: “We are an automotive software and technology company that bundles together Volkswagen Group’s software competencies and further expands them, building upon a heritage of bringing automotive innovation to everyone. Over 6,000 developers, engineers, and designers worldwide unify their knowledge at CARIAD. Their mission: transforming cars into software-defined vehicles that seamlessly integrate the automotive experience into our digital life, turning the Volkswagen Group into a software driven mobility provider.

“We live in an era of ever-changing mobility needs — from electrification to digitization and automation. Software has become crucial in determining how customers will experience their car in the future. It is our key to transforming automotive mobility and making it safer, more sustainable, and more comfortable in a new way — for everyone, everywhere.”

It goes on to say it is “building the leading tech stack for the automotive industry, aiming to create a new automotive experience and increase the innovation speed of Volkswagen Group to make the car a digital companion.” The core of its mission is building one unified software platform and tech stack for all the brands in Volkswagen Group, “enabling them to excite their customers with digital experiences that can continuously be improved through over the air updates.”

That all sounds lovely and quite touchy feely, but in practice, the results have fallen far short of expectations. It’s all Tesla’s fault, of course. Not content to make pretty good electric cars, it also decided to turn those cars into computers on wheels. Being located in the heart of Silicon Valley, it had access to the best and brightest software engineers, who set out to build a digital driving experience that blew the socks off the competition.

Bringing Order Out Of Chaos

Until Cariad was created, each brand within Volkswagen Group was responsible for its own computerization efforts. But senior management, at the behest of Herbert Diess, decided having a half dozen groups doing their own thing was not an efficient use of precious resources, and so Cariad was created and all software development was assigned to it.

That situation was similar to what happened at General Motors in the last century. Originally, each division was allowed to develop and build its own engines and transmissions. At some point, the company realized how much time and effort was being wasted and standardized most engine choices across all its brands.

Things have not gone well at Cariad. Volkswagen’s electric vehicles have been plagued with software glitches, gremlins, and goblins. That was bad, but now things have gotten worse, as the heads of Porsche and Audi are being told their newest electric cars, such as the battery electric Porsche Macan and Audi Q6, may be delayed for years because the software stack Cariad is supposed to deliver isn’t ready and won’t be anytime soon.

To make matters worse, Cariad lost $2 billion in 2022, according to Automotive News Europe. The planned launch of company-wide structural car software, initially designed to enable the fourth and five levels of autonomous driving from 2026, has been postponed by two years, says a report by Reuters.

Cleaning House At Cariad

That news has brought out the long knives in the Volkswagen Group boardroom. Now, according to news reports, all of the top managers at Cariad — CEO Dirk Hilgenberg, CTO Lynn Longo, CFO Thomas Sedran, and CPO Rainer Zugehor — have been informed that they are done and will be replaced at a board meeting scheduled for Wednesday of next week. Reuters says Zugehor may survive the purge, but that is uncertain.

Business Insider reports the behind the scenes wrangling is happening because Cariad is unable to meet the timelines established for it. Delays are constant and costs are exploding. The software debacle was a major reason for replacing Herbert Diess. New CEO Oliver Blume is under fierce pressure to fix the problems, with Audi development chief Oliver Hoffmann seen as the prime mover in the internal revolt over Cariad’s failures.

A spokesperson for Volkswagen Group told BI, “We have always emphasized that we stand by Cariad. For the Volkswagen Group, the expansion of our software expertise is and will remain an important component for the attractiveness of our products. We are currently analyzing the situation of Cariad and the projects very closely. In this context, we have already made decisions and, for example, arranged the software architectures chronologically. Possible decisions on personnel changes were not made.”

It is understood that Blume wants to quickly fill the soon-to-be-vacant leadership roles and restructure the software unit. A conclusive concept for software development in the group is not apparent. A clear path forward is urgently needed in order not to fall behind in the competition with Chinese car manufacturers and Tesla.

With the firing of top managers at Cariad, Blume is giving in to the pressure of the premium brands and making the four top managers scapegoats, company insiders are saying. For others, it is business as usual in Wolfsburg, where palace intrigues between the major shareholders — the Porsche and Piech families and the state of Lower Saxony — are common. The dismissal of Herbert Diess was engineered by just such a cabal after he failed to get the results needed from Cariad.

Is Oliver Blume himself now under pressure to deliver results or else? One executive who declined to be identified told BI that behind closed doors, “the Wolfsburg world of power struggles continued unabated in the Blume era.”

The Takeaway

The nub of things is the quest for autonomous cars, something Elon Musk has been promising for 6 years now. And yet, few customers are banging on the doors at dealerships demanding self-driving cars. Why the disconnect? Money. Musk has said clearly he expects autonomy to be the economic engine that makes Tesla worth a trillion dollars or more. Every other car company wants in on the gravy train as well.

Things like self-driving systems will command either big fees up front or lucrative monthly subsctipions. Five years ago, an anonymous Volvo engineer said Level 5 autonomy would be like a license to print money for automakers.

Here in the graphene-paneled conference room at CleanTechnica global headquarters, we often debate about whether there might not be a lot of people who just want a good electric car with decent range and adequate charging ability. Not everyone wants or needs a horizontal elevator that turns the driving experience into the automotive equivalent of oatmeal. But money talks. The manufacturers are desperate to tap that revenue stream, and so the efforts to make autonomous cars will continue.

Cariad will crack the code eventually. Although, how many heads will roll in the C suite in Wolfsburg by then is anyone’s guess. Our advice to Oliver Blume is, “Keep your resumé up to date, Ollie. You may need it sooner than you think.”


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