As negotiations resume on Monday in northern Germany on a savings plan that could lead to thousands of layoffs, the future of Europe’s leading manufacturer may be playing out in California.
By joining forces with a young American company to build its new generation electric cars, the veteran Volkswagen, stuck in the biggest crisis in its history, is trying everything for everything. As negotiations resume on Monday in northern Germany on a savings plan that could lead to thousands of layoffs, the future of Europe’s leading manufacturer may be playing out in California.
It is in the Los Angeles region that the automotive start-up Rivian has established itself, with which the German giant sealed a partnership worth nearly six billion euros in November. The young company, founded in 2009, is now responsible for building the electronic architecture of the group’s future electric models with the hope of erasing the setbacks suffered by Volkswagen in recent years.
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An equal «high risk“, according to Ferdinand Düdenhöffer, expert from the Center Automotive Research (CAR), since Rivian, specializing in the manufacture of fully electric trucks, vans and SUVs, is much less established than the American Tesla or the large technology companies with which many work. of builders. Allying with giants such as Google or Microsoft “helps avoid risks» on the development of operating systems, which have become essential to the car of the future, recalls the expert.
A “billion pit”
Whether for the primary functions of cars, applications or even assisted driving, manufacturers are faced with the rise of “software”, integrated software, increasingly sophisticated, whose importance is taking precedence over that of “hardware”, the mechanics of the car.
They had to make their choice: completely delegate software development – as the Swedish Volvo did – or hire hundreds of developers to produce an in-house operating system, as promised by Cariad, Volkswagen’s dedicated IT subsidiary. Most preferred a solution between the two, by establishing partnerships, as announced by Mercedes with Google and Nvidia.
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The stakes are high: the failure of Cariad, accused of delays and defects in its software, cost the former CEO of Volkswagen, Herbert Diess, his place, sacked in 2022, and considerable sums for the group, ‘after Mr. Dudenhöffer, who speaks of a “abyss of billions». L’ex-patron a cru «that we could transform a classic car manufacturer into a technology and IT giant», summarizes the analyst.
Nothing could be more complicated for an almost century-old group like Volkswagen, whose internal organization is complex, with ten automobile brands which have developed each on their own, explains Andreas Nienhaus, of the research firm Oliver Wyman. This “inertia» slows down innovation, he adds.
The 2026 objective
Hence the radical change in strategy by Oliver Blume, Diess’ successor at the head of the group.
To prove to the German partner what it is capable of, Rivian installed a computer system of its own in an electric Audi this summer, in just twelve weeks, reports Der Spiegel magazine. “This is how long it would have taken for us here in the group to organize a meeting with everyone involved», laughs an insider quoted by the weekly.
A reliable and simplified electronic architecture, the promises of the young company make the heirs of the creators of the Golf dream. The joint venture wants to market new generation vehicles from 2026. Volkswagen has committed to investing up to $5.8 billion by 2027.
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Time is running out for Volkswagen, also handicapped by its production costs in Germany, a decline in its market share in China in the face of competition from young electric brands, in a context of slowing global demand. What about Cariad and its more than 5,500 employees in Europe? The subsidiary “will continue to play an important role», a promis le PDG.
Its administrative staff was reduced by 30% this year. Around 150 of Cariad’s engineers will be seconded to the new joint venture between Volswagen and Rivian, a Cariad spokesperson told AFP. Certain services remain under its responsibility, such as the development of infotainment or automated driving in partnership with suppliers like Bosch and Mobile-Eye.
