Cariad outranks VW Group brands as software takes centre stage

What VW under Blume has done with Cariad is give it the power to say to the group brands: we set the pace, not the other way around. “What used to be done was that the SoP [start of production] of vehicles was paramount and the governing principle,” Hilgenberg said. “That's now changed.” So now when a new car is being developed, the brand goes to Cariad and says ‘what have you got?, rather than ‘we’re launching Q2 2024 and you’d better be ready with something hot!”

Cariad is now essentially calling the shots in terms of release dates and platform launches. "Cariad is in the driver's seat and the VW brand is in the passenger seat – with Audi and Porsche on board," Hilgenberg said of release of 2.0 back in July in an interview with Frankfurter Allgemeine Zeitung newspaper.

The fact that it took Volkswagen so long to give Cariad the clout it needed within the group wasn’t surprising, argues Pedro Pacheco, senior research director at consultant Gartner. “Legacy companies need to undergo a heavy transition and that’s usually a big problem,” he told Autocar. “Software is going to be central to the success of the whole company. If Cariad and other software organisations from legacy car makers don’t manage transformation fast enough, then the newcomers will take over.” Pacheco pointed to the fact that Tesla almost overtook Audi to become the third largest premium car maker in 2022.

Despite all the teething troubles, the VW Group is adamant it wants full control of the software rather than outsourcing it. In fact, an earlier agreement with Intel’s Mobileye unit to supply the chip powering the MEB cars’ assisted driving system was a big reason for Cariad’s existence. That agreement gives Mobileye sole access to the data from the cars, which then goes to populate its REM (Road Experience Management) database to digitally map roads and pave the way for greater levels of autonomous driving. “That's a contract the Volkswagen brand did prior to Cariad. That's why Cariad was founded, because we are not having access,” Hilgenberg said in Las Vegas.

VW and Cariad realised they needed that data if they wanted to gain the knowledge to offer level three and level four hands-free driving capability on cars built on the Unified platform. Cariad reckons it’ll have 40 million cars on the road harvesting data by 2030, creating knowledge about all those rare ‘corner cases’ in driving that we humans can usually figure out how to navigate, but a computer might not. 

“The functionality is dependent on the amount of corner cases you actually can secure, harden and validate, and that needs a big fleet and high-performance power,” Hilgenberg said. Which means that for the Unified platform, Mobileye is out and chip supplier Qualcomm is in. One advantage Qualcomm has is that its chips can power both the assisted driving functions and the infotainment, as well as letting VW keep its data.

Cariad’s goal is to write more of the software itself, up to 60% by 2025 from around 10% now. It is recruiting hard and Hilgenberg says Cariad will hire another 1700 staff in 2023 to take its headcount over 7000 across its locations in Germany, China, the US and India. 

The CEO said his company receives 7000 applicants a month and is benefiting from the mass layoffs at US tech giants such as Google and Facebook.

One way it grows is through acquisition, such as the 2022 purchase of Intenta, a sensor data fusion company. In 2021, it bought the camera software division of Hella Aglaia. Cariad also has a wealth of partnerships outside the key chip makers. The premium infotainment software within the 1.2 platform going into the PPE cars is being developed on the Android Automotive open-source operating system. Cariad has formed a majority-owned joint venture in China with Horizon Robotics to develop assisted driving systems for the country, meaning it has split its strategy to avoid problems around data leaving the country (illegal in China). 

Meanwhile, after VW removed itself from the Argo AI self-driving enterprise, the weight of developing more saleable (ie achievable) levels of autonomous driving fell to Cariad and its partner Bosch under the Automated Driving Alliance. The partnership now has 750 people from each company, 1500 in total, working on hands-free technology.