CARIAD Volkswagen

Volkswagen names Bentley exec to revive its struggling software unit

Rebbeca Ren

posted on May 9, 2023 7:25 am

CARIAD, the three-year-old software unit of Volkswagen Group, now faces a major overhaul due to its subpar operation. 

Following reports over the weekend that the current head of Cariad would be fired, the German automaker announced on Monday that Bentley production chief Peter Bosch will succeed Dirk Hilgenberg as the leader of the business unit.

Bosch will take over from June 1, the company said on Monday, and two other software specialists will join him on CARIAD's board, with human resources chief Rainer Zugehoer the only remaining board member. 

In addition to the job of CEO, Bosch will be responsible for finance, purchasing and IT. Before moving to Bentley in 2017, the executive spent nearly seven years with the Volkswagen brand.

CARIAD, previously known as Car.Software Organisation, was founded in 2020 with the goal of developing in-vehicle software services, including digital entertainment, automated driving, and driver assistance systems, for not only Volkswagen but also other automotive brands.

As the electrification and digitization of four-wheeled vehicles accelerate around the globe, Volkswagen had forecast that CARIAD could generate as much as 1.2 trillion euros ($1.32 trillion) in revenue from subscriptions and other sales by 2030.

However, the software unit ran into a number of issues, including going over budget and falling behind schedule, which put significant pressure on management. For instance, the planned launch of company-wide structural car software, initially designed to enable the fourth of five levels of autonomous driving from 2026, has been postponed by two years. Meanwhile, CARIAD suffered an operating loss of 2.1 billion euros ($2.3 billion) in 2022 on revenue of 800 million euros, according to the automaker's annual report.

One objective of the latest management change is to better align CARIAD's software release schedule with planned model launches, as stated in Volkswagen's announcement.

Despite the overall R&D process and budget control work being subpar, CARIAD has been consistently increasing its investment in China. In order to take advantage of China's vast talent pool and capitalize on its burgeoning EV market, CARIAD opened a subsidiary in the country in 2022, its first outside of Europe.

With the ambition of “In China for China, from China to the world,” the Chinese team is responsible for collaborating with the European team on a new uniform and globally scalable software platform for all Group brands, ensuring it meets specific regional requirements.

Beyond that, CARIAD China, which is said to double its workforce to 1,200 by the end of 2023, focuses on driving and improving the development of China-specific software products. 

Aiming to gain a competitive edge in the automotive software sector, CARIAD invested $2 billion last October to establish a joint venture with Horizon Robotics, a smart car computing solution provider headquartered in Beijing. Together, the two companies will work on state-of-the-art, highly optimized full-stack ADAS/AD solutions for China. This collaboration aims to drive the integration of numerous functions on a single chip, increasing system stability while reducing costs and energy consumption.

In April, it announced plans to form a joint venture in China with ThunderSoft, a renowned provider of intelligent operating system products and technologies. This partnership will focus on the development of customized software products and solutions for connectivity and infotainment systems.

According to Volkswagen, CARIAD will play an even greater role in developing the vehicles of the future, from software to hardware. For example, there are plans for an integrated project house with the Volkswagen and Audi brands to develop the next generation of software-defined vehicles.

Cover image by Cesar Salazar on Unsplash