Can CEO Herbert Diess reinvent Volkswagen with EVs and software?

Software Challenges

The automotive industry faces significant challenges in software development and integration. Herbert Diess highlights the complexity of modern cars, which have ten times more lines of code than smartphones, requiring robust safety measures and real-time communication systems 1. He acknowledges that while Volkswagen is making strides, they still lag behind some competitors in software integration 2. Diess emphasizes the need for stronger vertical integration to remain competitive, noting that the process of developing a comprehensive software stack will take several years 1.

A car today already is ten times more complex than a smartphone. It has ten times more lines of code than a smartphone.

--- Herbert Diess

Volkswagen aims to unify its software stack across brands, allowing for economies of scale while maintaining brand differentiation 3.

   

Software Revenue

Volkswagen is exploring new revenue streams through vehicle software and related services. Herbert Diess discusses the potential for pay-per-use models and shared usage, which could provide additional income sources 4. He notes that while the traditional automotive model generates profit through maintenance and repairs, software-based vehicles require continuous updates and services, posing new financial challenges 4. Diess also mentions Volkswagen's openness to licensing its software to other companies, similar to Google's approach, to leverage economies of scale 5.

We think that there won't be too many really self-sufficient software stacks in the world because it will be really expensive to maintain.

--- Herbert Diess

This strategy involves partnerships, like the one with Ford, to share platforms and technology, enhancing competitiveness while maintaining control over user interaction 5.