Volkswagen’s software unit, Cariad, is facing further delays in the launch of its new software architecture as it undergoes a significant round of layoffs. The German publication Manager Magazin reported that Cariad plans to cut 2,000 jobs, which will impact the release of VW’s software architecture 1.2 by an additional 16 to 18 months.
Key Takeaway
Volkswagen’s software unit, Cariad, is facing delays in the launch of its new software architecture due to a large round of layoffs. The layoffs will impact the release of VW’s software architecture 1.2, causing a delay of 16 to 18 months. The software 1.2 platform, developed for the Porsche Macan EV and Audi Q6 E-Tron, was originally scheduled for completion in 2022. However, with the recent layoffs, it is now expected to be ready for use in cars no earlier than 2025.
Delays and Restructuring
Cariad was created by VW just three years ago, aiming to develop the software architecture for the Porsche Macan EV and the Audi Q6 E-Tron. The original completion date for the software 1.2 platform was set for 2022. However, following an executive reshuffle in May, the launch was pushed to the end of 2023 to align with the 2024 VW models. With the new layoffs, it appears that the software 1.2 platform will not be ready for use in cars until at least 2025.
VW’s current vehicles already have the software 1.1 version installed, but Cariad is also working on the development of a 2.0 version, an operating system designed for all VW Group brands. Originally planned for release in 2025, the recent layoffs have prompted Cariad to start the software redevelopment process from scratch.
It remains unclear whether these layoffs will affect the release date of the Macan EV itself, which is slated for early 2024.
Impact and Challenges
The restructuring at Cariad will also hinder the progress of the next-generation Scalable Systems Platform, an architecture intended for use in VW’s EV lineup. VW has long struggled to implement software in its vehicles, which puts the company at a disadvantage when competing against Tesla and other automakers that embrace software-defined vehicles. Such vehicles not only offer advanced capabilities but also provide opportunities for additional revenue through in-car entertainment and services.
In 2021, VW Group announced that Cariad could potentially generate up to €1.2 trillion ($1.4 trillion) in revenue by 2030 through subscriptions and other sales. However, the series of missteps and delays faced by Cariad has resulted in various management changes over the years.
The most recent change occurred in May when Cariad’s board replaced CEO Dirk Hilgenberg with Peter Bosch, who previously oversaw manufacturing at VW’s Bentley brand. As part of the restructuring plan, Bosch oversaw the layoff of 2,000 employees.
VW Group’s board of directors has approved the downsizing plan, which is expected to take place between 2024 and the end of 2025. However, it still requires approval from VW’s works council, which has guaranteed job security for workers until mid-2025.
