E/E Architecture Volkswagen and Cariad: External Expertise to fix it

Related Vendors

dataTec AG

Wuxi InfiMotion Technology Co., Ltd.

New strategy, new partners, new structure: How the VW Group is reorganizing its subsidiary Cariad after paying 14 billion euros.

Cariad has cost the VW Group a lot of money so far: According to a report in the german business newspaper Handelsblatt, a total of 14 billion euros (approx. 16 billion USD) since it was founded in 2020. Not including the costs of postponed product launches. The most prominent examples are the Audi Q6 and Porsche Macan models, which were launched two years later than planned. According to an analysis by McKinsey, this cost the sports car manufacturer around three billion euros (approx. 3 billion USD).

The software company was also to play an important role in Volkswagen's former flagship project—"Trinity". However, this has long since been postponed to the 2030s. These are some of the reasons why Cariad has been reorganized for a good year now. CEO Peter Bosch—himself a consultant at Oliver Wyman for over ten years—has decided that Cariad will relinquish responsibility for E/E architectures. As confirmed by a spokesperson, the Volkswagen brand will take over the existing E/E architecture E³ 1.1, which is used in the MEB models. E³ 1.2 is used in the PPE models. Audi is now responsible for this platform. Cariad will continue to be closely involved and supply software for these architectures.

The Future Core Tasks of Cariad

The future of Cariad therefore lies in the basic functions of individual areas: For example, the VW subsidiary will manage the activities for automated driving, infotainment as well as data, backend and cloud in the future. Here, the central organization could achieve synergy effects across all brands.

Under CEO Oliver Blume, the Volkswagen Group is focusing more on partnerships. Buying in expertise should help to implement projects more quickly. In China, Cariad is working with Xpeng on the so-called China Electronic Architecture (CEA). This is initially to be used in four VW brand models in the entry-level compact class segment—as part of the "China Main Platform" (CMP) vehicle platform. There are also plans to use CEA in the two VW brand vehicles developed jointly with Xpeng for the mid-range segment. As was announced just under a year ago, initially in an SUV that is to be launched on the market in 2026.

VW-Rivian Joint Ventures Develop new E/E Architecture

For the remaining markets, VW is working together with Rivian and has founded a joint venture with the start-up. The E/E architecture for the Trinity project planned under the name "E³ 2.0" has now been placed in the new joint venture—and has been renamed "SDV 1.0".

"The main objective of the joint venture is the independent development of a new, high-performance E/E architecture and software for the so-called Software Defined Vehicle (SDV)," said a press spokesperson from Cariad in response to our inquiry about the collaboration. It is about a purely zonal architecture for the "future electric vehicles of both companies in all relevant segments, including small cars". This can be seen as indirect confirmation of the rumors that the VW ID 1 will be the first Group model with this new architecture. The brand recently gave a preview of the small car with the ID Every 1 concept, which will be built in Portugal.

Cariad Shrinks

"We aim to use these [computers and software] in as many vehicles as possible and to exploit the resulting benefits in terms of economies of scale, sourcing and the overall cost structure," commented Rivian CEO Robert Joseph Scaringe on the VW Group's financial investment in the start-up in the summer of 2024.

For Cariad, all this means is further downsizing. The management of the struggling VW software subsidiary wants to lay off 1,600 employees by the end of the year. This was reported unanimously by the Handelsblatt and Manager Magazin (german economy magazin) following a works meeting in mid-March. The works council contradicted this report, stating that no figures had been determined or mentioned. They are currently negotiating a redundancy program. Employment at the VW subsidiary is secured until 2029.

According to Handelsblatt, the job cuts affect employees at the locations in Berlin, Ingolstadt, Mönsheim near Stuttgart and Wolfsburg (Germany). Cariad currently employs 5,900 people.

Any Cariad employee could accept the severance packages. However, according to the Handelsblatt, the management is not so much aiming to lay off traditional developers. Instead, it would primarily like to reduce the number of employees who previously coordinated the management with suppliers.

Machine Authentication

Machine Operator Authentication - Why knowing "who" matters