Volkswagen is becoming more connected

It was a tremendous break for the industry that Volkswagen announced in mid-2019: Volkswagen is bundling more than 10,000 digital experts in a new “Car.Software” organization with Group responsibility for software in the vehicle by 2025. These experts work in the Volkswagen, Audi and Porsche brands, in subsidiaries such as Carmeq and also in companies in which Volkswagen has acquired a stake in. The company plans to develop significantly more software in cars and for vehicle-related services itself and to increase its own share from less than 10 percent today to at least 60 percent by 2025. The Car.Software organization will play a key role in this.

In the future, there will be a standardized Group-wide software platform with all basic functions for all Group vehicles – consisting of the operating system “vw.os” and the Volkswagen Automotive Cloud. This will become the worldwide technological heart of the digital ecosystem, which Volkswagen is developing jointly with Microsoft. All the Group’s new models are to run on this software platform by 2025. The first vehicle based on a first version of this software platform is the Volkswagen ID.3, which celebrated its world premiere at the International Motor Show (IAA) in Frankfurt and whose production began at the Volkswagen plant in Zwickau in November.

“We are hardware platform experts and are transferring this competence to software development,” says Christian Senger, Member of the Board of Management of the Volkswagen brand responsible for Digital Car and Services. “We will develop software with standardized basic functions for all Group brands and can thus reduce complexity enormously. In the future, we will exploit the economies of scale of our group of companies. This makes particular sense in the area of software and leads to enormous cost advantages,” says Christian Senger.

Currently, up to 70 control units with operating software from 200 different suppliers have to be integrated in Volkswagen brand vehicles alone. In addition, the Group has various systems with the same functions, for example for infotainment or navigation. A standardized operating system with the same basic functionalities for all brands and the use of the Volkswagen Automotive Cloud for all Group models will make this much easier.

The same applies to the so-called digital ecosystems of the brands through which the services are offered. After all, all brands require certain basic services. This includes, for example, the simple search for e-charging stations. At Volkswagen Passenger Cars, this service is called “We Charge”. Across all brands, basic functions such as “Search for nearby stations” and “Pay with different payment methods” can be standardized.

Volkswagen is striving to achieve considerable economies of scale with its standardized software platform. The vehicle fleet is expected to comprise of more than 10 million fully networked new vehicles per year, significantly reducing the cost of software integration in each individual vehicle. At the same time, digital ecosystems are becoming more and more attractive for new partners and new customers with an increasing number of connected vehicles.

As of January 1, 2020, the Car.Software organization will operate as an independent business unit within the Group. By 2025, the new organization intends to invest more than seven billion euros in its tasks and projects. Volkswagen will introduce flexible working models, the latest collaborative technologies and agile forms of cooperation.

Industrial Cloud networks production

In addition to the Automotive Cloud, which Volkswagen CEO Herbert Diess presented together with Microsoft CEO Satya Nadella in February, Volkswagen is driving forward a second major cloud project, the Industrial Cloud. This cloud will be jointly set up with Amazon Web Services and is intended to network the Group’s global production network with 122 production facilities in the future.

“We will continue to strengthen production as a competitive element for Volkswagen Group. Our strategic cooperation with Amazon Web Services creates key conditions for this,” says Oliver Blume, Chairman of the Board of Management of Porsche and responsible for Production on the Board of Management of Volkswagen AG. “The Volkswagen Group with its global expertise in automotive manufacturing and Amazon Web Services with its technological know-how complement each other perfectly. With our global industry platform, we want to create a growing industrial ecosystem whose transparency and efficiency benefit all parties involved.”

In the cloud, the data of all machines, facilities and systems from all plants will be combined. This will enable Volkswagen to better analyze the processes – and lead to its acceleration. In the future, the global supply chain with more than 30,000 locations and 1,500 partner companies will also be integrated into the cloud.

Martin Hofmann, head of IT at the Volkswagen Group, also underlines the importance of this networking: “Today we still have the situation that IT within the production level at the plants differs to some extent – because most locations are very different. That doesn’t make it easy to standardize data and combine it across the board. With the Volkswagen Industrial Cloud, we are able to do this: we consolidate the data from all locations. In the future, we will be able to evaluate and control all key figures from production and logistics globally, regardless of their format. We’re going live with Industry 4.0.”

Other projects and co-operations announced by Volkswagen in 2019 are dedicated to the major future topic of autonomous driving. One element of the industrial cooperation with Ford presented in July is that Volkswagen and the US Group are taking an equal stake in Argo. Argo is developing technologies that are highly relevant to the introduction of autonomous driving.

“With this joint investment in Argo AI, we are securing superior engineering expertise for ourselves,” says Volkswagen CEO Herbert Diess. “We will gain access to a world-class talent pool of SDS (Self-Driving System) developers and intellectual property, while Argo AI will receive the financial resources it needs to advance technological leadership in self-driving systems. With Argo AI’s software developers, we will analyze the huge amounts of data required to understand region-specific driving behavior, road objects, and unique conditions in different locations.”

At the same time, Volkswagen is also pushing ahead internally with the development of competencies in the area of autonomous driving. At the beginning of 2020, the Group will establish Volkswagen Autonomy (VWAT GmbH) based in Munich and Wolfsburg. In addition to the limited liability company in Germany, a further company is to be established in Silicon Valley in the same year, and one in China in 2021. As a competence center for autonomous driving – from level 4 – Volkswagen Autonomy will serve to build up central know-how within the Group and bring SDS to market maturity.

The focus of Autonomy is on Systems Engineering

Volkswagen Autonomy is headed by Alexander Hitzinger, Senior Vice President for Autonomous Driving at Volkswagen Group and Member of the Board of Management for Technical Development at Volkswagen Commercial Vehicles in Hanover. Volkswagen Commercial Vehicles is the Group’s leading brand for autonomous driving as well as for Mobility as a Service (MaaS) and Transport as a Service (TaaS). Mobility solutions for people and goods in urban areas will be the first application case for Volkswagen Autonomy’s SDS. The Volkswagen subsidiary will also work closely with Argo on the implementation of the self-propelled system and will focus strongly on systems engineering and industrialization during development. The aim is to establish an SDS as a standard module for all Group brands.

“With Volkswagen Autonomy, we want to establish a global technology company in which we bundle competencies from the automotive and technology industries in order to combine agile and creative work in a high-performance culture with process orientation and scalability,” said Alexander Hitzinger. “We will continue to leverage synergies across all Group brands to reduce the cost of self-propelled vehicles, high-performance computers and sensors. Around the middle of the coming decade, we want to start commercializing autonomous driving on a large scale.”

Avoiding traffic congestion with quantum computers

Employees in many areas of the Group are already working on digitizing the company. For example, Florian Neukart, Director of Advanced Technologies and IT Innovation, and his team in San Francisco are researching how quantum computers can be used for intelligent traffic control. In Lisbon, Volkswagen launched the world’s first pilot project for traffic optimization with a quantum computer. During the “WebSummit” technology conference held in November in partnership with the municipal transport company CARRIS, the Group equipped MAN buses with a self-developed system. This system uses a quantum computer from D-Wave and calculated the fastest individual route for each of the nine participating buses, almost in real time. The buses were thus able to detect and avoid traffic jams at an early stage. In this way, the travel time of the passengers could be greatly reduced, even at peak times, and the flow of traffic improved.

Supply chain transparent thanks to blockchain

Another research project is investigating how blockchain technology can be used to ensure the sustainability of raw materials in the supply chain. Together with Minespider, a company specializing in blockchain, a pilot project is to make the global lead supply chain transparent. The Blockchain technology uses digital certificates to enable that the raw materials can be traced back to their original source (https://www.volkswagen-newsroom.com/en/press-releases/from-mine-to-factory-volkswagen-makes-supply-chain-transparent-with-blockchain-4883).

New in-house educated IT experts

A qualification as a software developer with continued salary payments for employees or an open-ended employment contract after two years for new hires: This is what Volkswagen offers IT specialists and those who want to become IT specialists. In April, the Volkswagen Group officially launched the “Faculty 73” qualification program, which was completely redeveloped in just nine months, at the Wolfsburg AutoUni.

The program is aimed at employees, IT talents, students that have dropped-out of their education programs and trainees with basic IT skills. A degree is not required. Knowledge of English and programming is desirable, but not required. Only the potential and the passion for information technology and software are important. “Now we want to continue actively training in order to cover our future IT requirements,” says Gunnar Killian, Group HR Director, regarding the “Faculty 73” program.

Boost for modernization

The Volkswagen brand presented the “Roadmap Digital Transformation” in 2019: 2,000 new digital jobs will be created, agile working methods will be strengthened and improved IT processes will provide even greater relief for employees in the future. Up to four billion euros are to be invested in digitization projects by 2023 – primarily in administration, but also in production. Agile working methods, improved processes and digitization will relieve employees and speed up processes. For the personnel transformation in the course of Volkswagen’s digitization offensive, the qualification budget will also be increased by 60 million euros to a total of around 150 million euros.

Ralf Brandstätter, Chief Operating Officer of the Volkswagen brand, says: “With the Digital Transformation roadmap, we are giving further impetus to the modernization of Volkswagen. We are making the company fit for the digital era in the long term.”Thomas Schmall, Chairman of the Board of Management of Volkswagen Group Components, adds: “For our component plants, the Digital Transformation roadmap is the accelerator for our transformation into e-mobility. In the future, we will assume responsibility for battery cells and battery systems, from electric drives to charging infrastructure and recycling – and to do so, we need to digitize our processes, increase our software expertise and streamline our global component activities.”