With the advent of the era of software-defined cars, it is time to redefine the deeper connotation of "localization". This time, at the forefront, it is still the public.
Text | He Fang, Zuo Maoxuan
"We are second in the world, and Tesla is currently far ahead." Recently, Volkswagen Group CEO Diess admitted in an interview with the news program "60 Minutes" that there is still a big gap between Volkswagen Group and Tesla in the field of electrification.
In November 2020, In an article titled "How We Change the Masses," Diess proposed the goal of "catching up with Tesla." Since then, Diess has publicly stated on several occasions that tesla is a challenge target and hopes that the Volkswagen Group will become the leader of the global electric vehicle market in 2025.
In addition to its hometown in Europe, the market where Volkswagen is most likely to surpass Tesla is China, the largest single market for Volkswagen, which contributes nearly 40% of the group's sales every year, and has a strong user base and brand recognition.
As a key model for Volkswagen's electrification and digital transformation in China, the cumulative sales volume of the Volkswagen ID. family in the past year has exceeded 100,000 units. But compared with the glory of the fuel vehicle market, Volkswagen's electric vehicles seem to need to burst out more energy.
Improving the strength of software is the key to the continued competitiveness of ID models. More precisely, in China, Volkswagen electric vehicles need to be more targeted to solve the needs of Chinese consumers if they want to succeed.
On April 28, CARIAD, a software company owned by the Volkswagen Group, announced its China strategy and officially established CARIAD's Chinese subsidiary. This is CARIAD's first subsidiary outside of Europe.
"China is more advanced in the field of digitalization and automotive industry in the world, and the customer's requirements for digitalization, intelligence and experience are relatively high, walking in the forefront of the industry; China is also the most important single market for volkswagen, we have done a lot of communication with Various Manufacturers, Joint Venture Partners, Parts Factories and the Government in China in the past forty years, and have accumulated rich experience in development collaboration." Now, under the new mission, this is a natural thing to do. ”
On April 21, Changqing, CEO of CARIAD's China subsidiary, said in an interview with the think tank Jun.
The establishment of the China team will enable CARIAD to respond to the local market demand faster, and will develop, iterate and continuously improve the product at a Chinese speed based on the local customer experience and expectations.
Indeed, with the advent of the era of software-defined cars, it is time to redefine the deeper connotation of "localization". This time, at the forefront, it is still the public.
From China to the world
On December 9, 2021, the Volkswagen Group announced that it has strengthened the team of the Group's management board, reorganized its organizational structure, and announced a number of new personnel appointments.
Since January 1 this year, Volkswagen GROUP CEO Herbert Diess has succeeded Audi CEO Dusman in the group's management board with overall responsibility for the software division CARIAD.
Since Diess took the helm of the Volkswagen Group, Volkswagen has been more rapid than other international automakers on the issue of electrification. In early 2021, Diess repeatedly hoped to renew his contract for three to five years in order to continue to further advance the second phase of his volkswagen transformation strategy: digital transformation.
However, this behavior, in the context of The deities himself and the union, became an opportunity for the major factions within the group to beat Dees. As a changemaker who has aligned himself with Tesla and Musk in every way, Diess has repeatedly expressed dissatisfaction with the speed of the Volkswagen Group's transformation and production efficiency.
It is worth noting that Diess was previously a director of the Volkswagen Group's board of directors responsible for china operations. However, after this round of adjustments, former Volkswagen Brand CEO Ralf Brandst tter was promoted to the group's board of directors, responsible for Volkswagen's passenger car business since the beginning of 2022, and replaced Feng Sihan, the current head of Volkswagen Group (China), in charge of China business from August 1, 2022.
Ralf's parachuting into Beijing also means that volkswagen's most relied on the head of the Chinese market is finally directly responsible for the group's directors, and as of now, Volkswagen China's top executive Feng Sihan is not a member of the group's board of directors, which also means that Ralph's authority is greater than Feng Sihan's, and even some insiders believe that this will be the most powerful CEO in the history of Volkswagen China.
From the current point of view, Volkswagen's most important job in China is to increase the market share of the ID. family.
The volkswagen ID. family has sold more than 10,000 units in China for many consecutive months, but compared with Tesla and the new forces represented by "Wei Xiaoli", it is still difficult to satisfy Volkswagen's German headquarters.
In China, the development of automotive digitalization is indeed in the forefront, compared with In Europe, Volkswagen needs to face more potential competitors, including new Internet car-making forces such as Weilai, Ideal, and Xiaopeng, as well as Huawei, Xiaomi, Baidu, etc. These technology companies that extend their tentacles for smart cars, Volkswagen's digital transformation in the Chinese market, there is indeed difficulty.
In fact, at the end of last year, after announcing a change in the board of directors, the Volkswagen Group quickly announced a five-year investment plan for digitalization, electrification and connectivity of up to 89 billion euros. The amount of this investment already accounts for 56% of the Group's total investment over the next five years. Among them, the Volkswagen Group will invest 30 billion euros in digital technology and autonomous driving.
In order to consolidate and further expand the software strength of the Volkswagen Group, Volkswagen has established cariad, an automotive software company, formerly known as the Car.Software Organisation, the Volkswagen Software Division established in 2020. At present, CARIAD has about 5,000 engineers and developers worldwide, and its main task is to build a unified software platform for all brands of the group, including a unified and scalable architecture, support VW.OS, an operating system developed by Volkswagen, and connect to volkswagen cloud VW.AC.
In fact, compared with Europe, China may be a better landing scenario for Volkswagen's digital transformation. In the fierce competitive atmosphere, enterprises have the opportunity to exude stronger explosive power under the stimulation of a large number of opponents.
As Changqing said, CARIAD's Chinese subsidiary has a very important mission: to go from China to the world in China, for China.
CARIAD's China subsidiary will not only innovate Chinese products in China centered on customer experience and market demand, but also apply Chinese innovative products to the world.
In other words, CARIAD's Chinese subsidiary will not only be a regional subsidiary, but will also feed back the technology to Europe and the world. This is obviously different from the previous establishment of R&D centers and design centers in China specifically for local needs by multinational companies.
Developed around three major platforms
CARIAD's China subsidiary will drive the development of software products for Chinese consumers, including the development of a unified and scalable new software platform, advanced driver assistance systems and autonomous driving, and next-generation intelligent interconnection capabilities with headquarters.
Obviously, it is to reinforce the shortcomings of automotive intelligence, or to supplement some of the functions that competitors currently have but volkswagen does not have. For example, Tesla and Wei Xiaoli have applied OTA upgrades on a large scale, pilot assisted driving, ecology built around large screens or multiple screens, voice interaction, etc. As far as the current market consumption trend is concerned, these applications have become the core product competitiveness of Internet car manufacturing, and it is also one of the main reasons why most young consumers choose these brands.
According to Sun Wei, chief technology officer of CARIAD China subsidiary, the current CARIAD China team is going all out to do software research and development around three main platforms.
The first is the development of a mass production platform, i.e. the MEB software platform. CARIAD China subsidiary will launch the OTA function in the second half of the year, and continuously push innovative features and new customer experience products with Chinese characteristics to the mass production platform through OTAs at the appropriate time.
In fact, the existence of remote upgrade updates OTAs promoted by Tesla does make in-vehicle software theoretically possible to complete iterative updates in a non-recalled form, even without the knowledge of the owner. Compared with traditional car companies, emerging companies such as Tesla and Wei Xiaoli are currently leading many positions in the development speed and update efficiency of in-vehicle software, and Volkswagen needs to catch up quickly.
The second is software research and development for high-end platforms, which is currently in intensive preparation and is in the middle stage of research and development. Among them, the advanced driver assistance system is the research and development focus of the CARIAD China team, which has a powerful sensor solution, hardware and software system with AI computing power, and can provide automatic driving functions such as highway navigation, urban assisted driving, and automatic parking.
Another area of focus for R&D on high-end platforms is the smart cockpit. CarIAD China's team combines the unique needs of the Chinese market and introduces an open application ecosystem based on Android's operating system platform to create smart cockpits and intelligent infotainment system applications that Chinese users love very much, including online media applications such as online navigation and AI assistants, as well as other new customer experience-oriented features, including games and instant messaging.
"The China team is primarily responsible for the development of Advanced Infotainment Systems and Advanced Driver Assistance Systems based on the Android open source system and Advanced Driver Assistance Systems for China-specific applications, and the R&D work on these two systems will make an important contribution to our global development." Sun Wei stressed.
In addition, V2X is also an important research and development direction for high-end platforms. Based on the 5GV2X communication protocol, smart cars can not only achieve bicycle intelligence, but also combine network connectivity to provide more functions through the infrastructure of vehicle-vehicle collaboration and vehicle-road collaboration.
Third, CARIAD has launched research and development around a next-generation unified and scalable software platform (SSP model) that will be available after 2025.
It is understood that CARIAD's Chinese subsidiary will work with its European headquarters to develop a unified and scalable software platform for all Brands of the Volkswagen Group to meet the specific needs of different markets. The entire technology stack will be launched around 2025 and will be pre-equipped with L4 level autonomous driving technology.
Four major R&D strategies
It should be noted that traditional vehicle companies want to align themselves with Silicon Valley, and it is not easy to recruit more software engineers and invest more R&D funds. One side effect that caught traditional car companies' engineers off guard is the deep-seated clash of engineer culture and software thinking.
In the traditional automobile industry, everyone pays more attention to the spirit of craftsmanship and reliability, but in the faster-paced Internet industry, efficiency and speed are the first. Tesla, Wei Xiaoli and other companies are slowly flowing out of a road in trial and error, and this concept is very different from the rigorous logic that is deeply rooted in traditional enterprises.
As we all know, the digital transformation of the automobile is the deep integration of automobile and technology, and the research and development strategy also needs to be adjusted. In the executive portfolio of CARIAD's Chinese subsidiary, the fusion of automobile and technology genes is reflected to some extent.
CEO Evergreen has been working for the Volkswagen Group for 30 years after his master's degree in physics in Germany in 1990, and has carried out many years of end-of-year disc and vehicle development. From 2011 to 2018, he was responsible for the management of the Group Platform (Baukasten) and the strategic management of the Group Platform, Drive and Module Systems (BAM). From 2018 to 2020, Evergreen was responsible for planning and establishing the Group's unified product range that can expand the electrical and electronic architecture, and promoting the transformation of the Volkswagen Group into a software-driven mobility service provider. As one of the co-founders of CARIAD, Evergreen will be responsible for product and project management at CARIAD's Headquarters in Germany from 2020 to 2021.
Before joining Volkswagen, Sun Wei, CTO, worked at IBM China Research Institute for 16 years and accumulated rich industry experience in software research and development and intelligent mobility. In 2017, after joining Volkswagen China, he served as the senior director of its intelligent travel R&D department, quickly formed a team of more than 150 software development engineers, provided intelligent vehicle connection related software systems for many volkswagen companies in China, and delivered a number of smart travel software projects for Volkswagen Group, including providing charging services for Camson New Energy Technology Co., Ltd. (CAMS) mobile phone app and piloting a self-driving taxi service platform in Hefei.
By integrating talented people from the Volkswagen Group China, the Volkswagen brand and the Audi brand, CARIAD China has formed a Team in China. CarIAD currently employs more than 600 people in China and expects to double by the end of 2023, with more than 90 percent of them being local software talent.
At the same time, CARIAD's Chinese subsidiary is building R&D forces in Beijing, Shanghai, Chengdu and Hefei to gradually build a nationwide distributed R&D network.
As software thinking is integrated into the world of automotive engineers, R&D strategies also need to change dramatically. Operating the software department independently of the vehicle group can alleviate the huge conceptual differences between the practitioners in the two industries.
In terms of the overall R&D strategy change, CARIAD performs in four dimensions: more agile, more innovative, more autonomous, and more local.
First, R&D needs to be more agile. The market is changing very quickly, and the demand for smart cars by young consumers is constantly changing, which requires that product development needs to capture changes more quickly and more keenly, and timely launch new products that meet their expectations and can surprise customers.
The CARIAD China team has greatly optimized the product planning process, with the goal of shortening the product planning time that previously took half a year to one year, confirming the requirements and business approval related to product planning in the shortest possible time, and the development start time can be greatly advanced.
Secondly, in the second month of the establishment of CARIAD's Chinese subsidiary, the "Forward" project was launched, which iterated on a quarterly basis to continuously explore new innovative topics that users need in the Chinese market, or can lead to user needs. According to Sun Wei, CARIAD's Chinese subsidiary completed the work of the first Forward project in the first quarter, collecting more than 80 innovative proposals in just over a month, and finally selecting 6 of them, and has now begun to start a comprehensive research and development work.
In addition, the CARIAD China team and the CARIAD German team jointly created the PMT tool chain, through automation and intelligence, the tool becomes an end-to-end highly intelligent and automated tool chain, from requirements design, to development, testing, verification, simulation and other integration. With the guarantee of this toolchain, the speed of software iteration in the future will be greatly accelerated.
Second, research and development should be more innovative. The CARIAD China team has come up with a new set of innovative ideas called OIC. OIC is an abbreviation for originality ("O" riginal), "I" mpressive, and rooted in "C" ar.
The third aspect is more autonomy. According to Sun Wei, by 2026, the goal is to reach 60% of independent research and development software. He said that autonomy is an important guarantee for improving the speed of research and development, which can help achieve differentiation and can also help itself establish core competitiveness and core intellectual property rights.
The fourth is more local. This R&D strategy has been strongly supported by the Volkswagen Group and CARIAD headquarters. According to reports, at present, CARIAD has achieved local research and development in many very critical research and development areas. For example, advanced driver assistance systems for high-end software platforms have been developed in all directions in China; in the first quarter of this year, with the support of the world's top leaders of the Volkswagen Group, Volkswagen's HMI (Human-Computer Interaction System) development function was transferred from Germany to China for the first time in history, and CARIAD's Chinese subsidiary was responsible for research and development.
However, Evergreen also stressed that while shortening the development and decision-making cycle, the public will not compromise on quality and will continue to maintain high quality. This is the DNA of the masses, and it must be maintained in the new era.
However, radical and conservative often have their own pros and cons, and Tesla's software lead has been established. With the rapid iteration of products based on massive data, in the face of competitors who "do not talk about martial arts", the current research and development rhythm pressure of CARIAD China subsidiaries is not small.
Volkswagen's "new localization"
It is worth noting that with the development of smart electric vehicles, in addition to Tesla, local companies such as BYD, Weilai, Xiaopeng and Ideal are becoming direct competitors of Volkswagen in China. The key to measuring the competitiveness of car companies is no longer the product itself.
In the first quarter of this year, the electric vehicle market in China and Europe showed a huge difference, and some electric models that sold hot in Europe were not satisfactory in China. In the traditional automobile era, it is no longer feasible to bring models developed abroad to China. With the advantages of intelligent innovation and local combat, China's emerging brands already have the confidence to break the wrist with multinational car companies such as Volkswagen in the electric vehicle market.
The application of the R&D results of CARIAD China will directly affect the sales of Volkswagen electric vehicles in China.
"In the future, with the deepening of this round of industrial transformation, 'software-defined vehicles' will become the general trend of industrial development, and localization development based on data and scenarios will increasingly become the focus of future competition of enterprises; at the same time, user experience-centered travel services will also become the core content of car companies to build brands." These changes will prompt foreign companies to start a new round of localization actions that are different from the past. Zhao Fuquan, honorary life chairman of the Federation of The Society of Automotive Engineers, professor of the School of Vehicles and Vehicles of Tsinghua University and dean of the Institute of Automotive Industry and Technology Strategy, said in a recent interview with the think tank Jun.
Judging from the trend of data security legislation, the restrictions on data export will become more and more stringent in the future, and it will be difficult to implement overseas software development without data support. More importantly, the development of new vehicles in the future must be closely integrated with regional scenarios, data and ecology, which makes the original product development method of foreign enterprises "headquarters development and local market adaptability verification" unworkable.
As a result, foreign-funded enterprises will have to establish software development capabilities and corresponding technology development ecosystems in China to quickly and effectively carry out targeted product development based on data and scenarios in the Chinese market. At the same time, in the future, in the whole life cycle of automotive products, car companies need to continuously iteratively upgrade products through OTA (over-the-air download technology) and effectively connect products with various service resources related to travel, which also requires foreign-funded enterprises to carry out and implement relevant research and development and ecological construction in China.
Zhao Fuquan called this new localization model based on data, scenarios, ecology and services as the "new localization" of foreign-funded enterprises.
That is to say, in the future, the localization of foreign car companies must jump out of the scope of localization of production and manufacturing, and implement all-round localization including research and development, service and ecological construction.
From the perspective of the establishment of CARIAD's China subsidiary, Volkswagen's "new localization" is to combine China's scenes, data and ecology to enhance localized software development capabilities.
Of course, localization of research and development is also inseparable from cooperation with local technology companies, and related procurement strategies have been adjusted.
On April 2, Volkswagen Group China announced that Volkswagen Group is adopting a more China-focused procurement strategy, inviting China's leading technology companies to participate in the group's global procurement for the first time, further promoting the strategic transformation with software as the core.
Volkswagen Group said it will work more closely with China's top technology companies to create future-oriented digital solutions and reshape the mobility ecosystem. Key areas of cooperation include digital connectivity, smart cockpits, autonomous driving and shared mobility.
"In China, for China, we need the support of local parts dealers in China, so that we can make products that local customers love." The key to this is the issue of speed. The working style and working speed of Chinese accessories manufacturers are different from those in the world. In the future, in the development and implementation of CARIAD China, China's local accessories manufacturers are very important to us. Evergreen finally said.