2,000 people! The Volkswagen Software Department lost 26 billion in two years, and the executives were collectively fired
After firing the CEO and firing the employees"
Author: Truman
Volkswagen's software department still hasn't been able to resist the pressure.
According to the German magazine Manager, Volkswagen intends to lay off 2,000 employees at its software subsidiary CARIAD.
This is another major change for CARIAD after the "bloodbath" of the senior management five months ago, which also means that the previous restructuring plan will be affected, and the new software architecture will continue to be delayed.
As a "political legacy" left by the previous CEO, CARIAD has had a bad fate since the current CEO Oliver Blume came to power.
At the beginning of this year, Volkswagen said it had completed a six-week strategic review of its software division, and the final result was that there would be no layoffs and more attention would be paid to efficiency.
Three months later, however, Volkswagen fired all CARIAD executives except for Rainer Zugeh, the chief executive of CARIAD, not even the CEO.
Now that another 2,000 people are planned to be laid off, the prospect of CARIAD is beginning to be uncertain.
01
Up to 30% layoffs
Volkswagen's board of directors has approved the layoffs, which will start in 2024 and end at the end of 2025.
The company agreed, but the layoffs had to be approved by the Works Council, which had negotiated job security for the workers.
A spokesman for the Volkswagen union said that it did not accept such a blanket layoff, "in terms of structure and tasks, there is no specific information on which positions will be cut." ”
A spokesman for CARIAD was even tighter about the layoffs, saying only that CARIAD CEO Peter Bosch had been working on a "comprehensive transformation plan" since this summer to "reposition" the company. It also said that "the transformation plan is in its final stages and will be communicated after the adoption of the resolution by the relevant agencies".
This may also mean that how the layoffs will proceed has not yet been finalized, but the top management has basically determined the measures for the layoffs.
At the same time as the layoffs, German media outlet Automobilwoche reported that the release of the Audi Q6 e-tron will be postponed again until next year, and the reason for the postponement is still due to software problems.
CARIAD software development has been severely lagging behind, and last July led to a delay in the launch of major new models for electric vehicles from major customers such as Macan EV, Audi (Artemis project) and Bentley.
The debut of the Volkswagen ID series was also postponed due to software problems, and a series of problems caused serious dissatisfaction with this department within the group.
According to Volkswagen Group's 2022 financial report, CARIAD suffered a very serious loss, with revenue of only 796 million euros last year and an operating loss of 2.068 billion euros in the same period.
It continues to lose money this year, with an operating loss of 1.7 billion euros from January to September.
In 2021, when the last CEO of the Volkswagen Group, Diess, was still alive, CARIAD lost 1.327 billion euros, which accounted for nearly 10% of the group's profit. In just two years, CARIAD's cumulative loss was nearly 3.4 billion euros (about 25.8 billion yuan).
Now it seems that after nearly a year of adjustment, CARIAD's R&D progress may not have improved much, and layoffs may be a step that has to be taken now in order to open up revenue and reduce expenditure.
With 6,000 engineers and developers worldwide and 2,000 layoffs, or 30% of the company's total workforce, CARIAD is no doubt a big deal for any company.
02
Internal brands have complaints
In 2019, former Volkswagen CEO Diess published an article titled "Cars Will Become Software Products", in which he pointed out that Volkswagen must become a software-driven car company, not just change the drivetrain.
In June of the same year, Volkswagen's independent software division Car Software (the predecessor of CARIAD) was exposed, and three months later, Bloomberg reported that Volkswagen planned to invest US$9 billion (62 billion yuan) in the project.
In July 2020, under the leadership of Diess, the Volkswagen Group officially established CARIAD, a software company, which is responsible for independently developing the core software system for Volkswagen's electric vehicles and implementing a unified automotive operating system.
After the establishment of CARIAD, almost all the software talents within Volkswagen were gathered, and high hopes were once pinned.
CARIAD is simultaneously developing three different systems for different brands of vehicles, mainly to integrate the vehicle's electronic and software architecture, which Volkswagen calls the end-to-end electronic architecture (E³).
E³ is not a traditional E/E architecture, but includes E&E hardware, software and upper-layer applications. Compatible with E³ is Volkswagen's cloud service VW.AC and in-vehicle operating system VW.OS, while E³, VW. OS、VW. AC is CARIAD's most important product portfolio, and in-vehicle infotainment systems, driver assistance and mobility services are all based on it.
It is the delivery of E³ that has dragged down the development of CARIAD, and there are three platform architectures under E³:
The E³ 1.1 (based on the MEB platform) has been mass-produced on the Volkswagen ID.3 and ID.4, but the results have not been good.
The E³ 1.2, based on the PPE platform, is scheduled to be available on models such as the Porsche Macan and the Audi Q6 e-tron from 2023, but will now be delayed by 16-18 weeks.
The E³ 2.0, based on the SSP platform, will enable a truly unified architecture for the Volkswagen Group brands, which was originally planned to be launched at the Audi Artemis as early as 2025, but is now being redeveloped to start with the new Trinity electric car, on which all future models will be based.
In retrospect, there were problems at all three points of E³ delivery, starting with repeated delays in deliveries, which forced the launch of several important models under the Porsche and Audi brands to be delayed.
As the hope of Volkswagen's electrification transformation, the first ID series has been subject to software problems after its launch, such as frequent failures such as car crashes, directional failures, and abnormal brakes, which have been complained by many car owners, complaining that Volkswagen's software technology is "like a blank sheet of paper".
It is also because of the unfavorable development of the ID series, which has aroused consumers' doubts about the public's poor software.
Volkswagen is clearly aware of this problem, so the current CEO Blume's first priority is to restructure CARIAD.
Blume proposes that it should first position itself as the most valuable core competency on the software side, and then seek mature solutions in the market to ensure progress and quality. The second is to revise the delivery time and sort out the process and interface of CARIAD's cooperation with various brands.
03
Why can't you make good software?
There is no doubt that the current automotive market is already a world of electrification and intelligence, and has even gradually begun to move from software-defined vehicles to AI-defined vehicles.
However, Volkswagen, which has 100 years of experience in car manufacturing, has turned to software development, which is not allowed and embarrassing for Volkswagen.
So why can't Volkswagen make its own software system?
Judging from the layout of CARIAD by the public, it can only be said that the goal is too high, and the reality cannot keep up, and the system of three platforms is developed at the same time, resulting in huge manpower, material and financial resources, but the technical path is very vague.
Secondly, Volkswagen, as a representative of traditional car companies, is experiencing the pain of mechanical drive to software drive in the transition to new energy and intelligence, which is also a problem faced by other traditional car companies.
In the early years, the main engine factory was only responsible for building the chassis, engine, gearbox and other mechanical structures, and now it is necessary to do it yourself from hardware to software, and it takes a lot of time to re-explore and develop, and the manufacturing and development cycle of automobiles is generally very long, and the corresponding software development is the same, but the market is not waiting for anyone.
Even if the development is successful, it still has to go through a long process of testing, from individual unit tests, to integration tests between different units, to audits, vehicle stage tests, and so on.
The process is complex and the standards are so stringent, especially for global car companies like Volkswagen, in order to meet the needs of different countries, their own standards are also higher, so a lot of time and capital costs are consumed in this process.
But no matter how difficult it is, you have to continue to do it, otherwise where will the face of the century-old public go.