They are two very different partners who found each other in times of need: The Volkswagen Group is the second largest car manufacturer in the world, sold more than nine million vehicles last year and can look back on a company history spanning more than seven decades. As of this week, VW’s partner is the tiny US car company Rivian, a start-up that brought its first series model onto the market three years ago. In 2023, Rivian only sold around 50,000 cars, an almost homeopathic number in the auto industry. Now VW and Rivian have entered into a billion-dollar alliance. They are founding a joint venture that will develop software for future generations of cars. Rivian brings digital know-how into the marriage, VW brings a lot of money – the Wolfsburg-based company is investing up to 5 billion euros in the joint venture and a stake in Rivian. For the highly loss-making small company from California, the money from Germany is a life preserver. Blume admits that the question of whether this deal will also pay off for VW is more difficult to answer. The fact that CEO Oliver Blume is mobilizing a ten-figure sum for the project shows how great the need is. The in-house software division Cariad, founded in 2020 by Blume’s predecessor Herbert Diess, is one of the manufacturer’s biggest handicaps. The corporate brands Audi and Porsche had to postpone the market launch of new models for years because the software was not ready. Diess was fired in the summer of 2022, not least because he couldn’t get the problems at Cariad under control. The billion-dollar investment in Rivian is now Blume’s final admission that VW’s previous software strategy has failed. Diess wanted the company to use Cariad to develop its car software as completely independently as possible. Because central digital control and networking, from infotainment to navigation to computer-aided driving assistance systems, has become a key competency in automobile manufacturing – and it will become even more important in the next few years. With a high level of risk, the disruptive potential is enormous. Experts predict that the digitalization of cars will change the industry even more profoundly than the switch from combustion engines to electric drives. Anyone who doesn’t have competitive software will be among the losers. For some time now, Blume has moved away from Diess’ mantra of digital self-sufficiency and entered into collaborations with Apple and Google. In China, VW has teamed up with the start-up Xpeng to catch up on its digital backlog. This alliance is very similar to the one now agreed with Rivian, but VW has to invest a lot less money in it. Of course, it is a bitter admission that a global company like VW with 680,000 employees is not in a position to develop state-of-the-art software. On the other hand, other large car manufacturers have also teamed up with smaller partners at various levels in order to become more competitive: Stellantis is cooperating with Leap Motor from China to build low-cost electric cars in Europe, BMW has teamed up with the Chinese manufacturer Great Wall on the electric version of the Mini .More on the topic It is by no means certain that the Rivian deal will now be a liberation in digital technology for VW. In the past, the group had not always shown a lucky hand when choosing partners: its investment in the hyped start-up Argo AI, a specialist in autonomous driving, turned out to be a flop for VW, costing billions. Blume’s alliance with Rivian is therefore a Courageous step, the VW boss is taking a big risk. But what would be the alternative? VW is obviously not making fast enough progress in software development on its own, and the digitalization of the car is too important to be able to tolerate this any longer. VW has to catch up, otherwise the company will have a much bigger problem in just a few years.
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