Volkswagen Group is evaluating the development of a unified operating system applicable to both electric and combustion engine vehicles, a strategic shift reflecting evolving market dynamics in Europe and North America. The potential move, revealed by Cariad, Volkswagen’s software division, aims to maintain the digital capabilities of combustion engine models and their associated platforms.
While currently focusing software architectures solely for electric vehicles, the group acknowledges the theoretical possibility of extending the system to include traditional combustion engines and plug-in hybrids in the future. This consideration follows recent financial write-downs at Volkswagen subsidiary Porsche, attributed to a delayed timeline for planned electric models and a prioritization of combustion engine and plug-in hybrid vehicles due to weaker-than-anticipated demand. Other brands within the Volkswagen Group are similarly reassessing the longevity of conventional powertrains.
The shift comes against a backdrop of ongoing discussions within the European Union regarding a potential easing of the planned ban on new combustion engine vehicle registrations slated for 2035.
The group’s long-term software supply chain remains open for discussion, with US partner Rivian – with whom Volkswagen has a substantial joint venture – widely considered a potential provider. Cariad may be initially involved as an interim solution. Expanding the software to encompass combustion engines would require a considerable investment, a burden the company is actively managing. Volkswagen recently implemented significant cost savings, earmarking 15 billion euros for 2024. This streamlining effort includes a restructuring of Cariad, with a projected 30% reduction in German staff by the end of 2025 and corresponding budget cuts, following recent losses of 2.43 billion euros.
