Volkswagen Knows How To Beat Tesla

Industry News / Comments

Just do what Musk is too arrogant to do.

You can already buy the Volkswagen ID.4 all-electric crossover. In the near future, production will shift from Germany to Tennessee in order to get more Americans into the carmaker's first ground-up EV. And there'll be plenty more to come, such as the production-spec ID.Buzz minibus. By 2030, VW is aiming for 50 percent of all sales to be EVs. By 2025, it foresees EV price parity with combustion-engined cars. But its main goal is to surpass Tesla as the world's No. 1 EV seller in just over three years' time. That won't be easy to accomplish but VW Group CEO Herbert Diess is determined it must be done. But Diess has another goal in the race to become the world's most influential automaker.

Speaking to Bloomberg, the German executive admitted the automaker is always open to teaming up with rival automakers and technology companies to increase the scale, speed, and cost savings on software development.

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"Opening up our technology platforms to others is part of our strategy to leverage economies of scale," Diess said. Tesla has taken the opposite approach by developing software entirely in-house. The premium Audi brand is currently heading up software development for the entire Group. It's important to understand that advancing software doesn't just mean the latest in infotainment but rather digital services as a whole.

By 2030, analysts predict more than a fifth of automaker revenue will come from software like subscription services. Diess isn't alone in his partner-seeking approach. BMW CEO Oliver Zipse expressed his willingness to share some software expenses, assuming their frameworks aren't too different from company to company.

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However, recent history shows that some automakers can't stick to software-related partnership agreements. In the summer of 2020, BMW and Mercedes announced a collaboration to develop autonomous driving technologies, but the project was canceled last March. Instead of joining forces with a competitor, it might be in VW's interest to seek agreements with technology companies like Intel, Apple, and Google. Intel's Mobileye division is an autonomous tech leader while Apple and Google already have existing Android and Apple CarPlay networks used by millions.

"Car software is the last domain in which Europe still has a chance to build a strong position and compete with the U.S. and China," said Diess. "Only a few complex software stacks will prevail," Diess added. Time is of the essence and VW needs to move fast.

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Source Credits: Bloomberg

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