Volkswagen Group has announced a major strategic shift—abandoning its in-house software development efforts. The company’s software subsidiary, CARIAD, will be redefined from a “core developer” to a “partner coordinator.” This marks the end of former CEO Herbert Diess’s ambitious “software-defined vehicle” vision after years of setbacks.
The change comes amid CARIAD’s ongoing operational and technical struggles, which have weighed heavily on Volkswagen’s performance. Between 2021 and 2022, CARIAD accumulated losses of €3.4 billion, followed by another €2.4 billion loss in 2024. These losses contributed to a 30.6% drop in Volkswagen’s 2024 net profit, making CARIAD a major financial burden.
After Oliver Blume became CEO in 2022, he quickly launched a strategic correction. He stated, “We neither wish nor are we capable of completing all software development on our own—we need reliable partners.” His comments signaled a clear move from self-reliance to collaboration.
Under the new approach, CARIAD will focus on maintaining existing software platforms and coordinating with external partners like Xpeng and Rivian, integrating their systems into Volkswagen’s vehicles. The division is effectively shifting from a lead developer to a supporting role in the group’s software ecosystem.