Volkswagen is trying to tie up loose ends with Bosch and Cariad (Update)

The Volkswagen Group and car supplier giant Bosch will not realize their planned joint venture to equip battery cell factories. Volkswagen and its battery subsidiary PowerCo are now pursuing the plan without Bosch as a partner, but Bosch will remain on board as a supplier.

At the same time, CEO Oliver Blume is getting fed up about the problems with software daughter Cariad and plans to replace the whole top management.

No joint venture

“We are not setting up a joint venture,” Bosch CEO Stefan Hartung confirmed; however, he did not give any reasons for the change of plans. Both companies made their initial plans public at the beginning of 2022. The partners wanted to establish a supply chain for battery cell factories. The aim was to supply integrated battery production systems and to support battery cell and system manufacturers in ramp-up and maintenance on-site.

Volkswagen and its Salzgitter-based battery subsidiary PowerCo now want to press ahead with the project alone – for the time being. “We are currently in talks with potential partners. We will provide information on the exact constellation in due course,” said a VW spokesperson. According to Hartung, however, Bosch will not be involved as originally planned.

At project level

Bosch and VW are not completely abandoning their cooperation. Bosch will continue to help the carmaker digitalize its factories, Hartung explains. According to Bosch’s digital head Tanja Rückert, the company supplies software for VW’s cell factories. With the necessary speed in digitalization, Bosch and VW could work together “better on a project level than in such a construct,” Rückert says, referring to the canceled joint venture.

PowerCo recently announced the construction of another battery factory of its own, to be built in St. Thomas, Canada. It will have an annual capacity of up to 90 GWh. The ground-breaking ceremony is scheduled for 2024, and the start of production in 2027.

The European cell factories in Salzgitter and Sagunt are already under construction. In addition, plans were announced in April for PowerCo to work with partners to build an ecosystem for electric vehicle batteries in Indonesia.

Unnerved about Cariad

Meanwhile, VW Group CEO Oliver Blume is getting unnerved about the still unresolved problems at the software daughter Cariad. According to Business Insider, he wants to oust the entire top management and has already informed them about his intentions. At the next general assembly of Volkswagen in Berlin next Wednesday, the Supervisory board will be asked to validate the decision.

A VW spokesperson said last Friday to the German news agency DPA that “we are currently analyzing the situation of Cariad and its projects thoroughly at the moment.” The company’s future is apparently not under scrutiny: “For the VW Group, the development of our software competence remains a decisive factor in the attractiveness of our products.”

Former VW  boss Herbert Diess created Cariad and wanted it to be ready in 2026 with a platform for fully digitalized vehicles. But delays accumulated, and premium daughters like Audi and Porsche were getting irritated about the delay of their new, very important EVs like the Audi Q6 e-tron and the Porsche Macan EV.

“Customers in the higher segments of the market aren’t used to waiting a long time for new functionalities, so both companies inside the VW Group are sounding the alarm bell for a while now. According to Business Insider, they had intensified the pressure on CEO Blume, fearing that delays might still accumulate.

During Q1 of 2023, Cariad lost € 429 million (against  € 416 million in Q1,2022). The VW Group points to the high investments needed to explain these constantly negative results.

Bentley boss takes over Cariad after big clean-up

The new head of Cariad is to be Peter Bosch, currently head of production at the Group’s subsidiary Bentley. He will replace Dirk Hilgenberg, who will have to vacate his position, as will Cariad’s head of technology, Lynn Longo, and chief financial officer, Thomas Sedran. This was reported yesterday by Reuters and the German publications Manager Magazin, Der Spiegel, and Handelsblatt, among others.

Bosch will be appointed to head Cariad by VW group CEO Oliver Blume as a reorganizer. Blume, in addition to his posts as chairman of the board of VW and Porsche, is also the highest controller of Cariad as chairman of the supervisory board. It is not yet known whether Hilgenberg, Longo, and Sedran will leave the VW group completely. According to Handelsblatt, all three are “currently discussing a move to other areas of the VW world”.

Bosch will probably not have to develop its own strategy for Cariad because the strategic realignment of the software subsidiary, which has been problematic for a long time, has already been worked out under Blume. In autonomous driving, the Group will cooperate with Mobileye in the future. Exactly which parts Cariad will take over from Mobileye and what will still be developed in-house is currently unknown.

According to company insiders, Bosch was already involved in the reorganization of Cariad, and as the new CEO, he is to complete these change processes. As mentioned, Blume and Bosch do not want to change former VW CEO Herbert Diess’ fundamental decision to bundle software development and set it up independently. A reorganization of work processes is also planned. In addition to faster software development, Cariad must save money: This year, costs must be reduced by a “medium three-digit million amount”, sources reveal.

As mentioned, this Wednesday, the annual general meeting of the Volkswagen Group will take place in Berlin. The reorganization of the software subsidiary will be a topic there, as well as in the meeting of the VW supervisory board today. Most possibly, the personnel will be confirmed on Wednesday on the fringes of the general meeting.