Innovation

VW Will Build Its Own Connected Vehicle Software

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Volkswagen has a $4 billion plan for connected and autonomous vehicle technology, one that includes a proprietary software operating system and will support car sharing, delivery and other services. The German automaker’s investment plan comes as rivals are ramping up their own connected vehicle efforts and as the standards battle heats up for that industry.

The company plans to spend that money through 2025, according to a report from Reuters. Spending will go toward “a cloud computing-based platform to connect vehicles,” among other products and services. A “new software operating system, to be known as ‘vw.OS’ … will be introduced in VW brand electric cars from 2020 onwards.”

As well, a “completely new electronic architecture (will) help facilitate autonomous driving functions,” Volkswagen said. “Rather than having around 70 different sensors and controllers operating independently within each vehicle, the new cars will connect the various sensors using the new proprietary software operating system.” That would enable, for instance, data gathered by a parking sensor to help the vehicle’s steering, braking and navigation system to spot parking spaces and then park the vehicle.

OTA Software

According to Volkswagen, it is “easier to do over-the-air software updates for cars if the operating system was designed in-house, rather than depending on third-party software supplied by the different vendors providing various sensors.”

As car manufacturers, software providers, payments and commerce players and others build the connected vehicle ecosystem, there is increasing experimentation and competition in regards to the best operating systems to install. Recent evidence of that came from Volvo, when it announced that it would embed Google Assistant, Google Play Store, Google Maps and other Google services into its next-generation Sensus infotainment system.

Amazon and Apple, too, are finding a way inside connected vehicles. Toyota recently said that its 2019 Corolla will include Apple’s CarPlay and Amazon’s Alexa. In fact, Volkswagen said it plans to embed “WePark” and other smartphone applications into VW in-vehicle infotainment systems and connect “vehicles with vendors like Amazon that can use an app to open cars so they can be used as delivery locations.”

Growing Market

The global automotive operating system and infotainment market is worth more than $15.9 billion, with robust growth expected in the coming years as car brands increase their connected car offerings.

Meanwhile, Volkswagen’s rivals are also making their own plans to up their competitive power in the connected car ecosystem. Ford provided a strong recent example of that. The company has created a self-driving car unit dubbed Ford Autonomous Vehicles, into which it plans to invest $4 billion through 2023.

The U.S. car maker said the new unit will also be charged with accelerating the autonomous vehicle (AV) business, so that Ford can capitalize on market opportunities. The new LLC, which is structured to take on third-party investments, will be primarily based at Ford’s Corktown campus in Detroit, and will hold Ford’s ownership stake in Argo AI, its self-driving system development partner. Ford said $1 billion of the $4 billion will go to Argo AI.

Volkswagen’s recently announced investment in connected and autonomous car technology will lead to a projected “1 billion euros ($1.17 billion USD) in sales by 2025 from offering new digital services, including car-sharing, parking and parcel delivery,” Reuters said.

In recent months, Volkswagen also has demonstrated a more direct interest in payments. It had earlier confirmed that it is in the process of applying for a U.K. banking license that will enable it to continue providing financing to car buyers after Britain leaves the EU.

A growing number of European car companies have been providing their own financing for consumers, with Volkswagen’s U.K. Financial Services division currently using its German parent’s banking license to make car loans. The combined lending by VW, Mercedes-Benz owner Daimler, BMW and Renault has more than doubled to €400 billion since the financial crisis.

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