Volkswagen plans to develop 60% of its vehicles' software by 2025, up from 10% now, and grow its Car.Software unit from 3,000 staffers to 5,000 by end of 2020
Carmaker rules out working with tech companies to develop operating system for its vehicles — Volkswagen has ruled out working …
Context & Ripple Effects
The Car.Software unit created last year to build "vw.os" is now getting a scale mandate: Volkswagen wants to write 60% of its vehicles' software itself by 2025 — up from 10% today — and double staffing to 5,000 by end of 2020. Crucially, it has ruled out handing the operating system to tech companies, framing the car's software stack as something to own outright.
That ownership bet is the throughline of everything that follows in this coverage: a $30B push to match Tesla's software pace that ran into internal battles and glitches, missed development goals that triggered plans to fire most of Cariad's management, China fallback talks with Huawei — and eventually the "complete reset" that brought Xpeng and Rivian partnerships back in. The 2020 no-partners pledge is the baseline against which all of that reverses.
First-order effects
- Volkswagen's Car.Software unit must hire 2,000 engineers within months, competing directly with Tesla and tech firms for automotive software talent at a moment when only 10% of code is written in-house.
- Tech companies are formally locked out of Volkswagen's operating-system layer — any supplier or platform hoping to sell VW an OS is off the table for now.
Second-order effects
- A cross-brand single platform makes Volkswagen dependent on co-developed silicon, which is exactly why the unit later partnered with STMicroelectronics on semiconductors rather than buying chips designed around someone else's software assumptions.
- Rivals watching the in-house build struggle get a live cost-benefit case study: when Cariad misses goals and budgets, partnering routes reopen — Huawei talks in China, then Xpeng and Rivian — forcing competitors to decide whether vertical integration is worth the same execution risk.
Third-order effects
- If the pattern holds, carmakers' software strategy converges on hybrid models — owned platforms for differentiating layers, licensed or partner-built components where timelines slip — rather than the pure in-house OS this announcement promises.
- The auto industry's center of gravity shifts toward whoever controls the software stack: VW's willingness to spend tens of billions chasing Tesla's integration model signals that operating-system control becomes a structural moat question, not an IT decision.
The trend: Carmakers are attempting Tesla-style vertical software integration in-house, then progressively re-adding partners where execution fails — a cycle of centralization and partial retreat that is redrawing supplier boundaries in the auto industry.