Follow-up: VW to seek partnerships rather than use Audi to develop electric and autonomous vehicles

Edward Taylor and Jan Schwartz, reporting for Reuters (from Automotive News Europe):

“Volkswagen…will explore potential alliances with Ford and others to develop autonomous and electric vehicles. If approved by the board, it would signal a major departure from VW's standalone efforts to build them and diminish Audi's importance as an engineering hub.

The strategy could also deepen existing cooperation with Ford. This could include Ford supplying a pickup platform and some engines to VW, one of the sources said. VW could also buy a stake in Ford's autonomous cars program and give Ford access to its MEB electric cars platform, they said.

Audi has been developing autonomous technology for VW, Audi and Porsche. It built the A8, a car with advanced self-driving features, but its efforts for a fully autonomous car have fallen behind rival companies such as Alphabet's Waymo.

"We want to have access to a self-driving system and we are speaking with relevant players. It is very expensive to develop and others are already well advanced," Chief Financial Officer Frank Witter said in a phone call with reporters on Tuesday.

This ultimately isn’t surprising, and affirms my comments regarding yesterday’s article. Today, the automotive industry is fragmented, and consists of a number of key players, ranging from both traditional automotive manufacturers to those entering with a Silicon Valley mindset. As a result, there is little logic in every company going in-house, and at great expense, to develop technology that fundamentally aims to achieve the same end goal - a fully autonomous, electric vehicle. In this regard, recently departed Fiat-Chrysler CEO Sergio Marchionne’s comments are prescient:

“Auto companies need to quickly separate the stuff that will be swallowed by commodity from the brand stuff”

In this regard, what matters more is the integration and execution of electric vehicle and autonomous driving technologies, with design and usability into a seamless whole - it is this that will differentiate successful automakers from those that are not. When everyone has access to the same fundamental technologies, it is that final, extra layer of polish that will separate the wheat from the chaff, and an average car from one that is great. Of course, whether that extra polish can be achieved through refinement of available, off-the shelf technologies, or only through an in-house, end-to-end development and ownership of the technology stack within a car, remains to be seen.

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Above: The VW brand portfolio. Note that VW Commercial Vehicles is considered to be separate to the ‘main’ VW passenger car brand despite often sharing dealerships and sales channels