Just about everyone knows who Volkswagen is. They are the German company who makes cars – remember the Beetle from the 1960’s? Well, they are still around and they still make cars. The person with the CIO job has been studying the car market and has seen the rise of Tesla in the electric car space. VW would like to enter this market also. However, despite their years of experience in making cars, it turns out that it’s been software that they have been struggling with as they try to enter this new market.
The Problem With Software
You would think that a big company like VW could do just about anything that they put their minds to. The VW CIO sunk five years and nearly $50 billion into the company’s bet on electric vehicles, the ID.3. The car, however, when it arrived didn’t work as advertised. Sure, it could drive, turn corners and stop on a dime. However, the fancy technology features VW had promised were either absent or broken. What the person in the CIO position had missed was that the company’s programmers hadn’t yet figured out how to update the car’s software remotely. Even worse, its futuristic head-up display that was supposed to flash speed, directions and other data onto the windshield didn’t function. As though this wasn’t bad enough, early owners began reporting hundreds of other software bugs.
After years of development, Volkswagen decided to delay the launch and sell the first batch of cars without a full array of software, pending a future update. Tens of thousands of ID.3 owners will have to bring their cars in for service to have the new software installed. The CIO said that after that the software will be regularly updated wirelessly. Volkswagen who is the world’s largest car maker, has outspent all rivals in a global bid to beat Tesla. For years, industry leaders and analysts pointed to the German company as evidence that, once unleashed, the established car companies’ raw financial power paired with decades of engineering excellence would make short work of Tesla.
What they didn’t take into consideration: electric vehicles are more about software than hardware. Clear evidence of the importance of information technology. It turns out that producing exquisitely engineered gas-powered cars doesn’t translate into coding savvy. The ID.3 debacle is causing problems at Volkswagen. The CIO nearly lost his job last year amid a revolt of Germany’s powerful labor union and shareholder anger over the bungled launch of the ID.3. If there is any good news, it is that the ID.3 is gaining traction, outselling Tesla’s Model 3 in Europe. One of the reasons for its success it that it has a price tag that is about $12,000 less than Tesla’s model. Additionally, Germany made a decision last year to increase incentives for EV purchases. The real challenge for the CIO is that the ID.3 has also garnered negative trade-press reviews and is still missing key features.
Where Does A CIO Go From Here?
Launching an electric vehicle was something that everyone expected the VW CIO to do. Ever since Tesla launched its first car in 2008 there was this feeling that the really serious players, such as VW, were going to come. The sad result of all of this is that the Germans have finally come, and it turns out that they’re not as good as Tesla. Other existing car manufacturers including General Motors, Ford, Renault, Peugeot and Toyota are also bringing new electric models to market this year. Failure to keep up in this new market could redraw the global auto map, costing the German car makers – Volkswagen, BMW and Daimler – their leadership status in high-end car products.
The VW CIO is drawing lessons from the mistakes on the ID.3 project as he overhauls the company’s software efforts to prepare for a successor model, dubbed the ID.4, which will be produced at first in Europe and China and in Chattanooga, Tenn., as well. The VW CIO says that the ID.4, its first all-electric car to be sold world-wide, will deliver on its predecessor’s promises. It is understood that in order to be successful in this new world and secure its prosperity VW must completely change.
What’s interesting is that software has been running in gas-powered cars for years. Today, an average passenger vehicle typically includes about 80 parts fitted with chips that perform discrete tasks. VW’s CIO realizes that these chips run code that remains static over a car’s lifetime. With the shift to electric, it turns out that computing has become the heart of the vehicle, with a central processor managing the battery, running the electric motors, brakes, lights and other critical systems as well as additional features such as entertainment or heating in the seats. Just like a gas-powered car should be serviced regularly, a modern electric vehicle may receive multiple software updates to improve safety and performance, offer new in-car services, or unlock sources of revenue for the manufacturer. VW’s goal is to eventually build at least 60% of its automotive software in-house. The biggest challenge isn’t the technology, it is the mind-set of the people and their reluctance to embrace radical change until circumstances force them to.
What All Of This Means For You
You would think that if you were the CIO for a major car company, creating and launching your company’s next new car would be basically run of the mill. However, much to his dismay, the VW CIO has discovered that creating a successful all electric car is much harder than creating yet another gas powered car. The company has created an electric car, but it has fallen far short of what they had hoped to produce.
In the world of cars, everyone is trying to catch up to Tesla. VW is no exception to this rule. To compete, VW has created the ID.3. They had grand plans for this car to be their “Tesla Killer”. However, when it was introduced, a number of features did not work and people who bought it soon complained about faulty software. VW has promised to fix all of the problems and in the future will be able to deliver software updates wirelessly. The problem that VW ran into was that they didn’t realize that electric cars are more about software then metal. Succeeding in the electric car market is critical to a firms chances of future success. VW believes that its next car, the ID.4 will solve all of the ID.3’s problems. VW has been creating software for car for a long time. They just need to change the way that they view building an all-electric car.
The good news for the VW CIO is that Volkswagen is a company that knows how to build cars. They have not succeeded in creating a successful all-electric vehicle yet, but given time they should be able to do this. It is the responsibility of VW’s CIO to guide his company from where they currently are to where they want to get to. With the awareness of what has not worked in the past, he should have all of the information that he needs in order to successfully accomplish this task.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™
Question For You: Do you think that VW should create their electric car software themselves or should they outsource it?
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What We’ll Be Talking About Next Time
CIOs who are following what is going on in the world of security and encryption know that things are about to dramatically change. A new type of computing, quantum computing, is being developed. This new type of computing is going to be perfectly suited to breaking the types of encryption that we are using to secure our networks and our corporate data today. Within 10 years these new quantum computers are going to become available and CIOs need to be getting ready to deal with them now.