VW has had large problems getting their software processes straight. They've thrown money at the problem for years (instead of changing company culture, which needs to happen first) so I'm not surprised they'd buy a whole car company just for the software.
So there is Apple, a massive company that makes software and has struggled with its car project, and VW, a massive company that makes cars and has struggle with software.
In another universe, I wonder if this could have been a partnership?
Apparently working together with Apple is extremely difficult because they are so controlling and demanding, and that is even without the cultural and timezone difference, so I doubt it's viable.
Apple regularly does acquisitions (like, multiple per year), so I guess it's not impossible - but they seem to usually be much smaller companies which presumably assimilate. Their last big one[1] seems to have been the purchase of Intel's smartphone modem for $1B, still a lot smaller than VW's market cap of $58B.
A company which does multiple acquisitions per year will have a team specialising in the integration of acquired companies, and practice and institutional knowledge of the issues of doing so. But a merger would be different - a smaller company will slot in under some existing executive, with maybe the CEO promoted into the top team if it's a really hot company; a merger would require the merger of two executive teams, which would be a difficult event. So yeah, might not be viable.
>Their last big one[1] seems to have been the purchase of Intel's smartphone modem for $1B, still a lot smaller than VW's market cap of $58B.
That isn't how you can buy VW, the market cap is totally misleading. VW Group has a bizarre structure, it is actually directly controlled by some Porsche Holding company, which is directly owned by the Porsche–Piëch family.
Oh it ended up owned by Porsch? So confusing. I remember the short squeeze, but usually I don't follow this stuff.
I wasn't really quoting $58B as the price Apple would pay - just an indicator of the size of VW. But probably the wrong one I guess?
I know that a merger doesn't involve paying the market cap. It's more about convincing the shareholders that their final shares in the merged company would be worth more than the sum of whatever shares they have in each part. If it's legally structured as an acquisition, the purchase price is a bit of a fiction.
No, VW Group owns Porsche, the car brand. There is also Porsche SE which is a tiny company, which owns controlling shares over VW Group.
The short squeeze happened because there aren't actually that many shares around which you can buy.
>I know that a merger doesn't involve paying the market cap. It's more about convincing the shareholders that their final shares in the merged company would be worth more than the sum of whatever shares they have in each part.
Shareholders opinions are totally irrelevant. The only thing that would matter is the family who owns Porsche SE agreeing, which isn't going to happen.
Market cap is the product of the number of shares and what the market thinks a single share is worth. So the market cap matters as it puts a bound on what the price could be. But in this case the price at which shareholders would accept such an acquisition is irrelevant, as their is a single shareholder who holds controlling shares and gets to make the decision.
Or even make it a full acquisition, but allow VW to remain a separate organisation with its own CEO and own board who answer to Apple's shareholders (and/or to the very top Apple execs) rather than to a separate group of shareholders?
I.E. securing any future VW profits, and ensuring that the IP licensing deal is indefinite, while staying hands off and allowing VW to keep doing what they do with the exception of using Apple software.
VW has comparable revenue to Apple, 4 times the employees, twice the assets and triple the equity. Additionally it can only be bought by negotiating with a single family.
No, apple can not buy VW. This idea is totally absurd.
If you look a few comments higher than mine, you'll see that the context of my comment and the one I replied to start from:
> In another universe, I wonder [about Apple + VW joining forces]
We're not speculating on what might happen tomorrow, just discussing hypotheticals for the scenario in which those companies were wanting to be partners of some kind.
Agree with you, that's why my thought was that, if they were to do anything, an acquisition in which VW retains their autonomy and leadership would make more sense than one in which the two executive teams merge and attempt to manage the new dual-culture single company.
Unfortunately, with our current capitalistic system, it doesn't make sense to buy a company which has no intention to be as profitable as you are.
Basically, shareholders expect you to invest all the cash in your stockpile for a similar percentage return (on average), and they won't want you to invest in a capital heavy but almost profitless industry like carmaking unless you think you can turn it into a business of similar profit levels per unit investment to your existing business.
Most of my issues with their software are on the Mac. For things they really care about, they can pull finger and make them good. Quite why they can’t find the resources to fix up more of their software is a bit mystifying.
>They've thrown money at the problem for years (instead of changing company culture, which needs to happen first)
I don't think that is true at all. They even tried to create a separate company, just to focus on software, so that culture there could develop differently. It just didn't work out.
because they forced their policies and standards onto the new startup company.
It's the classic mistake: you setup a separate 'startup style' company to move fast, but give them too much budget and too much rules, so they just spend the budget on rebuilding the same mess instead of innovation. It's a consultant heaven to make a lot of money, but in the end this really only works if the group company stays in the dark for a considerable amount of time and doesn't impose their ideas
they tried to create a separate company, but culture was imported. It's called vw group for a reason. They have lot's of 'bureaucracy' and this is not specific just for vw. That's why things do happen so slow - changing the processes that do already work (poorly but work) is super hard when there are lot's of ppl that do praise these procedures
This is an attempt to sidestep the politically hairy problem of changing a company’s culture. This never works because the daughter company either gets eaten by the more powerful parent company‘s culture, or their output is ignored and never integrated back into the parent.
What do you do instead? The VW processes for mechanical, manufacturing and mechatronics engineering seem to work reasonably well. How do you change the culture of such a large company, without breaking what works?
You recognize that software engineering is different from mechanical/electrical engineering and stop shooting yourself in the foot. This will only happen when a competent software guy is part of the top executive suite and has sufficient freedom to do what is necessary.
I think the chances are slim, considering the general ineptitude regarding software development in German companies. They will get better until finally arriving at mediocre, but they will never be as great as American companies.
I hope one day they manage to implement a functioning CarPlay in their VW Polos, it has been broken since years.
Sorry, I meant as a response to your question. But point is, software at European non-software companies gets grouped in with IT. Treated as a support team rather than a revenue team, with salaries to match.
But this can't be true for VW, which set up an entire company to do software for cars, which has nothing to do with providing IT or was ever viewed as a "support team".
The core issues of such daughter concerns is that, despite being a separate thing, a lot of "leadership" people from core management are shipped to run the separate thing.
These leadership people carry over the whole process and cultural mess into the new place while claiming to be "startup culture". Secondly, one major issue that frequently occurs but goes unnoticed is that, the pay is abysmal.
Basically, the leadership expect to hire talents for the same pay(or sometimes less) of what is paid in core group but forget that core group gets plenty other benefits(union benefits are immense things, educational budgets, pursue some other stuff for a while and then come back anytime to take up where you left off, family benefits, discounts, profit sharing etc.) and get confused when people obviously don't want to work for that kind of pay minus all the benefits.
So eventually, they hire a lot of expensive consultants, who create lot of busywork to induce artificial lack of manpower to hire more of them. Eventually, a lot of budget is spent, only thing left to show are a lot of irrelevant proof of concepts. Then core group finance people comes asking for massive budget cuts, when all of these consultants leave(with any domain knowledge) and suddenly a small firefighter internal people have to start cleaning up the mess and work long hours. Thanks to good social benefits, most people internally get frustrated due to such bad conditions and leave and then eventually the company folds.
Sadly, it is mostly a repeat playbook of big names and I have seen it happen three times already. I don't blame the consultant firms as it is not their fault to make as much billing as possible because they know there will be budget cut anytime. I don't blame internal people leaving because, they are never paid fairly, subjected to very bad conditions and they are free to leave and care about their wellbeing.
Leadership at Cariad also seems to have a background in mechanical engineering, so those processes translate. You need people with hands-on software engineering experience to create a new culture that works for software development.
Am not sure about Cariad leadership, but the three failed projects I have been part of, the leadership was adequately technical(some mechanical, some aeronautical, some electrical, some material and many other, but they had been removed from the ground for so long that they mostly forgot how the actual engineering works and start hiring expensive consultant-management to insulate themselves from all liabilities of dealing with the actual people.
I kid you not, one of the failed project had only 1/7th of actual engineers building the software(and partially hardware), 4/7th were mostly leadership and management and rest 2/7th mostly HR, finance, regulation, legal, supply chain etc. And out of that 1/7th, only 10% were inhouse engineers, rest were expensive rented consultants, who were mostly busy doing politics.
The other two were slightly healthy ratio but managed to burn out the hardworking people by not understanding the actual requirements and introducing 200 steps of red-tape on everything.
> "VW themselves says they want the investment for the Software of Rivian, which also is somewhat curious."
If you've ever driven a Volkswagen EV and compared their software experience to what the likes of Rivian, Tesla, and Polestar have, this will come as no surprise.
As a VW EV owner (ID.4), I can attest to this. The software is a burning dumpster fire, usability is terrible, the most common workflows break or simply never work, the car forgets even basic settings like whether you want to charge to 80% or 100%, and even the bare basics like the windows going predictably up when you press both "up" buttons sometimes fail (race conditions, apparently). It's an absolute disgrace.
I think any other vendor's software is better than this.
We drive an ID.5. Apart from the UX, the outdated visual design language – is the interface also horrendously slow in yours? I have very noticeable lag when interacting with it, sometimes it takes even a second to respond to input.
If it weren't for the insanely good driving experience (coming from a VW Polo before), the software would have definitely convinced us to go for another car.
> is the interface also horrendously slow in yours
Yes. But I consider this to be the least of its problems — if it were slow, but actually worked, I'd be OK with it. The problem is that it is quite simply broken in a number of ways.
It looks as if no management at VW ever used the car. It should be mandatory for management to use any new car design as their home/family car for a month or so. I'd imagine some problems would be fixed in no time. Things like the car forgetting charging settings, the car being unable to link driver profiles to key fobs (!) and distinguish between drivers, the fact that some settings are per-driver, while others are per-car, or the fact that the phone app doesn't display any useful information, especially if you have two drivers. I mean, I could go on and on. It's mind-boggling that software of this quality has ever been released.
Car manufacturers' interconnecion is amazing by itself. Direct "competitors" share engines, gear boxes [1], or the whole vehicle [2] (modifying just interior and badges, of course). Seems like they adopt the same strategy as laptop manufacturers did (though likely the other way around) - cheap and middle range cars are OEM ones, especially commercial vehicules (made under someone's license with minimum modifications), while only high-end are independently developed.
>Maybe eventually they'll make Rivian a Volkswagen brand.
That seems counter productive though, they seem to want Rivian tech. Usually their brands are managed centrally, so VW is developing platforms and architectures, which are then used by Skoda, Seat and Audio to make their models.
VW decided to decentralize development, especially software. This is true for the Chinese market, which is very important to VW. Germans like knobs, Chinese like playfull interfaces with gadgets.
Yes, that is true. Maybe they want to do something similar in the US? Where they have some subsidiary doing largely independent development for more region specific models?
Car companies centrally develop platforms, but those platforms include a lot of third party components. It's not so strange as it sounds, just like motherboard manufacturers shipping boards with tons of third party chips.
So it makes sense if VW were to integrate couple Rivian parts into a platform. It won't be a one-side win nor loss.
I'm not certain, but I think it isn't like VW developing platforms and everyone using it. It's more every company in the conglomerate taking turns or having specializations and everyone else using that.
So that a Golf platform is first developed by VW and then productized by VM and Skoda, but Skoda is already developing next year's platform which VW will use.
>but Skoda is already developing next year's platform which VW will use.
Do you have any evidence for Skoda developing a platform on their own?
Audi and Porsche did do their own platform development, but that was never used by VW or Seat or Skoda and was for a completely different market segment.
This platform has been developed by VW over a decade ago.
It is not something which Skoda has developed on their own, it is Skoda getting to do legacy support for one small part of a large platform family.
"...the Czech manufacturer's development of the specialised MQB-A0-IN"
Not developing as in starting from zero, but developing as in taking an existing platform and modifying/improving it for a new series of cars (in this case simplifying the platform to make it cheaper to produce, and targeting the very lowest end of the car market). Admittedly not a platform we're likely to see in 'the west', and sure it's nothing fancy, but I guess you have to start somewhere.
edit: reading back through the original thread, I agree that you are correct that Skoda is not developing a ground up platform that will be the basis for several VAG cars.
I remember in the beginning they were heavily criticized for the looks. They stuck to it, and now it's a recognizable (and trusted - more or less) brand.
I didn't hear much criticism. Have always thought they did well with the styling. And yeah, I might even say they have the best brand image of any electric car company at this point - which could be a big part of why VW wants this relationship.
Good news for both companies. I'm a bit surprised, because I thought VW would be pissed at Rivian that the R3 basically looks like a 1991 VW Golf[1] Country[2].
VW mostly stopped using the Rabbit name in 1985. It briefly made a come back in 2006 - 2009 for the Golf Mk5. The 1991 model would have been the Golf in NA. My parents purchased a 1987 VW Golf new which I then purchased from them in 1990 when leaving college. I owned it for another 4 years.
So perhaps Land Rovers are a better comparison? It surely reminds me a lot of the design of the Evoque which is quite small by Land/Range Rover standards.
They have the ID platform but it is too expensive for making the ID.2 and a potential Renault tieup with their cheap EV Zoe/Dacia platform fell through.
They also have a tie-up with Xpeng in China for a China only EV platform.
Why have another iron in the fire with Rivian if they only make a US only truck and compact SUV ???.
Unsure why they would do this considering the EV know-how they have under their umbrella ... I mean, Porsche to start with, Rimac... Maybe eyeing another brand to collect.
I'm all for it. The more Tesla competitors the better. I need them to be healthy. I'm probably about 5 years away from buying an EV (I just don't believe in the current crop and I've tested quite a few) and I'm not willing to be a guinea pig.
