Volkswagen's CARIAD taps into China's digital innovation potential

Volkswagen Group's software company CARIAD has set up its first subsidiary outside of Europe in China, with the aim to make the German carmaker's vehicles more digitalized and smarter in the country and beyond.

The mission is "in China for China, from China to the world", said Chang Qing, CEO of CARIAD's subsidiary in China, which was formally established in April.

Chang said there are more than 600 software engineers in China and the figure is expected to double by the end of 2023, of which more than 90 percent will be Chinese. The role of the engineers will be to develop and adapt software for Volkswagen's marques.

A nationwide research and development network is also being built up, with Beijing, Shanghai, Chengdu in Southwest China's Sichuan province and Hefei in East China's Anhui province earmarked as initial hub locations.

Among other things, it will enable the first over-the-air update of Volkswagen's electric ID. family in China in the second half of this year.

"The newly established China team will enable us to quickly respond to local needs. We will develop, update and continuously improve our products at China-speed based on local customer expectations," said Chang.

Specifically, it will drive and enhance the development of China-specific software products, including the co-development of a unified and scalable new software platform as well as ADAS, automated driving and next-generation connectivity functions.

"China is a world leader in digital innovation, and consumers here expect new features and experiences on a daily basis. Also, China is Volkswagen Group's most important single market across the globe. Those are the reasons why we have decided to build our first subsidiary here," said Chang.

Chang said the China subsidiary will also introduce some local solutions into the group's models in other markets to improve their digital appeal.

"I think it's fair to say that China is leading the digital transformation of mobility," he said, citing McKinsey statistics that more than 80 percent of Chinese consumers believe that automated driving and smart connectivity are important.

CARIAD was established in 2020 to consolidate and further expand Volkswagen Group's software competencies in the new age of electric smart and autonomous vehicles.

Now more than 5,600 engineers and developers are working globally to build a uniform software platform, which includes a unified and scalable architecture, an operating system and automotive cloud, by the middle of this decade.

Chang said the China subsidiary will contribute 70 percent of the development work of the technology stack and product line for the unified and scalable software platform, including local development, as well as local adaptation.

"One of CARIAD's goals is to provide our self-developed technology stack to more than 40 million Group vehicles globally by 2030.

"The China team will work closely with the group's brands and joint ventures in China to achieve this goal, so that we can realize the enormous synergy effects and economies of scale expected under our New Auto 2030 Strategy," said Chang.

Volkswagen Group unveiled its New Auto strategy last year, aiming to grow into a software-driven mobility company by 2030, with a strong focus on global technology platforms.

Sun Wei, chief technology officer of CARIAD's subsidiary in China, said speed is the cornerstone of success, underpinned by the right mindset and a China-specific technology concept.

"Through market observation and research, we have summarized and defined our own concept to select our innovative ideas, called 'OIC'.

"It is not 'Oh, I see', but 'O'riginal, 'I'mpressive, and rooted in 'C'ar," said Sun, who left IBM for Volkswagen Group in 2017.

He said what would motivate customers to choose Volkswagen Group's models is to create something that truly impresses tech-savvy Chinese consumers, and such things would differentiate the group from its rivals.

Sun illustrated the philosophy with a user experience application called Outfit of the Day.

An AI camera detects the color or style of the driver's clothing, and the car automatically configures the digital elements, such as the infotainment desktop theme, ambient lighting color, greetings and music, to match the outfit.

"Young people today are very happy to post their beautiful outfits on the internet. Our application originates in but extends the idea of dressing up, seamlessly integrating it into the digital experience of the Intelligent Cockpit," said Sun.

This is one example of CARIAD's work in China. In the first quarter, the team developed more than 80 innovative ideas and it has selected the top six for further development, which will be seen in its product lines within three to six months.

These six ideas cover diverse areas such as ADAS, the intelligent cockpit, remote services, and architecture, said Sun.

Some others have been introduced into mass-produced models. The latest models from Audi, a premium arm of Volkswagen, are now equipped with three new V2X functions in China.

One of them is related to traffic light information. It provides drivers with second-by-second traffic light information on the road they are driving on, with the recommended speed given so that drivers don't have to wait for green lights at the crossroads.