Volkswagen’s software transformation: An enterprise architecture decision at CARIAD

In spring 2024, Oliver Blume, Chief Executive Officer of Volkswagen Group, faces a major information technology decision. He must recommend whether Volkswagen should invest up to US$5 billion in a 50:50 joint venture with Rivian Automotive to use Rivian’s next-generation software and electrical/electronic (E/E) architecture, or continue relying on CARIAD, Volkswagen’s in-house software company, to develop the Group’s future software platform. The case explains why Volkswagen created the Car.Software Organisation in 2020, later renamed CARIAD, to build a single software platform for all Volkswagen Group brands. It examines the software delays that affected important vehicle programs, including the Porsche Macan Electric and Audi Q6 e-tron, the leadership change from Herbert Diess to Oliver Blume, the restructuring of CARIAD under its new CEO Peter Bosch, and operating losses exceeding €2 billion annually. It also describes Volkswagen’s software partnerships in China with Horizon Robotics and XPeng as alternative approaches to accelerating software development. The case concludes immediately before Volkswagen announces the proposed Rivian partnership. Using the case exhibits, students evaluate why Volkswagen’s in-house software strategy struggled, compare alternative software sourcing strategies, and recommend whether Blume should continue investing in CARIAD, partner with Rivian, or pursue another strategic option.