VW Vows to Spend $4Bn Becoming a Mobility Company

Volkswagen Group wants to change from an automaker to a mobility service-provider and will bet about $4Bn on that effort by 2025.

The plan includes connecting all its models to the internet, creating a unified onboard IT architecture and building a cloud platform for services that will include car-sharing, parking and package delivery to customers’ vehicles. The investment may also include acquisitions. One of the early steps will be the launch of We Share, a car-sharing service the company plans to introduce in Berlin next year using its e-Golf and e-Up electric cars.

VW isn’t the first car company to lay out ambitious plans for a digital-age transformation. Connected cars, the growth of ride-hailing and other mobility apps, and the popularity of Tesla’s electric cars and over-the-air software updates have driven old-line automakers to bet on big changes. Ford, Toyota and General Motors, among others, have vowed to become diversified mobility providers.

However, VW’s plan does stand out for its scope. It will eventually span all of VW Group’s 12 brands, which account for about 11 million cars per year. The company is also highly motivated to make a fresh start in the wake of a diesel-emissions cheating scandal that has rocked its reputation and management. The new initiative, called Transform 2025+, will turn cars into connected devices, Volkswagen Group said. The company expects to generate billions in revenue from selling new digital offerings and services as the changes roll out.

Inside its vehicles, VW plans to change the whole computing architecture. In today’s VW vehicles, like others, the engine and other components are managed by up to 70 control units, often supplied by separate components suppliers. Starting with its I.D. series of connected electric cars in 2020, VW plans to reduce this number to just a few controllers that will all use the same programming language. That could make it easier to evolve vehicles’ capabilities over time and help to pave the way for autonomous driving. The architecture will have open interfaces so that third-party developers can contribute code, the company says.

The cloud platform VW plans to build, called the One Digital Platform, will let the company deliver a set of digital services over the air and even change the relationship among the automaker, dealers and owners. VW will be able to stay in contact with the owner throughout the car’s life, offering software updates and new features without a trip to the dealer, the company said. Tesla helped set the stage for this kind of direct customer relationship with its remotely upgradable software platform and company-operated dealerships.

Naturally, the cloud platform will also be available via phones and other connected devices, giving VW a way to reach non-owners, the vast, untapped pool of consumers who can’t afford a vehicle or choose to opt out of car ownership.

Services available on the cloud platform could include fleet management, e-commerce and electric-car charging and billing. The company has already launched the We Park service for finding and paying for parking spaces, We Deliver for getting packages delivered to a car and We Experience for helping drivers find things near where they are parked.

— Stephen Lawson is a freelance writer based in San Francisco. Follow him on Twitter @sdlawsonmedia.