Volkswagen will invest 3.5 billion euros in developing new digital businesses

The German manufacturer has taken a new step forward in its ongoing transformation from a car manufacturer into a provider of transport and mobility services, announcing yesterday in Berlin an ambitious investment plan of 3.5 billion euros for the launch of We Share — its new carsharing platform, which will be operational in Berlin from the second quarter of 2019 and in 2020 in other European and North American cities yet to be specified.

This new service has been created to compete directly with offers such as Drive Now (BMW), Car2Go (Daimler), Emov (PSA), Wible (Hyundai) and Zity (Renault) — as well as to acquire new digital businesses and products, including a new cloud computing platform and a new software operating system that will support the entire new universe of mobility-related services that Volkswagen is going to create under the name We.

“We have a clear vision: we will continue building vehicles that are immensely superior, but in the future our Volkswagen will increasingly become digital devices on wheels,” said Jurgen Stackmann, Sales Director at Volkswagen, during his appearance before the media. “Our customers will become part of an ecosystem we have called ‘We’, which will complement the on-the-road experience of Volkswagen by allowing customers to bring their entire personal world into their vehicle.”

To achieve this, in addition to relying on open interfaces and encouraging third parties to join in building a solid platform by contributing their software, Volkswagen will also “go shopping”. Before the upcoming Christmas season, the brand will already have made some new acquisitions of technology companies related to the new digital services that We plans to offer the brand’s customers.

“We are going to be a hardware and software company,” said Michael Jost, Head of Strategy for the Volkswagen brand, during the press conference held yesterday in Berlin, “and to meet this development we have to reinvent the car.” This includes creating a new IT architecture in the brand’s vehicles, much simpler than the current one, which will debut with the new Volkswagen I.D. electric vehicle family arriving on the market from 2020.

This new platform does away with a large number of control units (a typical car currently has around 70) that until now have operated separately under software specific to Volkswagen, concentrating them into a few computers equipped with a unified programming language, vw.OS. Thus, “by separating hardware from software in the car, the foundations are laid for many future and ongoing updates to each model, which will allow us to quickly move to the next level on the road to autonomous driving,” Jost said.

In this way, the Wolfsburg brand is going to create, under the We name, a whole package of mobile applications that Volkswagen customers will be able to access with a single login. These services will be available both to owners of the brand’s conventional and more traditional vehicles and to those who opt for the new electric vehicles arriving in the coming years.

Among these new services, Volkswagen announced yesterday the creation of advanced and secure electronic payment systems for street and car park parking, parcel delivery services directly in the user’s car, services tracking fuel prices, and special services offering localised deals from different retailers. Volkswagen’s objective is to generate revenues close to 1 billion euros a year by 2025.

Before that, in 2020, the real turning point for the brand will come. Volkswagen currently has 1.5 million vehicles without online access that can already connect to the internet via Volkswagen Connect, but by that year the brand expects to have its entire fleet connected. Thus, every year five million vehicles will become part of the so-called IoT (Internet of Things).

Currently, the new contracts that customers sign with dealers in the Volkswagen network already allow the brand to interact directly with customers and their vehicles throughout the entire lifecycle of the latter, so that customers can receive tailored offers without needing to make an appointment or go to the workshop to resolve some of the problems that may arise with their car. To develop this entire new system, Volkswagen has created a new single Digital Platform (ODP) in the cloud. In collaboration with other brands in the German group, the ODP will connect each car of the brand with the customer and with all available services, both those developed by Volkswagen itself and those offered by any external partner of the platform that has decided to join the new Volkswagen universe.