AutosPorsche Shakes Up Software Strategy After $3 Billion Blow

Porsche Shakes Up Software Strategy After $3 Billion Blow

Porsche focuses on the development of semi-custom software.

Images source: © Press materials | Porsche

2:48 PM EDT, April 22, 2024

Porsche has faced significant losses in time and money due to challenges at its subsidiary, Cariad, which is part of the Volkswagen Group. These setbacks have prompted the brand to rethink its strategy on handling software.

The Volkswagen Group originally established Cariad in 2019 as a separate entity focused exclusively on software development, aiming to elevate the quality and innovation of their systems. Among their ambitious goals was the development of software capable of enabling level 4 autonomous driving by 2026, which would allow a vehicle to operate without human intervention.

However, the reality has been starkly different. Cariad encountered numerous obstacles in developing new information systems, leading to budget overruns and unmet objectives. These internal issues were directly linked to delays in the electric Porsche Macan and Audi Q6 e-tron launches. Consequently, Cariad underwent a significant overhaul of its management and structure to cut costs steeply.

Porsche deeply felt the impact of these troubles, resulting in a delay of over two years for the electric Macan. The McKinsey analytics center estimates the financial damage to the German automaker to be around 3 billion euros (approximately 3.3 billion US dollars). In response, Porsche decided to integrate Android Automotive into its systems. According to Automotive News Europe, the collaboration between Porsche and Google is set to intensify.

The latest version of the platform, featured in the new Macan, is currently being enhanced for better stability. By 2025, with the new Boxster and Cayman debut, it is expected to offer access to Google Maps, Google Assistant, and other Play Store applications. This open interface approach will allow for easy adaptation based on market and regional preferences, creating a “mixed ecosystem” of solutions from both Google and Porsche. This demonstrates the brand's preference for charting its path in software development to avoid past risks.

Additionally, in March 2024, Porsche announced a partnership with startup Applied Intuition to support the advancement of its software and address the issue of reducing dependency on "black box suppliers." This move further solidifies Porsche's commitment to pioneering its technological advancements independently.