Volkswagen Layoff Plan Reinforces Electric Vehicle, Cariad Software Question Marks

Volkswagen's layoff plan within the Cariad software unit reinforces VW's struggle to develop next-generation software for multiple automobile brands -- including VW's Porsche, Audi, SEAT, Škoda, CUPRA, Lamborghini and Bentley lineups.

VW launched Cariad as the Car.Software Organization in 2020. Fast forward to present day, and VW plans to eliminate roughly 2,000 Cariad jobs from 2024 until the end of 2025, according to a report in German publication Manager Magazin.

The potential Cariad layoffs threaten multiple Volkswagen software projects -- many of which are tied to electric vehicles (EVs), car energy efficiency and sustainability.

Volkswagen and Cariad: Executive Changes, Proposed Layoffs and Software Delays

Here's a timeline recapping what has gone wrong at Cariad:

September 2021: Herbert Diess, VW's CEO at the time, said the carmaker still had its work cut out to become a maker of automotive software, Reuters reported. Diess lost his job less than one year later.

July 2022: VW's board ousted CEO Herbert Diess and replaced him with Porsche Chief Oliver Blume. Cariad delays and cost ovveruns contributed to the boardroom decision, Reuters reported.

October 2022: Volkswagen expanded its cooperation with Mobileye, and decided to no longer invest in self-driving startup Argo AI, Reuters reported.

December 2022: Volkswagen CEO Oliver Blume outlined a new software and vehicle platform strategy to the carmaker's supervisory board on December 15, Reuters reported.

Januaury 2023: Dirk Hilgenberg, CEO of Cariad at the time, vowed to deliver progress after a December 2022 board review of the software unit.

May 2023: Amid product delays, software bugs and alleged cost overruns, VW restructured Cariad and named Peter Bosch to lead the software group as CEO -- succeeding Dirk Hilgenberg. The company's 2.0 software platform -- originally due in 2026 -- has been delayed until 2027 or 2028, Reuters reported.

September 2023: Cariad named André Stoffels as CFO.

October 2023: Multiple updates...

• VW's board approved the Cariad layoff plan, but the proposed job cuts still require approval from the works council, which has negotiated job guarantees for workers until mid-2025, Manager Magazin said.
• New software for various Audi and Porsche models will be delayed by roughly four months, and a new scalable systems platform (SSP) is being redeveloped from scratch, the report said.
• SSP software is critical to VW's future success. The software's goal is to support any size car from any VW Group brand, Car Magazine notes.
• Porsche will integrate Google Maps, Google Assistance and other apps from Google Play into its future cars, though Cariad will remain Porsche's primary software plumbing for the long haul, Reuters reported.

Electric Vehicle Market Challenges: Meanwhile, the overall electric vehicle (EV) market has faced growing headwinds in recent months. Sales of EVs are still growing -- but not as quickly as previously forecast.

Moreover, bankruptcies in the electric vehicle market are piling up. Examples include WM Motors of China, as well as Lordstown Motors and Proterra.

Growing Green Job Market Faces Targeted Layoffs, Staff Cuts

The overall sustainability job market remains strong -- as businesses seek employees to fill green IT, renewable energy, and energy transition jobs.

Indeed, demand for green jobs in the United States has grown roughly 50% since 2019, according to Lightcast. In response, companies such as Accenture, EY, Goodwill and Microsoft have launched green jobs training programs.

Still, the rising tide involving green jobs will not lift all boats. Sustainability-oriented companies announcing layoffs and staff cuts in 2023 so far include ChargePoint, Flexport, Maxeon Solar, Morningstar Sustainalytics and Navigator CO2.