VW Group’s Cariad Software Division Had A Bad Year. Again
Over a period of three years, Cariad accumulated operational losses exceeding $7.5 billion.
- The Cariad software unit of Volkswagen Group reported an operational deficit of $2.64 billion for the previous year.
- The company's income amounted to $1.44 billion.
- The German automobile corporation intends to announce additional job cuts at Cariad.
Cariad, known as "the software hub of Volkswagen Group," as it is formally called. the company’s website has transformed from a bright star into a cause of financial troubles in under half a decade.
In the 2024 financial report released by Volkswagen Group, it was noted that Cariad reported an operational deficit of $2.64 billion (€2.431 billion). Although the software unit generated revenues of $1.44 billion (€1.327 billion), marking an increase from the previous year's figure of $1.17 billion (€1.078 billion), this rise did not prevent an escalation in losses compared to 2023, where they recorded an operating shortfall of $2.6 billion (€2.392 billion).
The pattern of experiencing deeper operational deficits alongside rising revenues began in 2022 as Cariad reported a loss of $2.28 billion (€2.1 billion) with an income of $870 million (€800 million). From 2022 through 2024, Volkswagen Group’s software unit accumulated more than $7.5 billion in operating losses despite generating almost $3.5 billion in revenue.
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In the previous year, the software company experienced greater sales income compared to 2023 due to an uptick in licensing fees from the boosted sale of automobiles equipped with Cariad software. Nonetheless, the total vehicle deliveries of VW Group declined from 9.24 million units in 2023 to 9.02 million—a decrease of 2.3%.
This is merely the most recent in a series of setbacks for the software division of this major German automaker. Upcoming market releases include the Porsche Macan Electric and the Audi Q6 E-Tron. were pushed back by 12 months due to software issues stemming from Cariad. The early software versions included with electric vehicles like the Volkswagen ID.4 and ID.5 , known for their frequent freezes and glitches, were also created by Cariad. This resulted in a significant reshuffle of the leadership within the division , having welcomed a new chief operating officer, chief technology officer, and finance director in 2023.
Eventually, things got better with the release of more advanced software updates; however, the condition of the Cariad division remains far from ideal. According to reports, by year-end, Volkswagen Group intends to reduce their workforce at Cariad by 1,600 employees. Handelsblatt report In its 2024 financial outcomes, the Volkswagen Group stated that they plan to "restructure their operations."
Formally launched in 2020 under the name of Car.Software Organization, Cariad now counts around 6,000 employees globally. The organization aims primarily at crafting a single operating system along with a unified electronic framework for future models within the Volkswagen Group lineup. Originally tasked with developing Volkswagen's leading electric vehicle project called Project Trinity, several postponements compelled the company to restart this initiative from square one.
This time around, VW will effectively utilize its resources. A $5.8 billion investment in Rivian and, according to Automotive News , the updated core architectural design will utilize Rivian's software expertise , incorporating features such as Level 4 driver assistance systems.