If you drove an Audi or Porsche and Volkswagen today, you would probably have different hardware and software for navigation, for climate control, and even for the window lifter. That’s not necessary. … Software offers a huge opportunity for economies of scale, still allowing for brand differentiation.
Now, a Porsche can remain a Porsche, even better than today. An Audi can remain an Audi, and Volkswagen will offer a broad range of products, but the basic software stack can be very, very similar. Software is relatively expensive in automotive. Now it’s a one-time expenditure. … We think that we have a good chance to also become very competitive in software if we build a common basic software for all the brands. This is exactly why we founded CARIAD: to get from a world where we bought software with the embedded systems to our own software stack. The brands have all the tools and all the freedom to differentiate for sportiness, for comfort — for all sorts of different use cases. This is why we think we are well set up for this new world, where economies of scale will probably play a bigger role than in this old auto world. Differentiation will probably be more difficult, but through software, it will be very, very possible.
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We have that revenue in mind for sure as well. Customers will be prepared for some features they didn’t buy at the start, probably after a few years or after a few months — even if they consider taking another option or another software feature, the customers would be prepared to pay a monthly fee or a one-time expenditure. We estimate that the big difference is that we keep the residual value of the car higher, we keep the car fresher, and we get a better customer experience.
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Let me ask you a very reductive question: do you think the future of Volkswagen is a hardware company, a software company, or a services company?
It’s combined. It’s all three. We will remain a hardware company because we need excellent manufacturing skills as well as finish quality in the future designs. We need direct customer contact, so we will remain part of that. Software will be decisive for the differentiation and for gaining the economies of scale, so we will become a software company as well — talking to the customer and delivering day in and day out. We will also become a service company because mobility will change. Pay-by-use sharing fleets, mobility services, and autonomous vehicles will change mobility quite considerably. People may not own a car anymore: they may just use cars, and we will be a part of that game. We will definitely become all three of those companies, so we will remain a bit complex, but a lot more vertically integrated.