Entering into a strategic partnership, Volkswagen and Microsoft will collaborate to develop the ‘Volkswagen Automotive Cloud’, one of the largest dedicated automotive industry clouds for all future Volkswagen digital services and mobility offerings. The Supervisory Board of Volkswagen approved the conclusion of an agreement to this effect between Volkswagen and Microsoft on September 28. Volkswagen therefore continues to forge ahead with its digital transformation at full speed. With Microsoft as its strategic partner, the company is taking a decisive step in its digital transformation into a mobility provider with a fully connected vehicle fleet and the digital ecosystem ‘Volkswagen We’.
“The strategic partnership with Microsoft will turbocharge our digital transformation,” said Dr. Herbert Diess, CEO of Volkswagen AG. “Volkswagen, as one of the world’s largest automakers, and Microsoft, with its unique technological expertise, are outstandingly well-matched. Together, we will play a key role in shaping the future of auto-mobility.”
“Volkswagen is harnessing technology to digitally transform and deliver innovative new connected car services to its customers,” said Satya Nadella, CEO of Microsoft. “The world’s leading companies run on Azure, and we are thrilled that Volkswagen has chosen Microsoft. Together we will reimagine the driving experience for people everywhere.”
In-car services and platform based on Microsoft technology
From 2020 onwards, more than 5 million new Volkswagen brand vehicles per year will be fully connected and will be part of the Internet of Things (IoT) in the cloud. The profound partnership between the two companies will lay the foundation for combining the global cloud expertise of Microsoft with the experience of Volkswagen as an automaker with a global market presence.
Together, the two companies will develop the technological basis for a comprehensive industrial automotive cloud. In the future, all in-car services for vehicles of the core Volkswagen brand as well as the Group-wide cloud-based platform (also known as One Digital Platform, ODP) will be built on Microsoft’s Azure cloud platform and services as well as Azure IoT Edge. This will dramatically streamline the technical landscape.
Via the Volkswagen Automotive Cloud, Volkswagen will considerably optimize the interconnection of vehicle, cloud-based platform and customer-centric services for all brands, such as the ‘Volkswagen We’ ecosystem.
By building the Volkswagen Automotive Cloud, Volkswagen will be able to leverage consistent mobility services across its entire portfolio and to provide new services and solutions such as in-car consumer experiences, telematics, and securely connect data between the car and the cloud.
Establishment of digital headquarters
As part of the new entity, Volkswagen will establish a new automotive cloud development office in North America near Microsoft’s headquarters. To help usher in a new wave of automotive transformation, Microsoft will provide hands-on support to Volkswagen as it ramps up its new automotive cloud development office, including resources to help drive hiring, human resources management and consulting services. The workforce is expected to grow to about 300 engineers in the near future.
Beyond the technological rationale of the partnership, Microsoft provides access to cloud expertise across their organization so Volkswagen developers and engineers can benefit and learn from Microsoft’s strong culture of collaboration and agility and can transfer those experiences into the core Volkswagen organization.
Development of the largest digital ecosystem in the automotive industry
In the long term, the solutions developed through the strategic partnership will be rolled out to other Volkswagen Group brands in all regions of the world, building the foundation for all customer-centric services of the brands. This includes the Volkswagen ID. electric family as well as conventionally-powered models. In the future, Volkswagen’s fleet of cars will become mobile ‘internet of things’ hubs linked by Microsoft Azure.
Porsche increases investment in start-ups by EUR 150 million
Porsche (part of Volkswagen Group) has increased its total investment in venture capital activities by EUR 150 million for the next five years. The objective of ‘Porsche Ventures’ is to gain access to trends, new technologies and business models. The investment activities being undertaken by Porsche Ventures build in part on the company’s existing start-up investment activities.
As a strategic investor, Porsche is focusing on investments in business models relating to the customer experience, mobility and digital lifestyle, as well as on future technologies such as artificial intelligence, blockchain and virtual and augmented reality. Through its venture capital activities, the sports car manufacturer is seeking to invest in new companies that are in the early and growth phases.
“To continue building on the success that we have enjoyed over the past few years, we must fundamentally change our business model. Porsche has always been among the pioneers of the automotive industry. To date, innovation has been driven to a large degree by technology and with strong links to our current core competencies. In some cases, the changes that are now becoming necessary are linked to topics beyond our main fields of expertise. With this in mind, it is essential that we build a strong ecosystem with competent partners,” explains Lutz Meschke, Deputy Chairman and Member of the Executive Board for Finance and IT at Porsche AG.
A minority shareholding in Berlin-based start-up Gapless represents the latest investment made by Porsche Ventures. This new company allows customers to digitally manage their vintage vehicles, including the entire vehicle history, and share this information with other users in a secure format that prevents forgery. To offer this service, the start-up is developing a solution based on blockchain technology designed to maintain or increase the value of collector’s pieces. Gapless is currently in the foundation stage and employs nine members of staff.
Porsche Ventures has also recently invested in fast-growing technology company WayRay. This Zurich-based start-up develops and produces holographic augmented reality head-up display technologies and is working on the ability to seamlessly integrate virtual objects into the driving experience. Porsche bought into WayRay as a strategic lead investor during the Series C funding round. The total value of the financing round is 80 million US dollars. In addition, the Stuttgart-based sports car manufacturer holds shares as a strategic investor in start-ups Anagog, Miles and home-iX, as well as technology and sports car company Rimac.
Alongside direct investment deals, Porsche invests in selected venture capital funds, such as e.ventures in Europe and the USA as well as the Magma and Grove funds in Israel. The company is also a member of the Startup Autobahn innovation platform. In March 2018, Porsche Digital worked with Axel Springer as part of a joint venture to launch the start-up accelerator programme APX. However, in its search for suitable partners Porsche does not invest in start-up companies alone. In addition to the deals being made via Porsche Ventures, the sports car manufacturer invests in established businesses that are making a difference to the field of mobility through pioneering technologies.