Well, that decision is wrong in so many ways that it is hard to pick one reason. I struggle to wrap my head around the fact that in 2024 leadership of such a giant company can't recognize a mere fact: software is a king. If you managed to hire a wrong set of people who failed to deliver the right solution it doesn't mean you should change the goal. With high probability you must change the team. And, probably, resign yourself, by the way, but that is a whole different story. Let's see why.

Here is an announcement: https://www.msn.com/de-de/finanzen/top-stories/vw-trifft-drastische-entscheidung-m%C3%BCssen-unseren-stolz-%C3%BCberwinden/ar-BB1r4NQL

I mean, look around. This world is dominated by software. Moreover, there is no individual vehicle operating system anymore. Fleets are on their way to become a platform, an extension of your mobile phone or company’s data center. While VW gave up on building their own software, another company with the same, - and probably  lower, - amount of resources managed to build their own operating system from scratch, while designing a completely new car. 

Yes, I’m talking about Tesla. They did even more than that! In a short period of time the Tesla's team managed to create a platform, an autopilot and an open system which allows you to integrate large fleets and provide your solutions for them in a reliable, secure and predictably easy way. They have their own home designed GPU integrated into their vehicles to improve CV aspects of it. Combine it all together and you can foresee the future where Tesla vehicles are told over an API to go here or there and execute a business task of a company or fulfill a private need of a person who owns it. 

Taxi services, delivery of goods, summoning of a car or parking it, going for groceries, picking up your kids from a school and driving them down to a tennis lesson - everything is about to be changed. Why does the largest car manufacturer in Europe struggle to recognize and embrace it? Software is a key to move forward. And software strives only in direct connection with a hardware it’s running on.

I’m not saying that VW is about to crash and die, of course. They are too big to fail, as they say. My point here is that worse things are about to happen to them. Unless they change their mind and double down on RnD they will become boring, obsolete and then just disappear absorbed by another power. Probably, a new economical and innovative power we all see coming - Chinese car production. Kinda like Nokia did when they switched to Windows Phone OS, remember? Or like Motorola found their destiny dissolved in the past after being acquired by Google. You name it.

Cars are no different from phones or laptops in that sense. Basically, there are 2 possible models to develop them nowadays. You can be Apple. Then you own your stuff end to end. And with each step you extend your ownership. Start from a software and proceed down to the CPU level. Or, another option, you use Android. First path assumes you have hardware vertically integrated with an operating system. Then you can do things which people see as magic! Otherwise you are locked up with what you’re given by your software provider and your innovation stagnates to moving icons on the dashboard and coming up with a new clever way to visualize things. 

You should also be aware, that once your software is chosen you’re locked in. Basically forever. Because there is no way to change an operating system for a few million cars you have already produced and sent on the roads. And switching vehicles being built in the moment to something completely new will require gigantic investments, efforts and skills your team won’t have anymore. 

Building stuff is hard and expensive. But that’s like doing sports. Stop running that mile every day, get slow, lazy and heavy, and you’ll never be seen on that trail ever again.