1. Why do you think VW Group initially decided to develop its software capabilities on its own through a new business unit, CARIAD? What challenges arose and why?
2. Analyze some of the changes the VW Group is now looking to implement with respect to CARIAD. What advice do you have for the VW Group as they reorganize CARIAD in the weeks and months ahead?

BERLIN -- Volkswagen Chief Executive Officer Oliver Blume, in his first major restructuring move since becoming chief last year, is expected to replace the management of the company's struggling software unit after it caused delays to new-model launches, according to people familiar with the matter. The decision to remove Dirk Hilgenberg, head of the unit called Cariad, finance chief Thomas Sedran, and Lynn Longo, a Michigan native who serves as Cariad's chief technology officer, could be announced as early as this week, possibly before VW's planned shareholder meeting on Wednesday, the people said. Messrs. Hilgenberg and Sedran and Ms. Longo couldn't be reached for comment. The changes at Cariad were earlier reported by the German-language Business Insider news site on Saturday. While Mr. Blume is set to remove the executives from their current roles, one of the people familiar with the matter said they could be offered other jobs within the VW group in Europe or North America. The expected decision to replace existing management comes after an intense analysis of Cariad conducted by VW that came to the conclusion that current management lacked strong tech experience and leadership skills in a restructuring situation, this person said. VW executives have said publicly that VW remains committed to Cariad as a business unit. But the person said that the unit needed a new structure focused on fast, incremental software development in sync with the schedules of product launches at the brands. Mr. Blume hasn't settled on candidates for new management at Cariad, the person added. Cariad was created by Mr. Blume's predecessor, Herbert Diess, to produce advanced software, including self-driving capabilities for the VW group's brands by the middle of the decade. The move to shun big tech software providers such as Google and Apple in favor of inhouse development was risky. VW spent billions and had to recruit an army of software developers and coordinate efforts across its diverse brands.Despite the effort, Cariad got mired in the complexities of building advanced software, leading to a string of delays to model launches. Instead of paving VW's path toward overtaking electric-car market leader Tesla, Cariad held the company's brands back from moving faster. The launch of VW's first all-electric model built on in-house EV technology in 2019 was marred by glitchy software. Instead of delaying the launch again, VW decided to release the vehicle with an incomplete software package. Mr. Diess hired Mr. Hilgenberg from BMW in 2020 to fix the group's software organization. Although Mr. Hilgenberg made some progress, Cariad continued to stumble, causing the planned launches of breakthrough all-electric models -- the Audi's Q6 e-tron and a battery-electric version of Porsche's popular Macan SUV -- to be delayed. The troubles at Cariad added to pressure on Mr. Diess, who was ousted last year. Mr. Blume serves in a dual role as CEO of VW and Porsche.

CARIAD is the software powerhouse of Volkswagen Group. Its mission: to bundle and further expand the software competencies of the Volkswagen Group. Mobility made easy. For everyone. Software driven. With a focus on the digital experience and automated driving, CARIAD is building the leading tech stack for the automotive industry. Aiming to create a new automotive experience and increase the innovation speed of Volkswagen Group to make the car a digital companion. The software-defined vehicle powered by CARIAD is a crucial contribution to the success of the Groups NEW AUTO strategy. The company was established in 2020 as the Car.Software Organisation. Today, around 6,500 engineers and developers work at CARIAD globally on a uniform software and technology platform for all Volkswagen Group brands. This includes a uniform operating system, a uniform E/E architecture and an automotive cloud. The company is also developing digital functions for the vehicle: driving assistance systems, highly automated driving functions and a uniform infotainment platform including a third-party application store. In this way, CARIAD is creating a new digital ecosystem connecting the digital world of drivers with Volkswagen Group vehicles, paving the way for new, digital business models for the Volkswagen Group. 2 The Volkswagen Group. (2023, March 10). CARIAD [VW Group Website]. With its scalable software and technology platform, CARIAD is developing the technological foundation to turn the car not only into a digital device, but also into a smart companion: a vehicle that accompanies customers into the future even years later through updates with new digital function. CARIADs home base is Germany, but the software is developed and delivered around the world, with focus on markets in Europe, the United States and China. The software developers and engineers from over 90 different nationalities are spread across seven locations in German automotive and software hubs like Wolfsburg, Munich and Berlin. To foster automotive innovation on a global scale our subsidiaries in China and the US enable CARIAD to develop market-specific solutions and enhance the global customer experience.

The following is a press release (May 8, 2023) from the Volkswagen Group regarding the reorganization of CARIAD. Structural and personnel realignment at CARIAD3 Following the technical optimization measures of recent months, the Volkswagen Group is now moving forward with structural and personnel development at CARIAD this includes the restructuring of the CARIAD organization, accelerating the implementation of the E platforms (end-to-end electronic architecture), structural orientation to the development of software-defined vehicles (SDV), intensified technology partnerships, and a new leadership and team model. Peter Bosch has been appointed CEO of CARIAD effective June 1, 2023, and will simultaneously also assume responsibility for Finance, Purchasing and IT. Bosch previously successfully realigned Bentley during his time as a member of the companys Board. Ties between CARIAD and the Volkswagen Group brands will become closer and the company will continue its build-up as an internal supplier for future technologies. The Supervisory Board of CARIAD has approved a comprehensive realignment of the Volkswagen Groups software subsidiary. Peter Bosch, previously responsible for manufacturing at Bentley and the Volkswagen AG representative on the Board of Scout Motors, has been appointed CEO. Supported by acknowledged software experts and a transformation team of experienced managers from the Volkswagen Group, CARIAD senior management and technology specialists will comprehensively advance the development of CARIAD. Oliver Blume, CEO of the Volkswagen Group and Chairman of the Supervisory Board of CARIAD, commented: Last year, we drew up a ten-point plan for operational and strategic areas of action within the Volkswagen Group. One key element is the realignment of CARIAD, and we have already made good progress. We are now setting the next milestones for advancing 3 The Volkswagen Group. (2023, May 8). Structural and personnel realignment at CARIAD [Press release, VW Group Website]. strategic, structural and personnel development. CARIAD focuses on the development of digital future technologies for the Group brands. We are stepping up the pace and broadening our approach to partnerships. This is designed to combine our competences with the best solutions on the market for the benefit of our customers. The outcome is even closer software-vehicle development interaction. In the past few years, experts from all over the world have been recruited and inspired with the ambition to develop a uniform operating system for all Group brands. When I took office in September 2022, I underscored that CARIAD is a key success factor for the Volkswagen Group. As one of the core elements in our 10-point plan, we have addressed key issues: Sharpening CARIADS core competences Revising the interfaces with the brands Realistic sequences for the software architectures Boosting effectiveness Expanding strategic partnerships We have taken important decisions on these issues in the past few months and have set our guardrails for example, we have organized the software architectures and their timelines for our vehicle projects. We have drawn further specific conclusions on the basis of our thorough analyses, and are now advancing the in-depth development of CARIAD. We would like to thank Dirk Hilgenberg and his team for their passionate commitment and the progress they have achieved. We are already in talks with them about possible new roles within the Volkswagen Group, Oliver Blume said. Peter Bosch named new CEO Peter Bosch assumes responsibility as CEO of CARIAD effective June 1, 2023. As the Member of the Board for Manufacturing at Bentley Motors since 2017, he shared responsibility for the successful restructuring and reorganization of the company. Peter Bosch is an experienced Volkswagen manager, having held several other posts within the Group, including roles within the Volkswagen brand. As a Member of the Board of Scout Motors, he was recently closely involved in establishing the manufacturer of full-electric R-SUVs and Pickups in North America. Within CARIAD, Bosch will also assume responsibility for Finance, Purchasing and IT. Peter Bosch is the right CEO at the right time, Oliver Blume said. He is a strategist, an enabler and a team player. He successfully proved that at Bentley. He knows the Volkswagen Group well and also has extensive experience in the fields of change and consulting. Going forward, the new CEO will be joined on the Board of Management by two acknowledged software experts. CARIAD will announce these appointments in the near future. The final Board Member is Rainer Zugehr, who retains his role as Chief People Officer (CPO). In addition, an experienced Transformation Board is already in place to provide CARIAD with further support. This board brings together selected CARIAD managers to create a highly-competent team to shape the realignment. The focus is on steering the transformation process and advancing cooperation between CARIAD and the Volkswagen Group brands with a team spirit, fairness and passion, Michael Steiner, Member of the Supervisory Board of CARIAD and responsible for development in the Volkswagen Group, said. According to Steiner, the Supervisory Board specifically focused on a team of experienced managers from all Volkswagen Group brands, CARIAD experts and new external managers. The comprehensive realignment of CARIAD is based on five points: 1. Restructuring of the CARIAD organization 2. Accelerated execution of the E platforms 3. Structural orientation to the development of software-defined vehicles (SDV) 4. Intensified technology partnerships with strong tech players 5. A new leadership and team model Software based: the software-defined vehicle architecture CARIAD will play an even greater role in developing the vehicles of the future, from software to hardware. For example, there are plans for an integrated project house with the Volkswagen and Audi brands to develop the next generation of software-defined vehicles.