Volkswagen is considering ending a €1.5 billion ($1.71 billion) partnership with auto supplier Bosch to jointly develop software for driver assistance and autonomous driving.
This move is reportedly aimed at cutting costs and enhancing competitiveness.
The report comes amid news that the German automaker is planning to shut four plants and lay off 100,000 workers.
The current state of Volkswagen’s autonomous driving program is unclear, and if the partnership is indeed called off, its rollout could face delays.
VW’s Cariad and Bosch Release Statement
According to a report by German news outlet Bild, Bosch had entered into a partnership with Volkswagen’s software division, Cariad, to develop the autonomous driving software for all brands under the Volkswagen Group.
However, despite an investment of $1.71 billion, the project reportedly failed to meet expectations, Bild reported, citing internal sources.
While Bosch and Cariad have not confirmed the report, they did release a joint statement, saying they don’t address rumors. It read:
“As a matter of principle, we regularly review our development partnership and continuously assess whether it aligns with our strategic and technological goals as well as current market developments.”
Partnership Is Slated to End
According to the report, the partnership will be terminated in accordance with the terms of the contract, and the termination will not take effect before Monday.
Volkswagen now plans to partner with another company to source the hardware and software for its autonomous driving systems. A replacement is reportedly being selected, with an agreement expected in September.
It remains to be seen whether ending the partnership with Bosch will affect the supply or development of driver-assistance features across Volkswagen Group brands.
Volkswagen Plans Major Layoffs
Guessing Headlights recently reported that Volkswagen was planning the largest restructuring ever seen in the history of the automotive industry.
It is considering shutting four German factories and increasing its planned job cuts to 100,000 workers. The company’s supervisory board has been informed of the plans, which will be discussed on July 9.
Plant closures at Hanover, Zwickau, Emden, and Audi’s Neckarsulm site could lead to over 45,000 job losses. Combined with the 50,000 job cuts already planned, the total could reach 100,000 layoffs.
Earlier this week, Volkswagen CEO Oliver Blume shared the company’s cost-cutting plans with senior executives to build support before facing expected resistance from unions and the state of Lower Saxony, its second-largest shareholder.
Ingo Speich, a representative of Deka, an investment company that owns shares in Volkswagen, told Reuters that the root cause of the problem is dwindling sales. He said:
“The high costs are merely a symptom, not the cause. They do not address the root cause, which is weak sales.
“VW must bring attractive products to market that are in high demand; that would put an end to the debate over costs.”