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What happened to Volkswagen’s plan to beat Tesla?

I know I am not the only one scanning articles for the right electric vehicle to buy. I am on the edge of buying electric but keep feeling that my old reliable petrol vehicle will do just fine for the next while. As I scan the reviews online, I have to admit that software is not at the forefront of my mind.

A Wall Street Journal article caught my eye: “How Volkswagen’s $50 Billion Plan to Beat Tesla Short-Circuited”. It’s an incredible example of how an industry giant approached software in the wrong way.

software in cars
Copyright Volkswagen AG/dpa/picture alliance

Software changes continuously

You must realise that software doesn’t industrialise; it evolves. You need to think about it as a biological system and not a mechanical one. Even though it runs on machines.

Jeff Gothelf wrote a compelling book called “Sense and Respond” several years ago. He wrote his analysis of the challenge of auto software called “Volkswagen’s electric car ambitions: A Sense & Respond case study”. In the article he says:

“What they didn’t consider: Electric vehicles are more about software than hardware. And producing exquisitely engineered gas-powered cars doesn’t translate into coding savvy.” Wall Street Journal

So what happened?

VW built a huge auto software and mechanical platform for their electronic vehicles. However, when their new electric vehicle ID.3 launched, the software wasn’t ready! VW were taking on the might of Tesla with their ID.3 vehicle. They endured a year of bad press. That is a lot of boardroom meeting headache time!

VW asked new ID.3 owners to drive their vehicles back to the garage for an “auto software update” after purchase. When is the last time you physically went to a manufacturer for a software update? It is the equivalent of heading to your local Apple store for the latest software release!

Customers don’t expect to see auto parts software updates let alone drive to a garage to experience one! Digital companies like Amazon release new software every second. Tesla push Over-The-Air auto software updates to vehicles on average every two weeks.

You must remember that the art of software delivery is simple – rapid and continuous.

What does the map say?

Digital Native Platform for EV map
Digital Native Platform for EV map

Regular readers will know that we are massive fans of Wardley mapping. You can use wardley mapping to plot the current landscape and chart movement (evolution) and climatic factors (risk). When I map the VW experience, several observations jump out:

  • Manufacturers face a difficult mechanical challenge to build a vehicles. But the challenge is a solved problem. They need to be good at it because we expect cars to work. See the bottom of the map.
  • Customers buy electric vehicles because they love tech. They are looking for flashy new features. And these must be auto software driven. See the middle of the map. This is a critical feature that does not usually exist with non-electric cars.
  • Manufacturers need to move from an approach of “being great at manufacturing several million cars” to “continuously pushing out new and innovative auto software features”.
  • If you treat auto software on a digital native platform as custom, you have introduced room for failure. Auto software needs to be productised for scale. You should not commoditise it .
  • If you try scaling auto software like a factory. it doesn’t work. Production over evolution is not desirable. Manufacturers need to embrace change in auto software. And not attempt to eradicate it.

My map highlights that scaling auto software production over adapting to change will be a blocking factor in this environment.

What could be different?

We want to tackle the really interesting point:“what could have been done differently?”:

Manufacturers must set their MVP

Manufacturers must work out the simplest shippable system? And an ‘Over-The-Air’ auto software update is an essential requirement.

Evolutionary Architecture

This is similar to the MVP. But it is actually more important. Tesla ship auto software that’s incomplete, but is continuously evolving. VW ship auto software that sits in the vehicle for a year before an update. That approach is last generation.

Leverage Cloud Native services

The lack of OTA auto software updates implies that there is a low-level system of work that is not complete. Are there any parts of their auto software system that they “didn’t need to build”? Could they have rented those parts from the cloud?

Integration is hard

I bet that VW used old school integration as opposed to flexible eventing. Old school integration with 14 vendors is never going to happen smoothly. Could more of their development be in-house? 

Change the whole system

Did VW treat software as an equal partner with the mechanical system. Or was auto software treated as a peripheral? I’m not sure. But I do now that it’s tough to design systems in silos.

I am sure it’s not all down to software. We should applaud VW for launching a significant and ambitious project. This is not a multi-billion software error. But the article suggests that “software issues” were a problem.

Let’s be clear; software is never the problem. The approach to writing the software is always the problem.

Would Serverless have saved the day?

If the entire approach was Serverless-First, surely this would have saved the day? Maybe. If VW has used a serverless approach what issues would they have highlighted earlier?

Clear business KPIs

They would have measured connectivity, driver safety, diagnostics from day one. And customer satisfaction would have been a KPI also.

Fast feedback loops

Good software delivery means proving that critical KPIs are being met continually. They would have been able to flag “bad software” early.

Observability with telematics

The software system should be visualised early and initially, This tests “the concept” and unifies understanding. Ultimately it evolves into live insights to the system.

Single team

Even if sub-components are outsourced, you need one team to stand over the whole system. Establishing that responsibility will result in the ultimate feedback loop and flag a red project status early. 

What is the ultimate impact?

Fortunately for VW, they moved beyond this quickly. And we will forget about this auto software issue. Only a few vehicle owners will feel peeved. Because they bought their cars pre-launch, they are probably VW super-fans.

VW wasted a few billion dollars and an exec gets a wrap on the knuckles. Tesla delight in the press:“Volkswagen, a rocky $50B EV bet, and the bid to chase Tesla’s software prowess“. Simultaneously, the plans for an all-encompassing electric car platform in the cloud by VW (“How Volkswagen Automotive Cloud will help shape the connected car of tomorrow”) are still in place. And it will be successful. VW sideline the issues described as hiccups.

The real issue is future competition. Could a newcomer challenge Tesla? Like many industries, the auto industry is ripe for software disruption. If VW have struggled with software transformation, how will the other manufacturers cope?

Either way you need a fundamental mindset change when the software is at the heart of your product.

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