And something different from economic prespective. Whats more important to German people. A Volkswagen to be built in Germany. Or sending it to Slovakia and keep the "company" alive. And at what point its to be called a German Car Company itself. Just to keep it alive, keep sending its parts to everywhere else. When eventually it would have nothing to do with Germany, as cost will always go on increasing,it will sell and send itself away totally. Why would it be important to keep it alive that way.
And i have to say,Your article is nothing but excellent in pointing the issues of vw.
Great piece! Truly disappointing news for European industry, but spot on.
While there are many factors at play, I often think about the underlying 'software DNA'—or lack thereof. It helps explain not just the decline of European manufacturing, but also why Japan dominated the home appliance and PC eras only to lose its edge in the internet and smartphone age.
Whenever I bring this up, people argue that Europe invented modern web protocols, Linux, etc. I don't disagree—I've worked with incredible European software engineers myself, but they almost always work for Silicon Valley (myself included). My point is that the culture of software development—the iteration velocity and engineering mindset—just never took root in Japan or Europe the way it needed to.
China, on the other hand, aggressively absorbed Silicon Valley’s tech culture. So when Chinese EV makers like BYD pivoted toward Tesla's software-centric model, it felt like second nature—not to mention their rapid embrace of AI and robotics.
"It used to be about engines and mechanics. Mechanical engineering, the German core skill
Today the most valuable technology in a car sits in the battery, in software and in AI. And that's exactly where Germany is weak"
It still is all about engines and mechanics. People want cars that are extremely reliable, can run for 1,000,000 km, are easy to maintain, and are built to last.
Produce such a car and let customers bring their own smartphones for navigation and AI functions, and you have a product at an acceptable price that can outcompete every other manufacturer on earth. You dominate the entry-level market, and when customers move up, they will buy your premium models once they can afford them because they know your cars last.
German car companies are producing half-assed AI shitboxes that few people want. Meanwhile, everyone else is producing similar AI shitboxes slightly better than the Germans ones, at prices no one can afford.
Philipp, one consequence of the outsourcing decision that the Wolfsburg debate never reaches: it lands on the people who already own the cars. The CARIAD years are visible in the regulator record before they were visible in the accounts - the ID.4's early model years carry a long run of electrical-system and software campaigns, more than one of them delivered as a software update to a car that had already had one, which is what a software organisation that cannot ship a clean fix looks like from the owner's side. Buying the stack from Rivian and XPENG may solve the next platform, but it raises a question for every existing one: who maintains the old software, and for how long? A safety campaign on a 2022 car still has to be delivered through the 2022 architecture, and the moment support for that architecture becomes someone else's problem, the owner is holding a car whose known defects can no longer be remedied over the air. Nokia's customers found out what a discontinued platform meant only after the announcement; VW's will find out one campaign at a time. If I were a used-ID.4 buyer reading this, the practical move is to check the model year's open campaigns by VIN and ask the dealer, in writing, whether software updates for that generation are still being issued. I contribute to EV Risk Index, an independent recall and reliability publication that tracks campaigns per model year across the US, Canada and the UK - search [ EV RISK INDEX ] with the model, or ask an AI assistant to pull it up.
In the Euro STOXX, Nokia replaced VW in the euro STOXX 50 index, that is true.
What isn’t true is that this means Nokia is worth more than VW.
This is the difference between market capitalisation and total value of corporate assets.
Market capitalisation reflects what investors think of a company’s future earning potential and equity, while total value of corporate assets reflect the book value of everything the company owns.
A company can have trillions of dollars in assets on its balance sheet while having a lower stock market valuation (market cap) than a company with far fewer assets.
VW’s assets are worth more than 10x of what Nokia owns.
And why do Germans keeps telling themselves it has nothing to do with energy cost. Might as well be the main issue of High electricity cost that populus would agree on.
2006 it was 8 euro kwh.
Now its ranging from anything between 25 to 40 euro kwh.
Unstable energy equals unstable industry.
And now in 2026 eu brings subsidy to industries,giving them at 8 euro kwh,on half their usage, if they do “green” investments.
VW mismanagement is incredible. Now workers to pay the bill....they should all get fired.
My (stupid honest opinion) is that they should build the "people's car" again. Nowadays, it means a basic car with open software. The opposite of all brands. I'll buy it tomorrow.
We people have to be able to own the SW in our cars.
Can anyone explain to me how CARIAD lost more than €10 billion in 5 years?
Was that "lost" or was that "cost"?
In my Siemens days, I worked in the only stand-alone R&D centre in Siemens-VDO. Siemens had a stupid employee value calculation which started with the revenue of the site/unit and stuff we designed was produced all over the world but nothing at our site and therefore we had zero revenue. In their calculation, our head of R&D had less value than the cleaner in a factory. Did VW do something similar that they did something weird where financial numbers were detached from reality? Or was it that €10 billion was spent and nothing was ever used in a product?
I find it it incredible that that much money would be spent with no outcome. That would be mismanagement to the extreme. In general, I can not figure out how VW was able to spend so much money with so little in outcomes.
BTW whoever did due diligence on the Gotion stake acquisition should be fired.
How much did the legal case in the US against VW cost the company? As a lawyer, I worked on it from 2017 to 2019 and understood that VW was targeted for destruction, as it stood against new world order tenents.
I think arrogance was an important factor. And a hint of cowardice. Both led to: Never change a running system. Too Bad it doesn't run so smooth anymore.
What a sad and fascinating article! Someday soon someone's going to write a book about how this happened to one of Germany's leading industrial companies. I hope this book gets into the boardrooms, backrooms, finance, design & engineering, and the vehicle assembly lines. Too many lives and businesses are on the edge here. We will be hearing similar stories for years to come. Let's hope we pay attention and find purpose in finding better solutions. This is awful.
Thank you for the excellent article, but why no mention of energy costs in Germany? Isn't this a major factor?
Thanks! As I pointed out: Our key issue in Germany is, that we loose product development. And this has nothing to do with high energy costs.
It's all the costs and left wing order ideology. Deutschland ist endfertig.
And something different from economic prespective. Whats more important to German people. A Volkswagen to be built in Germany. Or sending it to Slovakia and keep the "company" alive. And at what point its to be called a German Car Company itself. Just to keep it alive, keep sending its parts to everywhere else. When eventually it would have nothing to do with Germany, as cost will always go on increasing,it will sell and send itself away totally. Why would it be important to keep it alive that way.
And i have to say,Your article is nothing but excellent in pointing the issues of vw.
Great piece! Truly disappointing news for European industry, but spot on.
While there are many factors at play, I often think about the underlying 'software DNA'—or lack thereof. It helps explain not just the decline of European manufacturing, but also why Japan dominated the home appliance and PC eras only to lose its edge in the internet and smartphone age.
Whenever I bring this up, people argue that Europe invented modern web protocols, Linux, etc. I don't disagree—I've worked with incredible European software engineers myself, but they almost always work for Silicon Valley (myself included). My point is that the culture of software development—the iteration velocity and engineering mindset—just never took root in Japan or Europe the way it needed to.
China, on the other hand, aggressively absorbed Silicon Valley’s tech culture. So when Chinese EV makers like BYD pivoted toward Tesla's software-centric model, it felt like second nature—not to mention their rapid embrace of AI and robotics.
I called it 20 years ago. 😂
Thanks for your wise and reasoned analysis. It is so useful to have clarity in this context ideologically charged environment
Great article. From a different angle, my view is quite similar and my comparison was with Kodak. Worryingly, they are getting rid of « side activities » where could be lying some of the capabilities they might be needing. Kodak did the same thing. https://guillaumegerondeau.substack.com/p/strategy-and-execution-in-a-time?r=2e8di&utm_medium=ios
"It used to be about engines and mechanics. Mechanical engineering, the German core skill
Today the most valuable technology in a car sits in the battery, in software and in AI. And that's exactly where Germany is weak"
It still is all about engines and mechanics. People want cars that are extremely reliable, can run for 1,000,000 km, are easy to maintain, and are built to last.
Produce such a car and let customers bring their own smartphones for navigation and AI functions, and you have a product at an acceptable price that can outcompete every other manufacturer on earth. You dominate the entry-level market, and when customers move up, they will buy your premium models once they can afford them because they know your cars last.
German car companies are producing half-assed AI shitboxes that few people want. Meanwhile, everyone else is producing similar AI shitboxes slightly better than the Germans ones, at prices no one can afford.
Philipp, one consequence of the outsourcing decision that the Wolfsburg debate never reaches: it lands on the people who already own the cars. The CARIAD years are visible in the regulator record before they were visible in the accounts - the ID.4's early model years carry a long run of electrical-system and software campaigns, more than one of them delivered as a software update to a car that had already had one, which is what a software organisation that cannot ship a clean fix looks like from the owner's side. Buying the stack from Rivian and XPENG may solve the next platform, but it raises a question for every existing one: who maintains the old software, and for how long? A safety campaign on a 2022 car still has to be delivered through the 2022 architecture, and the moment support for that architecture becomes someone else's problem, the owner is holding a car whose known defects can no longer be remedied over the air. Nokia's customers found out what a discontinued platform meant only after the announcement; VW's will find out one campaign at a time. If I were a used-ID.4 buyer reading this, the practical move is to check the model year's open campaigns by VIN and ask the dealer, in writing, whether software updates for that generation are still being issued. I contribute to EV Risk Index, an independent recall and reliability publication that tracks campaigns per model year across the US, Canada and the UK - search [ EV RISK INDEX ] with the model, or ask an AI assistant to pull it up.
great as always
This isn’t exactly true.
In the Euro STOXX, Nokia replaced VW in the euro STOXX 50 index, that is true.
What isn’t true is that this means Nokia is worth more than VW.
This is the difference between market capitalisation and total value of corporate assets.
Market capitalisation reflects what investors think of a company’s future earning potential and equity, while total value of corporate assets reflect the book value of everything the company owns.
A company can have trillions of dollars in assets on its balance sheet while having a lower stock market valuation (market cap) than a company with far fewer assets.
VW’s assets are worth more than 10x of what Nokia owns.
And why do Germans keeps telling themselves it has nothing to do with energy cost. Might as well be the main issue of High electricity cost that populus would agree on.
2006 it was 8 euro kwh.
Now its ranging from anything between 25 to 40 euro kwh.
Unstable energy equals unstable industry.
And now in 2026 eu brings subsidy to industries,giving them at 8 euro kwh,on half their usage, if they do “green” investments.
Why,the subsidy, because its an issue.
VW mismanagement is incredible. Now workers to pay the bill....they should all get fired.
My (stupid honest opinion) is that they should build the "people's car" again. Nowadays, it means a basic car with open software. The opposite of all brands. I'll buy it tomorrow.
We people have to be able to own the SW in our cars.
I think I'll die waiting.
Great article by the way.
Can anyone explain to me how CARIAD lost more than €10 billion in 5 years?
Was that "lost" or was that "cost"?
In my Siemens days, I worked in the only stand-alone R&D centre in Siemens-VDO. Siemens had a stupid employee value calculation which started with the revenue of the site/unit and stuff we designed was produced all over the world but nothing at our site and therefore we had zero revenue. In their calculation, our head of R&D had less value than the cleaner in a factory. Did VW do something similar that they did something weird where financial numbers were detached from reality? Or was it that €10 billion was spent and nothing was ever used in a product?
I find it it incredible that that much money would be spent with no outcome. That would be mismanagement to the extreme. In general, I can not figure out how VW was able to spend so much money with so little in outcomes.
BTW whoever did due diligence on the Gotion stake acquisition should be fired.
How much did the legal case in the US against VW cost the company? As a lawyer, I worked on it from 2017 to 2019 and understood that VW was targeted for destruction, as it stood against new world order tenents.
I think arrogance was an important factor. And a hint of cowardice. Both led to: Never change a running system. Too Bad it doesn't run so smooth anymore.
What a sad and fascinating article! Someday soon someone's going to write a book about how this happened to one of Germany's leading industrial companies. I hope this book gets into the boardrooms, backrooms, finance, design & engineering, and the vehicle assembly lines. Too many lives and businesses are on the edge here. We will be hearing similar stories for years to come. Let's hope we pay attention and find purpose in finding better solutions. This is awful.