VW Digitization Effort to Leverage Microsoft Azure

Volkswagen links up with software and electronics giant Microsoft to accelerate the German automaker’s digital transformation.

“Volkswagen, as one of the world’s largest automakers, and Microsoft, with its unique technological expertise, are outstandingly well-matched,” says Volkswagen CEO Herbert Diess. “Together, we will play a key role in shaping the future of (automotive) mobility.”

VW and Redmond, WA-based Microsoft will codevelop the Volkswagen Automotive Cloud, which the companies expect to be one of the automotive industry’s largest dedicated cloud computing platforms It will be the gateway to all future digital services and mobility services offerings from the automaker.

VW is investing $4.1 billion (€3.5 billion) through 2025 into a corporate-wide digitization plan, generously fueled by acquisitions and partnerships such as the Microsoft tie-up.

The digitization effort, which other automakers such as Daimler also are pursuing, is meant to support an industry transitioning from building vehicles to offering a full suite of digitally driven mobility services products, including car sharing and ride hailing. The new landscape also includes autonomous and electric vehicles, the latter of which VW aggressively is pursuing after its Dieselgate emissions-cheating scandal.

The automaker says beginning in 2020 more than 5 million new VW-branded vehicles annually will be connected and part of the Internet of Things in a cloud built off Microsoft’s Azure platform and its Azure IoT Edge service.

The VW stable of brands – including Audi, Porsche, SEAT, Bentley, Bugatti, Lamborghini and Skoda – will have access to the Volkswagen Automotive Cloud where consumer-centric VW services such as Volkswagen We will reside. Volkswagen We is the automaker’s platform for services such as We Deliver, a mobile package-delivery app, and We Park, a mobile parking app.

In-car experiences, telematics and vehicle data also will reside in the VW cloud.

To support the development, VW will establish a North American office near Microsoft’s headquarters with a workforce expected to grow to 300 engineers soon. Reflecting the enormous shift occurring within the historically insular auto industry, VW says it plans to study and emulate Microsoft’s collaborative and agile culture as the partnership goes forward.

The partnership is expected to grow Microsoft’s share of corporate cloud-computing customers, a market where it trails tech-industry leader Amazon.