Volkswagen Scales Back Cariad’s Role, Turns to Rivian and Xpeng for Software Development

Volkswagen is scaling back its once-ambitious in-house software efforts, shifting its Cariad subsidiary into a coordination role as it leans on partners like Rivian and Xpeng for core vehicle software.

CEO Oliver Blume confirmed the change during the Auto x Software Summit of the Financial Times in Munich, describing the move as a radical change after years of costly delays and missed targets.

VW pivots from in-house coding to partnerships

Under the new strategy, Cariad will primarily integrate partner software rather than develop it from scratch. Volkswagen says the revamped Cariad will operate as a leaner unit focused on managing and updating existing platforms while incorporating architectures from external collaborators, notably Rivian in the United States and Xpeng in China. Despite VW’s insistence that the unit will still maintain “a high share” of internal development, most of its original engineering teams have been disbanded or absorbed into partner programs.

Cariad’s restructuring follows multiple setbacks under previous leadership, including years-long delays in launching the all-electric Porsche Macan and Audi Q6 e-tron. These vehicles now use software developed jointly with external partners, according to Heise Online. Blume defended the new approach, saying it enables VW to achieve economies of scale while accelerating digital innovation.

Analysts warn of growing reliance on partners

The overhaul of Cariad has reduced VW’s software autonomy but may help it regain competitiveness against Tesla and Chinese rivals. Cariad will continue developing key technologies in autonomous driving, infotainment, and cloud services while acting as a gatekeeper for third-party integration. However, analysts caution that Volkswagen’s reliance on Rivian, with more than $5 billion invested, could make the automaker overly dependent on U.S. and Chinese tech ecosystems.

Rivian is currently prioritizing software for its upcoming R2 SUV before focusing on VW’s next-generation platforms, while Xpeng’s technology is expected to underpin a new China-market EV by 2026. Volkswagen also plans to launch a €20,000 electric model built on Rivian’s architecture by 2027, signaling deeper cross-company collaboration in the years ahead.

EV.com tracks the evolving EV collector space and performance electric vehicles hitting the market. Explore our listings to find the best EVs in your area available today.