As part of its plan to transform itself into a digital services-driven company, Volkswagen has announced a partnership with Microsoft to develop the Volkswagen Automotive Cloud.

Looking beyond electric cars and autonomous technology, the German automaker’s ambition is to create a seamless experience for drivers from the moment they enter, use, and leave their vehicles.

From continuing to listen to the same music as they enter the driver’s seat, to making calls and checking calendar appointments, the Volkswagen Automotive Cloud aims to combine popular third-party applications into a smooth, unified experience. Combining different applications to come together in a user-friendly manner is a challenge, which is where the partnership with Microsoft comes into play.

“The strategic partnership with Microsoft will turbocharge our digital transformation,” says Dr. Herbert Diess, CEO of Volkswagen AG. “Volkswagen, as one of the world’s largest automakers, and Microsoft, with its unique technological expertise, are outstandingly well-matched. Together, we will play a key role in shaping the future of auto-mobility.”

The power of the cloud

The Volkswagen Automotive Cloud will be created from scratch, powered by Mirosoft’s Azure cloud and IoT Edge platform. Microsoft cloud services such as Azure IoT, PowerBI and Skype will be at the forefront of the user experience, which include telematics and productivity solutions.

In turn, thanks to its own dedicated cloud, Volkswagen will be able to leverage consistent mobility services across its entire brand portfolio. From 2020 onwards, more than 5 million new Volkswagen brand vehicles per year will be fully connected, and will be part of the IoT cloud.

The partnership between both companies will lay the foundation for combining the global cloud expertise of Microsoft, with the experience of Volkswagen as an automaker with a global market presence.

“Volkswagen is harnessing technology to digitally transform and deliver innovative new connected car services to its customers,” said Satya Nadella, CEO of Microsoft. “The world’s leading companies run on Azure, and we are thrilled that Volkswagen has chosen Microsoft. Together we will reimagine the driving experience for people everywhere.”

Using the Volkswagen Automotive Cloud, Volkswagen will significantly optimise the connections between its vehicles, cloud-based platform, and customer-centric services for all brands, such as the “Volkswagen We” ecosystem.

The Volkswagen Automotive Cloud will also allow Volkswagen to leverage consistent mobility services across its entire portfolio, providing new services and solutions such as in-car consumer experiences, telematics, and the ability to securely connect data between the car and the cloud.

In the future, the solutions developed through this partnership will be rolled out to other Volkswagen Group brands in all regions of the world, building the foundation for all customer-centric services of the brands. This includes the Volkswagen ID. electric family as well as conventionally-powered models. The end goal is a future fleet of cars which will behave as mobile ‘internet of things’ hubs, linked by Microsoft Azure.

Working with neighbours

As part of the partnership, Volkswagen will establish a new automotive cloud development office in the US, close to Microsoft’s headquarters in Redmond. Microsoft will provide hands-on support to Volkswagen as it ramps up its new office, including assistance in the hiring process, human resources management, and consulting services. The workforce is expected to reach around 300 engineers in the near future.

In addition, Volkswagen developers and engineers will be able to benefit from Microsoft’s cloud expertise across its organisation, learning valuable insights through collaboration, while ensuring that the development process remains agile. Beyond Microsoft’s technical expertise, Volkswagen is also looking to learn from the company’s culture and transformation experiences.

“We came to the conclusion that we needed to change in a revolutionary way,” says Heiko Huettel, head of connected car for the Volkswagen Group. “We want to leverage what we can from Microsoft’s culture and Microsoft’s technology. We want to be the Microsoft of the automotive industry, in terms of being seen as the company that made a digital transformation and is really perceived as one of the digital players in the market.”

The future

Ultimately, this new partnership will help Volkswagen transform itself into a software-driven company which can directly connect with its consumers and customers, offering various services in multiple ways.

From pushing out software updates directly to vehicles to provide new functionality, or allowing customers to purchase services via their cars or mobile apps, this transformation ushers in a new era for Volkswagen Group’s 12 brands and 640,000 global employees.

Dee Templeton, Microsoft’s product lead on the partnership, states that “We want to help Volkswagen meet its bold ambitions for its future, and what we can offer is pretty unique in terms of showing them how Microsoft transformed its own culture and how we have embraced transformation holistically. It’s not just about software. Leveraging our expertise and our decades-old heritage in developing software from the bottom up is another reason partnering with Microsoft was so important to them.

“This will be a deep and multifaceted partnership that involves developing software that leverages the best the cloud can offer and most importantly, one that fosters a ‘one team’ culture to make it a reality.”

CES 2020