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Achtung Tesla! German Automakers Try To Compete With Elon Musk

Volkswagen and other German car companies want to develop their own software systems and thus close the e-car technology gap with Tesla. But success will depend on a cultural change in the established auto sector.

Elon Musk trying out a brand new VW
Elon Musk trying out a brand new VW
Daniel Zwick

INGOLSTADT — It's all systems go in Ingolstadt, where Volkswagen has invested billions of dollars in setting up a new subsidiary. The plan is for the organization Car.Software to soon employ 10,000 people and become the "second largest software company in Europe, after SAP," according to CEO Herbert Diess.

The subsidiary's main aim is for in-house programmers to develop a single operating system for all VW cars, the automotive equivalent of Apple's iOS, used across all its smartphones. Diess also believes the system could be sold to competitors.

It's a nice idea, but it's still unclear whether traditional manufacturers such as Volkswagen, BMW or Daimler are capable of developing the best operating systems for modern cars. And it's make or break: After battery technology, this software is the next most important criterion for future success.

But so far their efforts in this area have been far from impressive. There are already competitors who are years ahead when it comes to building computers on four wheels. And not only Tesla, the favorite of so many electric car enthusiasts. There are new suppliers springing up in its shadow, which have the potential to shake up the industry.

One of them is the start-up Apex.AI, founded by the German Jan Becker in Palo Alto, the heart of California's Silicon Valley. Becker has dedicated the past two decades of his life to developing self-driving cars: He has worked at the supplier Bosch, at Stanford University with pioneering computer scientist Sebastian Thrun, and at the American start-up Faraday Future.

Now Becker's own company has achieved what has long stumped the developers at Volkswagen: a single operating system for cars. "Our system is ready for use," says Becker. "Apex.OS is a complete software system for cars." It is now awaiting certification through the German auditing and certification service TÜV.

Once it has the official seal of approval, Becker plans to offer his operating system to manufacturers as a "white-label" product. "The customer won't necessarily know that their car uses Apex.OS," he says. They will only see the manufacturer's logo on their car's screen.

Established suppliers also want a piece of the pie.

This is similar to how the rest of the car is made: The manufacturer assembles it from a wide range of components made by specialist suppliers. As Daimler chairman Ola Källenius said in February, they don't aim to make every part themselves. "But we conduct the orchestra."

By the end of its own development process, Mercedes-Benz aims to have created a system called MB.OS that will support all the vehicle's functions — even the user interface MBUX, which already allows drivers to control a number of functions through voice commands.

The single operating system should allow the German manufacturer to close the gap on Tesla. At the moment, their cars have hundreds of programs running, and every component is controlled through its own computers and programming languages. This makes it almost impossible to have automatic updates for different functions, or to adapt this system to self-driving cars.

Apex CEO Becker describes it as a "tangle of different software." By contrast, his system would "read the data from all the sensors in the car, process them in real time and issue the necessary commands."

The start-up is breaking into a market where established suppliers also want a piece of the pie. Continental, for example, has set up a new department called "Autonomous Mobility." CEO Nikolai Setzer believes the market will "more than double in the next three years." Industry giants Bosch and ZF also plan to develop car software in the future.

Demand is high. Even with this new software subsidiary, in the long term Volkswagen still expects to source 40% of its programs externally. At the moment that figure is 90%. BMW is also turning to external experts, although the company already employs more than 10,000 of its own programmers and software engineers.

BMW iDrive 8 operating system — Photo: BMW blog

"I would say that, with the external suppliers, we have around twice as many engineers contributing to our system," says head of development Frank Weber in Munich.

The new operating system BMW OS 8, which will be launched this year with the flagship electric car iX, is made up of thousands of individual software components, put together in Munich. "It doesn't make sense to develop these things ourselves when they are already standard in the industry," says Weber. "Our team controls the overall architecture."

In the future, the programmers will take on a larger role in product development. The main advantage of Tesla's cars is that they are built with the driver's experience in mind, going from the starting point of the software — how the product is used — to the hardware, the physical components. In German cars, it's the other way round.

The culture of the car manufacturing is bumping up against software development culture.

To change this, the companies will have to change themselves. Car manufacturers are at a crossroads, says Frank Ferchau, managing partner at ABLE Group, which provides engineering and IT services to all the major German car brands. "The culture of the car manufacturing industry is bumping up against the software development culture, and the two don't go together," he says.

For example, for many in the car industry it is unimaginable for someone to take on a single project as a consultant, rather than wanting a permanent contract, but in the IT sector that is standard practice.

Companies are meeting the software experts halfway. The programmers at VW's Software.Org don't necessarily have to work in Ingolstadt. There are other bases in trendier cities. The same is true of BMW, Daimler and the suppliers. Programmers who want to work from California can do so.

It's not only the culture of presenteeism that has to change. "A car company like Tesla, which is set up like a software company, doesn't work in product cycles of several years. It uses a process of continual improvements," says Becker.

It would be a huge step for the old car manufacturers to transform themselves into software companies. "Not every company will succeed."

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Look At This Crap! The "Enshittification" Theory Of Why The Internet Is Broken

The term was coined by journalist Cory Doctorow to explain the fatal drift of major Internet platforms: if they were ever useful and user-friendly, they will inevitably end up being odious.

A photo of hands holding onto a smartphone

A person holding their smartphone

Gilles Lambert/ZUMA
Manuel Ligero


The universe tends toward chaos. Ultimately, everything degenerates. These immutable laws are even more true of the Internet.

In the case of media platforms, everything you once thought was a good service will, sooner or later, disgust you. This trend has been given a name: enshittification. The term was coined by Canadian blogger and journalist Cory Doctorow to explain the inevitable drift of technological giants toward... well.

The explanation is in line with the most basic tenets of Marxism. All digital companies have investors (essentially the bourgeoisie, people who don't perform any work and take the lion's share of the profits), and these investors want to see the percentage of their gains grow year after year. This pushes companies to make decisions that affect the service they provide to their customers. Although they don't do it unwillingly, quite the opposite.

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Annoying customers is just another part of the business plan. Look at Netflix, for example. The streaming giant has long been riddling how to monetize shared Netflix accounts. Option 1: adding a premium option to its regular price. Next, it asked for verification through text messages. After that, it considered raising the total subscription price. It also mulled adding advertising to the mix, and so on. These endless maneuvers irritated its audience, even as the company has been unable to decide which way it wants to go. So, slowly but surely, we see it drifting toward enshittification.

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