VW ends alliance with Bosch: 1.5 billion euros lost in autonomous driving project

More than 1,000 specialists from both companies were to develop a shared software platform for driver assistance systems in order to later offer it to other manufacturers as well. Bosch and the VW software subsidiary Cariad had originally planned to unveil the new system by mid-2026. But according to Cariad's account, the market and technology had developed differently than expected at the start of the collaboration: "Insbesondere bei hoch entwickelten Assistenzsystemen hätten sich Markt und Technologie anders entwickelt als zu Beginn der Zusammenarbeit erwartet", a spokesperson stated.

Background: A billion-euro investment without success

The alliance is to be formally terminated no earlier than 29 June, according to the reports. By the end of September, a contract on cooperation with a new partner is to be in place. Volkswagen wants to purchase hardware and software for autonomous driving going forward, rather than developing it in-house. "Um Kosten zu senken und schneller Boden gutzumachen, wolle der Konzern nun Hard- und Software von einem neuen Partner einkaufen, anstatt sie selbst zu entwickeln", it was stated.

Cariad told the newspaper that the company regularly reviews its development partnerships in principle and continuously assesses whether they still fit its strategic goals. It did not comment on confidential discussions. No statement was initially available from Bosch.

Strategic shift: Buy-in instead of in-house development

The split comes as no surprise to the industry. Insiders had previously reported that the joint project was making too little progress and that VW's internal specialist departments classified the technology as uncompetitive. Particularly in so-called Level 2++, hands-off driving in city traffic, VW sees a substantial gap to the competition.

The exit from the alliance is part of a broad cost-cutting and restructuring strategy at Volkswagen. The group had only recently announced plans to cut up to 100,000 jobs. With the buy-in instead of in-house development, VW aims, according to the reports, both to reduce costs and to reach market-ready solutions more quickly. Competitive pressure, particularly from Chinese manufacturers, is regarded as considerable.

Outlook: What does this mean for autonomous driving at VW?

What this means for the original autonomous driving plans remains to be seen. Volkswagen had previously expected Level 3 driving to be available as standard in new cars from 2030. At Level 3, drivers can take their hands fully off the wheel in certain situations and only resume control when prompted.

Bosch development chief Mathias Pillin said in 2025 with confidence: "Wir beherrschen die Technologie für das automatisierte Fahren im europäischen Markt besser als andere." This assessment apparently no longer aligns with VW's evaluation.

The goal of the Automated Driving Alliance was to make autonomous driving affordable for lower-priced vehicle models as well. With the end of the cooperation, VW temporarily loses this scaling strategy and, in its search for a future partner, is dependent on a previously unknown provider.

Overall, the move shows just how difficult and costly the development of autonomous driving functions is. By buying from an external provider, VW is consciously accepting a dependency in order not to fall further behind in international competition. The final signing of the contract with the new partner is scheduled for September.