Volvo intensifies push to develop software in-house

Volvo will add its third technology hub in roughly a year as CEO Jim Rowan makes in-house software development a top priority.

"I'm driving this hard," Rowan told Automotive News Europe. "The big differentiators as we move toward next-generation mobility are software and silicon."

He said one of his key jobs as Volvo CEO is to decide "what do we build and what do we buy."

Volvo will buy silicon, or microchips, from specialists such as Nvidia and Qualcomm, while "software is at the very epicenter of what we build."

Buying software left Volvo "beholden" to its suppliers, Rowan told Automotive News Europe in a separate interview last year. While developing software in-house "makes a huge difference for us both in terms of the cost, but more importantly in terms of the control."

Having this expertise means that Volvo does not need to make the lidar, radars, cameras and sensors that will partially or fully drive its future models.

"We just need to understand how we stitch into them [via software]," he said. "That is a profound change."

The software that Volvo will develop in Krakow will be for the automaker's safety and advanced driver assistance systems, including its autonomous driving solutions, the automaker said Monday.

The new center will be operational by year-end, initially employing 120 people. Volvo aims to boost the Krakow location's headcount to 500 to 600 people by 2025.

Rapid expansion

Rowan said Monday that Krakow was chosen ahead of about a dozen other cities because it has a "burgeoning software scene," giving the company the ability to quintuple its headcount in the next two years.

Along with access to talent, Krakow is an affordable place to live. Consumer prices including rents in Krakow are 34 percent lower than in Volvo's hometown, Gothenburg, according to the website numbeo.com.

Many of the software engineers Volvo aims to add in Krakow have worked in the country's telecom sector, "which gives you the connectivity piece as well as those basic software skills around RF (radio frequency engineering),” Rowan added.

Volvo signaled with the launch of the EX90 flagship electric SUV that its future will be built around full-electric cars that are increasingly sold online and powered by cutting-edge core computers.

To achieve that goal, the automaker also opened software development tech hubs in Bangalore, India, and Stockholm, Sweden, late last year. They work in conjunction with Volvo's existing tech hub in Lund, Sweden.

New role for Sunnyvale

The automaker's former tech hub in Sunnyvale, California, has been merged with the automaker's global commercial operation structure, according to the company. The focus for Sunnyvale, which is located in the heart of Silicon Valley, will be autonomous driving testing and verification.

Volvo said in January 2022 that it will make "unsupervised autonomous driving" available first to customers in the U.S. state of California before rolling it out in other markets.

When asked whether even more tech hubs will be added, Rowan declined to give a number.

Instead, he said that Volvo has a two-pronged approach. Locations such as Krakow and Bangalore allow the company to add a higher number of software engineers because the cost of living there is lower than locations such as Silicon Valley.

"Part of the issue with the valley is that there are a lot of people there looking for the same talent," he said. "Trying to scale up to the same size as Poland or India becomes difficult and very costly."

Consumer prices including rents in Sunnyvale are 172 percent higher than in Krakow and 364 percent higher than in Bangalore, according to numbeo.com.

However, Rowan did envision having smaller, specialized teams in essential locations such as Silicon Valley.

"You can really get thought leadership there," he said. "It's in a smaller number [than in Poland or India], but it's really precise in terms of the expertise it can bring to the company."

Two keys to success

For Volvo's software surge to succeed, Rowan said there are two keys: process and connectivity/cloud.

He said process means Volvo must have precise guidelines on how the hubs will work together.

"If a software hub is going to be dropping software into a car, they need to know when it needs to drop that software, what needs to be embedded and everything needs to be tested thoroughly before they deploy it," he said.

For Rowan, connectivity/cloud is about creating a continuous workflow.

"That means the guys in Bangalore can write code and then put that into the cloud at night and the guys at another hub can pull that down and keep working on the same code," he said. "Eventually, you get this really nice cadence of product development."