Volkswagen Group's surprise announcement that it will team with Bosch to develop self-driving software can be seen as something of a strategic retreat.
After launching its own software unit, Cariad, just 18 months ago, VW appears to be admitting that it needs the expertise of partners to produce the incredibly complicated software stacks needed for advanced driving assistance and, eventually, full self-driving cars.
"We are acquiring the IP and capabilities to design our own software," VW CEO Herbert Diess wrote on LinkedIn on Tuesday, calling it an "important milestone."
Cariad was originally launched as an agile, stand-alone unit, but Diess himself said last year that VW was "always open" to discussions about partnering on software and other technology.
Expertise from Bosch, the world's largest automotive supplier, will help VW close what even it acknowledges is a gap to its main competitors, including Tesla.
An announcement in December by Mercedes-Benz that it had received approval for SAE Level 3 – meaning true hands-free driving on certain roads – only served to emphasize that VW's much-promoted embedded Level 3 function on the Audi A8 never received approval to be deployed.
And the Audi-led Artemis project, which aimed to bring to market by 2024 a fully digital passenger car capable of highly automated driving, has also stalled. That date has been pushed back to 2025, and a further blow came earlier this month when Porsche bought itself out of the project, saying it did not need the technology.
Stellantis, which just announced it will spend $23 billion on software, plans to introduce Level 3 self-driving in 2024, working in partnership with BMW to develop the technology. BMW, for its part, will roll out its own Level 3 autonomy technology starting this year with the next-generation 7 Series sedan.