Volkswagen Could End Automated Driving Alliance with Bosch Over Lack of Progress

In a further sign of aggressive fiscal discipline, German automotive giant Volkswagen plans to terminate its strategic automated driving partnership with leading tier-one component supplier Bosch. According to a newspaper report which cited multiple internal sources, the move to end the high-profile alliance is part of a broader corporate push to cut internal overheads, reduce development redundancies, and bolster global competitiveness amid severe market pressures.

The autonomous driving joint venture was officially formed in 2022, leveraging Volkswagen’s specialised software subsidiary, Cariad, alongside Bosch’s extensive engineering divisions. The primary objective of the alliance was to co-develop cutting-edge driver assistance modules and fully autonomous driving software that could be scaled globally across Volkswagen’s extensive multi-brand automotive portfolio. However, despite a cumulative capital injection of approximately €1.5 billion into the joint venture since its inception, the project has reportedly failed to meet critical internal benchmarks.

Internal company assessments conducted by Volkswagen engineers allegedly concluded that the jointly developed technology was simply not competitive compared to current global market standards. Insiders highlighted a substantial development gap between Volkswagen’s tech stack and its competitors, particularly regarding advanced ‘Level 2++’ semi-autonomous driver systems, which enable hands-free navigation in dense city traffic. Consequently, executive leadership decided to dissolve the partnership under its established contractual terms, with the official termination of the collaboration slated to take effect no earlier than late June 2026.

To bridge its technological deficit and accelerate the rollout of competitive semi-autonomous vehicles, Volkswagen plans to shift away from long-term, in-house foundational development. Instead, the automaker intends to directly source both hardware and software systems from an external technology supplier. The company is already in the process of vetting alternative suppliers, with the goal of finalizing and signing a new engineering contract by September 2026. 

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