How will Audi reimagine itself in a software-led era?

'Vorsprung durch Technik' is one of the most enduring marketing slogans in the automotive industry – and one that has truly given expression to Audi’s focus. It was first used in 1971 to showcase the technical diversity of the NSU range, then encompassing water-cooled front-drive, air-cooled rear-drive and rotary-engined models. But it really came into vogue in the 1980s with the radical Audi Quattro. At one point, the slogan was featured on the largest illuminated advert in Europe. For the past few years, though, Audi has been more sparing in its use of Vorsprung durch Technik, with the focus on grappling with the advent of electrification and the need to reduce carbon emissions. Expect that to change, according to Gernot Döllner, Audi’s new CEO and chairman. “I grew up with Vorsprung durch Technik,” he said, “but in the last few years, with not having [new] products, it was not the right time to talk about it. But this is still the core of the brand.” That said, Döllner believes Audi needs to find “a new interpretation” of the slogan for a new era, with a focus on technology “that helps people”. In Döllner’s view, ‘vorsprung’ is about innovation as much as technology and hardware, and there’s a real focus on software. “Thanks to shorter development times, we would like to demonstrate our Vorsprung durch Technik more clearly again,” he added. “At the same time, we are working on a paradigm shift towards the software-designed vehicle. Software will be the leading element in the development of future vehicles, with all other processes oriented towards it.” That shift to software could well come to define Döllner’s time at the helm of Audi - and it has certainly been the most pressing issue that he has had to address since starting his role last September. Formerly the Volkswagen Group's strategy boss after a long stint at Porsche, Döllner was appointed by Group chairman Oliver Blume in tough circumstances. He was brought in to replace Markus Duesmann, who was reportedly sacked because of numerous delays to the Q6 E-tron, the first Audi model to sit on the new Premium Performance Electric (PPE) platform and use the new E3 software architecture developed by Audi and Cariad, the Volkswagen Group’s software arm. The PPE platform and the E3 architecture are intended to underpin a whole range of models from not just Audi but the other premium and performance brands in the Volkswagen Group (Bentley, Lamborghini and Porsche), so its successful rollout was considered vital. But the Group has clearly faced huge challenges in adapting to a software-led development progress. The delays with the E3 system (which affected the Porsche Macan Electric as well) followed numerous software issues with the early wave of mainstream Volkswagen EVs based on the MEB platform. Döllner acknowledges that the firm set “very ambitious targets” for both the hardware and software platforms, which he says were intended to take “digitalisation to the next level”. He said the decision to delay the Q6 E-tron was because “quality and maximising customer benefits was our focus”. As software becomes increasingly important in modern cars, several manufacturers have tried to reimagine themselves as ‘software firms’, only to find that developing code is a very different challenge from building cars. That’s to be expected - and you only need to look at the efforts of firms such as Apple to realise that it’s even harder for a tech company to learn how to build cars. Döllner insisted that the software delays weren’t “a Cariad topic but a Volkswagen Group topic”. He added: “We put a lot of emphasis on optimising the way we develop software and products. We have worked a lot to smooth the processes and cooperation [within the Group].” The delays have clearly been frustrating, but Döllner believes that the efforts to develop the E3 system will be worth it, given the customisation options for customers and the ability to offer greater over-the-air updates in future. And he is adamant that this situation won’t happen again. “We learned our lesson,” he said candidly. “In the history of car development, there have been other companies and groups struggling with huge changes in electrics and electronics. To be honest, we underestimated the complexity of the network that we chose and the lines of code necessary for all the functionality we planned for. That took some time, and we learned our lesson and now have this architecture under control. The cars will prove it on the street.” Audi and Cariad have also reworked their development processes, said Döllner: “We tried to do innovation and scale at the same time, so we put too many cars on that architecture too fast. In the future, we will separate innovation from scaling. The next generation will be developed in a protected room, and once we are sure that it's stable, then we think about scaling in terms of both functions and other vehicles and derivatives.” Still, Döllner is adamant that Audi will continue to put software first in future - and that means fundamental changes to the way cars are developed. “Right now, one of the latest functions that comes to the car is the over-the-air functionality. But now the first function we implement on the cars is the software to allow OTA," he said. "From there on, every car will be updatable, in production, in aftersales and so on – that's a paradigm shift.” The focus on software is particularly pressing as Audi faces increased competition from tech-focused Chinese rivals. Döllner noted that the switch to electric in China is slower in the country’s premium segment, saying: “That surprised us, but the big dynamic is definitely in small and very small segments. In the premium segment, we still see huge demand for combustion and plug-in hybrids.” Audi is having to focus on connectivity and the in-cabin experience to win over tech-hungry Chinese buyers. That means working with Chinese companies to use locally produced infotainment software for the cars Audi and its joint ventures sells in those markets. “It makes sense to rely on the Chinese ecosystem for functions such as HD maps,” said Döllner. “The key is the back end and having partnerships to connect with the Chinese ecosystems. “That’s tough, and to be honest, in the past decades we really didn't manage to to integrate Chinese software properly in our vehicles. We are catching up, and that will get better. "We have the same challenges that the Chinese competition has coming to Europe. If you’ve ever driven a Chinese car in China and then in Europe, it seems to be a different product.” It might have been a tough path getting there, but Döllner is adamant that software is key to the future of the automotive industry – and in the long run, you wonder if Audi and the wider Group will benefit from facing such challenges at this stage. Technology has always taken time to develop: the Quattro first competed in the World Rally Championship in 1980, but it took until 1981 to win an event, and it was another two years before an Audi driver claimed the WRC title. But Audi’s continued pursuit of that revolutionary technology transformed the brand – and exemplified Vorsprung durch Technik. And with new technological challenges to master (albeit software, rather than hardware), it’s time to reassert those values back at the heart of the brand.