BriefCASE: Legacy to leapfrog? How the Rivian deal propels Volkswagen forward in the SDV race

Last month, Volkswagen made a big splash when it announced plans to invest up to $5 billion in Rivian Automotive until 2026 as part of a venture to share electric vehicle (EV) platforms and software. On paper the deal appears a win-win for both parties — one gets the much-needed cash infusion to boost operations and expansion, the other gets access to tried and tested software and electrical/electronic (E/E) architecture it has struggled to develop inhouse. However, will this partnership allow Volkswagen to leapfrog competitors in the EV race and build a sustainable business around the software-defined vehicle (SDV)?

Foremost, it should help Volkswagen deal with some of the legacy issues regarding software and vehicle platforms. The partnership is expected to accelerate the development of Volkswagen's SDV lineup and transition to a pure zonal architecture, which is foundational to the development of future SDVs.

Addressing legacy issues

Traditional original equipment manufacturers have struggled with the clean sheet changeover that SDVs will require owing to the OEMs' mix of propulsion choices and legacy platforms. The ability to lift-and-shift a ready-made architecture is extremely attractive to legacy automakers. According to Richard Dixon, senior principal analyst, E/E and Semi, S&P Global Mobility, Rivian's E/E architecture is built with a different approach to that of Volkswagen's, which is necessarily developed on a standing electronic control unit (ECU) and domain architecture that is not well suited to making a pure zone design.

"Rivian's approach is like Tesla's — its E/E architecture is designed from a clean sheet with one propulsion system in mind and very little legacy domain-based hardware. The first-generation R1 model has only 17 ECUs, wherein equivalent electric cars will have more than 60. R1's successor, R2, has only seven ECUs. There are three zones and four main domain controllers and only three ECUs. This is mostly attributed to a 'pure' zonal design where the domains and zones take a lot of management of local actuators, removing need for local controllers [ECUs]. This is different from some designs coming from established OEMs, which still carry some domain architectures and yet can't be free of that need to carry them over for reasons concerning cost of parts requalification, among others," said Dixon. For this reason, Rivian's hardware is better or on a par with many of its rivals (outside mainland China), he added.

According to Manuel Tagliavini, principal research analyst, Software, S&P Global Mobility, Rivian has extensively customized its automotive software stack to create a unique user interface while integrating specific functionalities tailored to its vehicles. This is seen in its unique UI/UX theming and other custom applications aimed at delivering a branded user experience.

"Rivian was able to develop a unified approach for its software architecture, which is a single software stack that runs across all the vehicle systems, merging the functions of multiple ECUs. This allows for a more efficient and flexible deployment of new functions and features through OTA updates, compared to what Volkswagen or Cariad — its software arm — was able to develop. On top of that, there is a focus on the implementation of autonomy and AI functions that becomes easier, thanks to the unified software stack implemented by Rivian," Tagliavini said.

Potential cost savings

Volkswagen will also benefit from significant cost savings through its partnership with Rivian. The transition to a pure zonal architecture can eliminate 20%-30% of ECUs and associated wiring, which lowers overall costs. Dixon estimates that transitioning to [Rivian's] zonal architecture can lower wiring in Volkswagen cars by up to 50%.

Additionally, according to S&P Global Mobility's Tagliavini, for an OEM with legacy software architecture, the required software migration to adapt to a zonal architecture would be costly, while implementing the software stack already developed by Rivian would accelerate and make this process less expensive.

Given the increasing importance of E/E architecture and software to the future development of the automotive industry, the Volkswagen and Rivian deal might have just set the hares running for a series of strategic alliances and joint ventures. By moving first, Volkswagen may have just narrowed the field of opportunity for its rivals, leaving it with a competitive advantage in the race to leverage SDVs.

Authored by: Amit Panday, Senior Research Analyst, Supply Chain & Technology, S&P Global Mobility

Get daily insights and intelligence by subscribing to AutoTechInsight