Volkswagen’s €1 billion “no-process-without-AI” plan reveals a Europe-first strategy to embed AI across every operation – balancing resilience, sovereignty, and openness amid fragmented regulation and intensifying global competition in Industry 4.0.
In sum – what to know:
AI everywhere – the German auto-maker’s phased strategy seeks to embed AI, including LLMs and a new LIM, in every business and manufacturing process.
Balanced sovereignty – it wants a private European cloud plus strong ties with US and Chinese tech partners to preserve access to global innovation.
Pragmatic regulation – it calls for clear, harmonized, and innovation-friendly EU AI rules to prevent “regulatory overdrive” and ensure competitiveness.
A little more here about Volkswagen’s €1 billion strategy to realise “no process without AI” across its global operations – as reported in these pages a couple of weeks back. The Germany-based auto-maker told RCR Wireless that it is making more company, vehicle, and customer data available “across the board” for AI applications, including for usage in large language models (LLMs) and in a new consortium-led large industry model (LIM) – to drive generative AI applications in its IT and OT operations, as well as in its vehicles themselves. It also provided some clarity about its global cloud strategy, which seeks to balance three disciplines: resiliency, sovereignty, and openness.
Data and AI, taken together, are one of the group’s “top-10 action fields” this year, it said. “We systematically evaluate each of our processes to determine how AI can help us improve,” explained a spokesperson. “To achieve this, we are making more approved vehicle and customer data, as well as transparently prepared company data, available across the board for AI applications – supporting the core processes of the company. We are currently also working on a comprehensive strategy for AI in the product. This includes aspects such as the cross-brand use of an LLM in the vehicle.” As such, the masterplan is, indeed, to embed AI everywhere.
Which means that Volkswagen will put various AI systems, including LLMs, to work internally in its manufacturing, logistics, and business operations, and externally in its vehicles to animate a proprietary multi-marque (VW, Audi, Porsche, Skoda, SEAT, etc) conversational AI (LLM) in infotainment systems, probably sub-branded, and also (presumably) to bring interactive AI enhancements to driver assistance and safety systems, predictive maintenance analytics, and sundry personalization features. Alongside, as trailed previously, Volkswagen has put forward the concept to develop an LIM that leverages domain-specific design, production, and other automotive process data.
“We are currently evaluating the concept of an LIM and are exchanging ideas at the working level with other companies. No concrete decisions or agreements have been made yet,” explained the spokesperson. “The concept is not focused on Volkswagen – we would be one company in a broader consortium that could involve players in the automotive industry such as OEMs and suppliers, but also technology and industrial systems partners.” An organizational blueprint for such an initiative might be the open Catena-X platform, designed to allow secure data exchange between companies in the automotive supply chain, the firm has suggested.
There is regional value in this, said the spokesperson. “We see the biggest potential of an LIM on a European level, and not only in Germany. So, for example, the AI development/deployment could be leveraged in France, [but] the industrial application expertise comes from Germany, and so on.” Indeed, the most interesting new explanation, perhaps, is to a question about Volkswagen’s approach to the cloud – in terms of privacy, security, sovereignty. The company told RCR Wireless: “We are preparing for ongoing geopolitical challenges. Our focus is on global geo-redundancy to safeguard the company in increasingly fragmented markets and world regions.”
It went on: “We must consider various political scenarios – for example, developing dedicated systems for the European region, independent of other providers. Therefore, we are aiming to build and operate a private cloud system in Europe.” Further details about architectural technologies and infrastructure partners have not been disclosed, as yet. But there is a postscript. “It must be clear that we intend, as a global company, to continue to work with technology partners in North America and China. With regards to our ‘factory cloud’… transatlantic business cooperation remains essential for developing common standards and norms for AI and other technologies.”
In other words, and as per the intro section: Volkswagen is looking to balance three goals: resilience, through global geo-redundancy for worldwide backup and failover systems; sovereignty, by building a private European cloud infrastructure, to retain ultimate control over sensitive data and compliance; and collaboration and openness by developing partnerships with US (and Chinese) tech firms to ensure access to shared innovation and standards. The last point is to ensure Volkswagen, bound by regulatory frameworks in its home markets, “does not become isolated in the global technology race”, it explained. Which is the bigger message, ultimately.
It is a bellwether note for enterprises contending with AI governance in a globalised Industry 4.0 landscape, effectively. And Volkswagen, as the biggest car maker in the home of Industrie 4.0, has a leadership position, of course, which is pro-regulation, but pragmatic. As such, it wants balanced regulation of AI that brings clarity and harmonization across Europe’s regulatory landscape. It accepts that AI carries risks and should be regulated – which is really the only position given its role in safety-critical areas like autonomous driving. But it does not want excessive European Union bureaucracy (“regulatory overdrive”), either.
The current regulatory environment is fragmented and burdensome, with different rules and reporting obligations across member states. Its announcement about its €1 billion “no-process-without-AI” strategy talked about “innovation-friendly frameworks in the global AI race”. It told RCR Wireless: “Balanced regulation of AI is sensible, as AI also carries risks. However, regulation must be innovation-friendly, clear, and consistent. We are not advocating for simple deregulation. It is far more important to optimize the existing regulatory framework – for example, by clarifying and simplifying reporting obligations.”
The spokesperson explained: “[It is important to] avoid regulatory overdrive; constantly introducing new rules does not foster innovation. What is needed is an innovation-friendly, strategically supported, and clearly regulated AI ecosystem in Europe. This also applies to areas such as autonomous driving. Regulatory harmonization is crucial to harmonize all relevant AI regulations across Europe to avoid innovation-inhibiting multiple regulations and national solo efforts.”
