Volkswagen and Microsoft strategic partnership for the development of Volkswagen Automotive Cloud

Volkswagen and Microsoft shared progress on the development of the Volkswagen Automotive Cloud. The Volkswagen Automotive Cloud is to be extended to further regions of the world and will be available in Europe, China, and the USA—the core markets for the future, full-electric, and fully connected ID model family. Volkswagen and Microsoft are also working on the first lighthouse projects for connected vehicle services. They are concentrating on communication and navigation solutions as well as personalized services: These will leverage self-learning algorithms facilitating the use of services in vehicles and offering occupants extended functions. Automated linking into telephone conferences and transfer of prepared navigation destinations will only be the first steps, which will also include the integration of Microsoft Skype and Microsoft Office.

Volkswagen intends to expand the global footprint of its Automotive Cloud, which has previously been developed primarily for the European market, China, and the US. Microsoft Azure, with its comprehensive cloud, edge, AI, and IoT capabilities, will continue to form the basis of the growing digital ecosystem. Volkswagen will use its Automotive Cloud as the core of its vehicle and service data operations. The digital ecosystem is being developed by the Volkswagen brand together with partners.

Need for cloud solution in the automotive industry:

The growing trend of making vehicles equipped with the best of systems and software for wireless connectivity and digitalization has made the automotive industry leverage the software- and services-focused approach. Improvement of connectivity and network infrastructure has resulted in a continuous shift toward IoT. By connecting a vehicle to the network, OEMs have succeeded in accumulating data that can be utilized for product development. Connectivity to the network has also helped reduce multiple hardware such as a signal receiver, amplifier, and USB for data connectivity from the vehicle. It has thus helped lower the cost of manufacturing and increase vehicle fuel efficiency by reducing weight. The cloud-based solutions market for automotive offers a plethora of features inside the vehicle such as weather-based updates, firmware and software updates, multimedia services, etc. over a cloud (internet). These features are deployed in a vehicle to create a congenial atmosphere and help the vehicle user and passengers stay connected with the outside environment. However, such features and applications need constant updates for proper functioning. To avoid any malware, such updates are provided with the help of cloud-based solutions. Furthermore, the growing demand for consumers for digitization and increasing complexity of connected vehicles will lead to a combination of cloud-based and delivered services.

MarketsandMarkets™ View Point:

Jayant Nannore – Team Lead : Automotive & Transportation, at MarketsandMarkets™, shares his Point of View as mentioned below:

In recent years, the automotive industry has witnessed a rapid evolution of digital services, and its growth rate is expected to increase exponentially in times ahead. These digital services will ensure that connected cars are equipped with advanced and smart features. The main objective behind the implementation of these connected technologies in a car is to make it more safe, efficient, and convenient. Major automobile manufacturers have started offering connected features such as parked vehicle locator, vehicle tracker, remote diagnostics, remote parking, parking space navigation, eCall, and traffic status notification.

Moreover, continuous efforts by OEMs to design and develop connected cars has led to the inclusion of multiple electronic systems in cars, which has increased the number of sensors and control units per vehicle. Such electronic components would capture data about tire pressure, driver behavior, speed, car wear and tear, and more every millisecond.

Furthermore, as technology has evolved, vehicles have become a dynamic platform for innovation which is changing the driving experience and taking the world closer to the reality of truly autonomous driving. The growth of ADAS and increased R&D spending on autonomous driving has attracted many high-tech companies that have not traditionally participated in the automotive industry. For instance, Uber, a ride hailing company, and Google, a technology and services provider, are testing and developing autonomous cars.

With the help of AI, cognitive computing, and predictive analysis, OEMs and automotive Tier I suppliers along with non-automotive players are going to make autonomous vehicles a possibility. These self-driving cars, which are expected to run successfully in the next 10–15 years, will generate more operational data—1 TB per hour. Such an enormous amount of data will need to be stored for various stakeholders such as R&D bureau, metallurgical team, and insurance who are associated with the value chain to extract breakthrough insights. Cloud-based solutions will thus play a pivotal role in the accumulation and processing of data. For instance, Uber, a ride hailing company, and Google, a technology and services provider, are testing and developing autonomous cars. Similarly, BMW is also expected to unveil its self-driving electric vehicle, BMW iNext, by 2021. These developments would offer several opportunities for cloud service providers to partner with automotive companies.

Cloud-based solutions are dependent on the strength of connected services. Services such as fleet management, real-time traffic data, and navigation services are dependent on the speed of connectivity. The advent of 4G and 5G services in the automotive industry would boost the V2X (vehicle to everything) communication, which will further boost connected services such as V2V (vehicle to vehicle), V2I (vehicle to infrastructure), and V2C (vehicle to cloud).


Volkswagen Automotive Cloud1

Volkswagen Automotive Cloud

Source: Secondary Sources and MarketsandMarkets™ Analysis


The automotive industry is at the cusp of technological evolution to develop self-driving smart cars while connected cars have become the stepping stone for autonomous vehicles. With the increasing connected services, smart devices, and IoT penetration, the need for cloud-based solutions for various applications such as fleet management, infotainment, telematics, ADAS, over-the-air (OTA) updates, and shared mobility has increased significantly.

These vehicles will share data with external data centers for the proper functioning of the aforementioned applications. Thus, the evolution of connected and autonomous cars has created a huge opportunity for automotive cloud solution providers. Additionally, non-automotive players such as IBM, Google, Microsoft, and Cisco can ride on the opportunities and create new revenue pockets, which, in turn, would expand the ecosystem of connected and autonomous vehicles.

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