The tech wars are underway.

Volkswagen has just announced that it’s teaming up with Microsoft to advance its self-driving vehicle technologies. Its Car.Software subsidiary will collaborate with the Seattle-based tech giant to develop a cloud-based automated driving platform. VW claims this process will allow for faster integration into its future fleet.

“As we transform Volkswagen Group into a digital mobility provider, we are looking to continuously increase the efficiency of our software development,” said Dirk Hilgenberg, head of the Car.Software division. “By combining our comprehensive expertise in the development of connected driving solutions with Microsoft’s cloud and software engineering know-how, we will accelerate the delivery of safe and comfortable mobility services.”

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VW Group and Microsoft made their first cooperation deal in 2018 to build an automotive cloud and test fleet operations are scheduled to begin later this year. The carmaker hopes to begin using this software in production cars, such as the all-new VW ID.4 and upcoming ID.6 battery electrics in 2022.

Volkswagen isn’t the only automaker Microsoft is working with.

Earlier this year, it teamed up with and invested $2 billion in General Motors’s own self-driving subsidiary, Cruise. But there’s another major reason why VW seeks Microsoft’s help: It requires assistance to create an over-the-air software update network similar to what rival Tesla has so effectively made. Last spring, a leaked memo revealed VW Group CEO Herbert Diess was “worried” about Tesla’s lead in its software and autonomous driving programs.


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The goal of the partnership is to alleviate those concerns and to ultimately give VW the competitive edge. Microsoft also appears to be quite confident it can deliver the goods for its partner.

“This is the next evolution of our foundational work with the Volkswagen Group to enhance their transformation as a software-driven mobility provider,” said Scott Guthrie, Microsoft executive vice president, Cloud + AI. “The power of Microsoft Azure and its compute, data and AI capabilities will enable Volkswagen to deliver secure and reliable automated driving solutions to their customers faster.”

Automakers have recognized that manufacturing vehicles alone aren’t good enough anymore; they must become mobility providers with a range of options. This includes ride sharing and even electric scooters.

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