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Volkswagen and Bosch to collaborate on automated driving software

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BERLIN, Jan 25(Reuters) - Volkswagen's software subsidiary Cariad and autos supplier Bosch have formed a partnership to develop software for automated driving to use in Volkswagen's passenger vehicles, the companies said in a joint statement on Tuesday.

The software will enable so-called 'Level 2' autonomous driving - consisting of hands-free driving in cities, rural areas and on the motorway - as well as a 'Level 3' system that takes over all driving functions on the motorway.

Level 2 driving would be installed in Volkswagen vehicles in 2023.

The software and its component parts could later be used in other automakers' vehicles, the statement said, without specifying when this could happen.

The partnership is the second major collaboration announced so far this year by the two companies, which last week said they were setting up a joint venture by the end of this year to equip battery cell factories with machinery.

The companies did not disclose how much they would invest in either partnership.

Both Volkswagen and Bosch have bundled their software divisions internally into single units in an attempt to strengthen their offering in the face of competition driven primarily by Tesla, as well as companies like Alphabet increasingly venturing into the autos sector.

Volkswagen aims for its software unit, Cariad, to supply 60% of software in Volkswagen vehicles by 2025, up from 10% when the unit was founded in 2020.

But competition for talent is fierce, and the high upfront investment of developing software capabilities from scratch, at a time when many carmakers also need funds for electrification and battery development, means some are forming partnerships.

Bosch and Daimler announced plans in 2017 to build a joint 'robo-taxi' automated driving fleet, reaching 'Level 5' automated driving that would give the car full control - but the partnership was cancelled in 2021, months after Daimler's CEO highlighted the high costs and risks involved. (Reporting by Victoria Waldersee Editing by Mark Potter)

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