VW’s Hitzinger says complexity of new cars will drive consolidation

The auto industry faces a new wave of consolidation as cars become electric, connected and add highly automated driving functions, Alexander Hitzinger, head of Volkswagen's Project Artemis said on Wednesday.

“There will be consolidation. Not everybody will be able to afford these complex platforms. We will see emerging a smaller number of very large players who will drive this transformation,” Hitzinger told the FT's Future of the Car summit.

The need to connect autonomous driving sensors to electric motors, batteries and high-definition maps is forcing carmakers to design vehicle underpinnings and car software operating systems in-house, rather than stitching together legacy code and systems provided by myriad suppliers.

Project Artemis is VW's attempt to do just that.

“Cars are so complex that the traditional concept where you outsource to tier one manufacturers does not work any more,” Hitzinger explained in a webcast.

The investment sums and the complexity of the technology favours larger players since falling sales, caused by the Covid-19 pandemic, is making it harder for smaller companies to stem the investments needed to develop cutting edge cars, he said.