Volkswagen Group’s embattled Cariad software unit has agreed to cut development costs in order to avoid mass lay-offs, according to reports.

Cariad boss and former Bentley production head Peter Bosch had wanted to cut up to 20% of the unit’s 6500-strong workforce, according to an October report from Germany’s Manager Magazine.

However, the new agreement between management and labour unions will enable Cariad to cut 20% of its costs annually by 2028, Bloomberg reported, citing a Cariad spokesperson.

Cariad has struggled in its mission to deliver a unified software platform for use across all Volkswagen Group brands as part of the group’s mission to digitise vehicles.

Cariad’s internal delays hurt the roll-out of the Volkswagen ID 3 and ID 4 and set back the launch of the electric Porsche Macan and Audi Q6 E-tron on the new PPE EV platform. 

The problems at Cariad are widely believed to have been one of the reasons that former Volkswagen Group CEO Herbert Diess was forced out in July 2022.

Earlier this year, Diess’s successor, Oliver Blume, replaced Cariad’s top management team headed by Dirk Hilgenberg and installed Bosch at its helm in May.

The car industry in general is struggling to make the shift to design cars more around their software than their hardware.

Issues they face include attracting a high enough calibre of software programmers as they compete with the tech industry, as well as overhauling their cars to operate more like smartphones powered by central computers rather than a series of interlinked parts.