Volkswagen invests $1.2B in AI to cut vehicle development time by 25%

Volkswagen has committed up to 1 billion euros (roughly $1.17 billion) to artificial intelligence investments by 2030, positioning AI as central to accelerating vehicle development and strengthening industrial operations. The German automaker expects efficiency gains and cost avoidance of up to 4 billion euros by 2035 from scalable AI deployment across its value chain, while aiming to cut vehicle development cycles to as little as 36 months—about 25% faster than current timelines.

What you should know: Volkswagen already has more than 1,200 AI applications in use across its operations, with hundreds more under development.

• The company announced its AI investment commitment on September 9 at the IAA Mobility trade fair, alongside plans to expand high-performance IT systems as part of its long-term digital strategy.
• By 2035, the automaker projects up to 4 billion euros in efficiency gains and cost avoidance from AI deployment across the value chain.

Key partnerships: Volkswagen is collaborating with Dassault Systèmes, a French software company, to build an AI-powered engineering environment across all brands and regions.

• The partnership focuses on virtual testing and simulations designed to cut vehicle development cycles to 36 months, approximately 25% faster than current processes.
• The company is also exploring a Large Industry Model—an industrial AI system trained on real design, manufacturing, and process data from participating firms, modeled on the Catena-X data-sharing platform.

Digital infrastructure expansion: The automaker’s Digital Production Platform now connects more than 40 manufacturing sites and is being upgraded with AI tools.

• AI applications are being deployed to optimize assembly processes, improve energy and material efficiency, reduce costs, and lower emissions.
• The technology is also being applied to strengthen cybersecurity and knowledge sharing across operations.
• Volkswagen is expanding its private cloud infrastructure to keep sensitive data stored and processed within Europe, aimed at bolstering digital sovereignty and resilience.

Workforce preparation: Through its WE & AI initiative launched in 2024, more than 130,000 employees have already received AI training.

• The program represents one of Volkswagen’s largest education and qualification programs to date.
• The company emphasizes workforce readiness as a key pillar of its AI strategy.

Regulatory considerations: Volkswagen highlighted that supportive regulatory and funding frameworks in Europe will be critical to sustaining AI adoption across the automotive industry.

Market reaction: VWAGY shares were trading lower by 1.23% to $12.04 at last check Wednesday following the announcement.