Rivian‘s founder and CEO RJ Scaringe has emphasized on Tuesday that traditional automakers must transition to software-defined vehicles to maintain their market share in the future.
In a new interview with Stripe’s Cheeky Pint, the CEO highlighted Rivian‘s partnership with Volkswagen, through which the Irvine-based company is supplying the German Group with software.
“We did a $5.8 billion deal with Volkswagen,” which Scaringe contextualized as the “second largest car company in the world,” and to which Rivian is providing zonal architecture.
The E/E architecture connects the vehicle’s mechanical systems — such as the powertrain, battery, and chassis — with its software functions.
“So, a platform that allows us to run the whole car with a very small number of computers, depends on the size of the vehicle, and then a software platform,” he explained.
Rivian‘s technology will serve to “a wide range of vehicles, which go from flagship Porsches down to a $22,000 European Volkswagen,” the CEO said reffering to the ID.1 model of the Volkwsagen brand.
To Scaringe, it’s “inconceivable” that traditional automakers can “exist at scale and maintain their market share and not have a software-defined architecture” in the next decade.
According to the CEO, the architecture currently used in vehicles is very complex and difficult to update.
“I think of the software architectures that are in car sales. It’s like a field of weeds,” the chief executive said, adding that there’s “all these little ECUs [Electronic Control Unit] all over the place.”
“They’re all little islands of software, you can’t make updates to them,” he continued, noting that “none of them are written by yourself,” leading to “so many abstraction layers between the actual code and the manufacturer.”
According to the executive, that doesn’t make companies competitive in a world of AI, where the goal is to have “deep contextual understanding of what’s happening across the vehicle.”
RJ Scaringe identified three possible paths for companies to follow: either try to develop software themselves, try to source it from suppliers of work with companies like Rivian.
For him, the first option would be hard “because they don’t typically have those skill sets” and the second would fail because “those companies are precisely the ones that don’t want to see all their little computers go away.”
“Obviously, I have a biased point of view,” Scaringe admitted, “but we think of the Volkswagen partnership as the ultimate billboard for the idea.”
In 2024, Rivian and Volkswagen formed a joint venture, with the primary goal of developing a new E/E architecture — called SDV [Software Defined Vehicles] 1.0.
As the main goal, the collaboration aims to reduce per-vehicle costs — which increases margins — and R&D investments.
It focuses on a scalable zonal architecture, trimming the number of control units in traditional vehicles, replacing them with a one to three zonal computers — making it simpler and cheaper to maintain.
This architecture will be implemented in Rivian‘s R2 — the first vehicle to test the system — and later in Volkswagen, Scout, Audi and Porsche models.
Scaringe sees software-approach vehicles as “a huge change that must come.”
According to the CEO, “if manufacturers don’t make that change, they’re just going to lose market share,” while “the ones that do have that technology are going to gain a lot of market share in the next 10 years.”
Prior to partnering with Rivian, Volkswagen has invested about €12 billion in its subsidiary Cariad to develop automotive software.
However, after internal bureaucratic struggles, the company has shifted from full in-house software development to partnerships with software-focused brands.
Volkswagen’s collaborations now include US-based Rivian and the Chinese carmaker XPeng.
With the latter, the German company is developing vehicles — across all powertrains — for the Chinese market.
