Volkswagen and AWS extend collaboration on digital platform to increase production efficiencies

[Lisbon, Portugal - January 27, 2019 A close-up of a titanium dis]
Ivan Kyryk

Germany’s largest automaker has extended its partnership [https://www.volkswagen-group.com/en/press-releases/more-efficient-smarter-more-resilient-volkswagen-group-collaborates-with-aws-to-help-transform-production-for-the-age-of-ai-19774] with Amazon Web Services (AWS) to employ artificial intelligence to increase production and lower manufacturing costs.

Volkswagen (OTCPK:VWAGY [https://seekingalpha.com/symbol/VWAGY]) (OTCPK:VWAPY [https://seekingalpha.com/symbol/VWAPY]) and Amazon’s (NASDAQ:AMZN [https://seekingalpha.com/symbol/AMZN]) cloud computing division have agreed to build on their existing collaboration on the Digital Production Platform (DPP) for an additional 5 years to deploy IT systems across its global production sites to increase production flexibility and bring new models to market faster.

“The Digital Production Platform plays a key role in [our ambition to become the global automotive tech driver]: it is the digital nervous system of our factories – and the key to a future of AI-powered production,” said Hauke Stars, Volkswagen's chief IT officer.

Expanded development of the platform will also enable Volkswagen to develop more sophisticated software defined vehicles, shaped by the company’s joint venture with Rivian Automotive (RIVN [https://seekingalpha.com/symbol/RIVN]) which is currently developing next-generation electronic architecture.

When the partnership between AWS and Volkswagen (OTCPK:VWAGY [https://seekingalpha.com/symbol/VWAGY]) (OTCPK:VWAPY [https://seekingalpha.com/symbol/VWAPY]) was initiated in 2019, the carmaker achieved a 6% increase in productivity, €500M cost reduction, and an expectation for a 50% reduction in CO2 emissions per vehicle.

Volkswagen (OTCPK:VWAGY [https://seekingalpha.com/symbol/VWAGY]) (OTCPK:VWAPY [https://seekingalpha.com/symbol/VWAPY]) is employing all methods to remain competitive and maintain its pole position within the German auto industry amid a challenging trade environment, intense competition from cheaper Chinese models, and pressure from German trade unions. Last month, the company slashed its full-year guidance after reporting a significant drop in second quarter profits. [https://seekingalpha.com/news/4471995-volkswagen-slashes-full-year-outlook-q2-profit-plunges-amid-hefty-us-tariffs]

“Challenges will arise in particular from an environment of political uncertainty, expanding trade restrictions and geopolitical tensions, the increasing intensity of competition, volatile commodity, energy and foreign exchange markets, and emissions-related requirements that have been more stringent since the beginning of the year,” the company said in its most recent quarterly report.

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