The Human Side of the “Software-on-Wheels” Revolution

The mood is tense, and expectations are high: when Friedrich Merz invites guests to the automotive summit at the Chancellery this Thursday. Federal ministers, the prime ministers of Bavaria, Baden-Württemberg, and Lower Saxony, OEMs, suppliers (who are facing a tough change process since 2019), and employee representatives will be sitting at the table. In the run-up to the summit, a seductively simple promise of salvation is circulating: if politicians finally relax their climate regulations, margins will return and jobs will be preserved. But this debate misses the point. What is crucial is to understand vehicles as software-defined vehicles (SDV) that can be improved through OTA updates, store energy, drive autonomously, or be integrated into on-demand services. However, it is not enough for the top management of OEMs and suppliers to understand this “software-on-wheels” revolution. It will be crucial for them to motivate their employees to follow these new paths intrinsically.

1. “Software-on-wheels” failure due to human factor

Let’s take a look at the largest automotive group in Europe and the world’s largest car manufacturer in terms of revenue (2023): Volkswagen AG wanted to establish a central software development unit called Cariad. It was the right approach: one software for over ten million vehicles a year. But this digital transformation project failed. The more than 6,000 employees and thousands more at external service providers were unable to code an error-free operating system. This led to delays in new models and huge necessery bug fixes after their market launch. McKinsey estimated the resulting damage in 2021 at ten billion euros. As a consequence and alternative to Cariad, Volkswagen CEO Oliver Blume launched the 50:50 joint venture “Rivian and VW Group Technology, LLC” with US software developer Rivian in June 2024. However, this has only been moderately successful so far.

This digital transformation at Volkswagen ultimately failed due to the human factor: On the one hand, the agile start-up mentality and culture of failure of the new software developers clashed with the hierarchical and micromanagement-oriented corporate culture of the parent company. This also applied to a number of managers who came from there. In comparable cases, they are often given a guarantee of return which neither requires nor promotes identification with the new company. On the other hand, the rapid growth to over 6,000 employees created all the human challenges of the growth phases according to Larry E. Greiner.

2. Cars and the integrated mobility ecosystem

Anyone who wants to keep a competitive German automotive industry must also view the car as an important element of an integrated mobility ecosystem. A system in which users have access to the means of transportation they need at exactly the right time. What this “big picture” might look like was on display at IAA Mobility 2025, away from the big metal catwalks.

There, at Königsplatz in Munich, mobility was no longer a zero-sum game between cars and public transport, but a collaboration. With its “Future of Local Transport” initiative, DB Regio showed how public transport, car sharing, and on-demand shuttles can be connected via multimodal apps, booking platforms, and mobility hubs to form continuous travel chains. In this world, the car becomes a flexible building block: it complements rather than replaces; it connects rather than separates. For OEMs, this means that hardware excellence remains a must, but the ability to integrate is what counts.

3. What does that mean for employees?

And what does the “software-on-wheels” revolution mean for employees in the automotive industry? Many experience the shift from mechanical engineering to architecture and software logic as a break in their identity. Those who previously demonstrated excellence by designing the perfect valve train are now wondering whether they are still needed in a world of zone nodes, middleware, and safety requirements. These questions touch on status, belonging, and pride. Leadership must create psychological safety, open up learning spaces, and at the same time appreciate that without the experiential knowledge of the “hardware generation,” the new world of electronics and software will not be robust. In the factories, there is a palpable fear that fewer parts and more automation will mean fewer jobs. Added to this are safety issues surrounding high-voltage systems and battery assembly, which cannot be solved “on the side” under time and cost pressure.

Employees of marketing & sales department

In sales and marketing, the focus is shifting from quick deals to lifecycle management: subscriptions, features-on-demand, energy and fleet services sound like opportunities, but initially feel like a loss of control for teams – new metrics, new channels, new responsibilities. Only when clear success criteria and provide genuine empowerment for data-based, advisory roles will stability return.

Employees of after sales services

In the after sales service sector, on the other hand, change strikes at the heart of professional identity: when over-the-air updates fix problems, there is a risk of feeling less “needed.” At the same time, responsibility for safe battery and high-voltage processes is increasing. What matters here is that companies visibly recognize prevention, pay for training, and create new career paths—for example, in remote diagnostics and battery health—that translate pride in one’s own skills into the new world.

Employees of purchase & supply chain

Finally, in purchasing and supply chain, demand whiplash, the moral pressure to dissolve long-standing supplier relationships, and the constant blame game in the event of bottlenecks act like a social centrifugal effect. Resilience work deserves visibility and guidelines, otherwise short-term transactional pressure will prevail over strategic partnership.

4. Integrating the technical and the human side

The same patterns emerge across all functions: fear of loss and grief because the familiar is ending. Status shifts that also cause ripples in the coffee kitchens. Gaps in belonging when well-established communities fall apart. Change Fatigue when too many change projects are running at the same time. The “survivor syndrome” of those who have to continue working after a downsizing but are worn down without any readjustment of workloads and meaning. These dynamics do not disappear with better slides. They need to be named, organized, and addressed.

This is exactly where effective change management comes in. It builds a change architecture that brings together the technical and human sides. Change management develops a comprehensible urgency narrative, secures co-determination at an early stage, and orchestrates programs so that they do not overload each other. It replaces uniform communication with segmented dialogues that do justice to different change curves. It anchors leadership as a craft of empathy rather than a slogan of perseverance, measures adoption, competence building, and sentiment alongside classic business KPIs. And it ensures that qualification paths open up real connections to new roles.

5. A top priority across the board

The automotive summit at the chancellor’s office should therefore focus less on exceptions to climate protection and more on the ability of managers and politicians to understand cars as parts of a mobility ecosystem. Software-on-wheels competence would then be anchored as a core service, the car would be understood as an individual supplement to public transportation, and the human side of this transformation would be a top priority across the board.