Volkswagen and Microsoft will collaborate to develop the VW Automotive Cloud, one of the largest dedicated automotive industry clouds for all future digital services and mobility.

"The strategic partnership with Microsoft will turbocharge our digital transformation," said Herbert Diess, CEO of Volkswagen AG. "Volkswagen, as one of the world's largest automakers, and Microsoft, with its unique technological expertise, are outstandingly well-matched. Together, we will play a key role in shaping the future of auto-mobility."

Satya Nadella, CEO of Microsoft, said: "The world's leading companies run on Azure, and we are thrilled that Volkswagen has chosen Microsoft. Together we will reimagine the driving experience for people everywhere."

From 2020, more than 5m new Volkswagen brand vehicles per year will be fully connected and will be part of the Internet of Things (IoT) in the cloud. The partnership between the two companies will lay the foundation for combining the global cloud expertise of Microsoft with the experience of Volkswagen as an automaker with a global market presence.

Together, the two companies will develop the technological basis for a comprehensive industrial automotive cloud. In the future, all in-car services for vehicles of the core Volkswagen brand as well as the group-wide cloud-based platform (also known as One Digital Platform, ODP) will be built on Azure cloud and services as well as Azure IoT Edge. This will dramatically streamline the technical landscape.

Via the cloud, Volkswagen will considerably optimise the interconnection of vehicle, cloud-based platform and customer-centric services for all brands, such as the Volkswagen We system.

Volkswagen will be able to leverage consistent mobility services across its entire range and to provide new services and solutions such as in-car consumer experiences, telematics, and securely connect data between the car and the cloud.

VW will establish a new automotive cloud development office in North America near Microsoft's headquarters.

Microsoft will provide hands-on support to Volkswagen as it ramps up its new automotive cloud development office, including resources to help drive hiring, human resources management and consulting services. The workforce is expected to grow to about 300 engineers in the near future.

Microsoft provides access to cloud expertise across their organisation so Volkswagen developers and engineers can benefit and learn from a strong culture of collaboration and agility and can transfer those experiences into the core VW organization.

The development will spread across the VW group.