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Volkswagen, a rocky $50B EV bet, and the bid to chase Tesla’s software prowess
Among the old guard of the automotive industry, very few could hold a candle to Volkswagen, which has initiated a $50 billion bet on electric vehicles. The plan, it seemed, was aimed at ensuring that the veteran automaker could catch up to Tesla, a dedicated EV maker that has made a name for itself by releasing vehicles that receive over-the-air updates on a regular basis.
Yet as the first result of Volkswagen’s dedicated EV efforts, the ID.3, rolled off the assembly line, it became clear that releasing software-driven electric cars was not as simple as building the next iteration of the Golf. When the ID.3 was released, the vehicle was incomplete. It could drive, turn corners, and basically do anything that regular cars are expected to do. Software-wise, however, it was nowhere near done. Features that were promised were absent, and promised capabilities such as over-the-air updates were unavailable.
Even the ID.3’s heads-up display, a feature that is not present in rivals like the Model 3, didn’t function. Early users of the vehicle also reported hundreds of software bugs. By June last year, Volkswagen decided to delay the ID.3’s launch and sell the first batch of the cars without full software. The vehicles are expected to receive an update that would provide the ID.3 with its full feature set, but the initiative will require a service visit around February 2021.
As noted in a report from The Wall Street Journal, Volkswagen’s issues with the ID.3 were the result of the veteran automaker not being proficient in software. For years, industry analysts and leaders alike have suggested and peddled the “Tesla Killer” narrative, suggesting that once the big players of the auto industry get serious about electric vehicles, Elon Musk’s EV startup would be completely overrun. As it turned out, building electric cars was not as simple. Just because a company can produce good gas and diesel-powered cars does not mean that they can produce good EVs.
Karsten Michels, a senior engineer for Continental AG, one of the firms which Volkswagen tapped to develop the ID.3’s software, noted that the gravity of the task surrounding the development of custom vehicle software was underestimated. “Maybe we underestimated how much work is involved and how little we could actually rely on existing legacy software,” Michels said.
Peter Rawlinson, CEO of Lucid Motors, expressed his thoughts on the situation. “(Ever since Tesla launched its first car in 2008) there was this feeling that the really serious players are going to come. Now, the Germans have finally come, and they’re not as good as Tesla,” he remarked.
Volkswagen, for its part, seems to be taking the lessons it learned during the ID.3 rollout and is applying it for the release of the ID.4, a crossover SUV that could rival the Tesla Model Y. Herbert Diess, the Chairman of the Board of Management of Volkswagen Group and an executive who has struck a friendship of sorts with Tesla CEO Elon Musk, initiated efforts to overhaul the company’s software strategies. If successful, the ID.4, which will be produced in Europe, China, and the United States, would deliver on the promises set forth by the ID.3.
Ultimately, Volkswagen has learned a notable yet painful lesson during the ramp of the ID.3, the most notable of which is that software is something that legacy automakers still need to work on. Granted, software has been running in gas-powered cars for years, with average vehicles including dozens of parts with chips that are designed to perform specific tasks. EVs, however, require a different type of software, one that is more akin to those used by smartphones today. With electric cars, in-vehicle software becomes the heart of the vehicle, with updates becoming the equivalent of service visits in a gas-powered car. In-vehicle software today is never complete as well, as they must always be open to improvements.
Danny Shapiro, senior director of automotive at Nvidia, related his thoughts on the complexity of in-vehicle software. “The key here is taking this distributed system in the car, dozens if not hundreds of applications, and centralizing everything. This is very complex, especially with a car where the safety level is critical. You can’t just flip a switch and be a software company,” he noted.
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Tesla leases new 108k-sq ft R&D facility near Fremont Factory
The lease adds to Tesla’s presence near its primary California manufacturing hub as the company continues investing in autonomy and artificial intelligence.
Tesla has expanded its footprint near its Fremont Factory by leasing a 108,000-square-foot R&D facility in the East Bay.
The lease adds to Tesla’s presence near its primary California manufacturing hub as the company continues investing in autonomy and artificial intelligence.
A new Fremont lease
Tesla will occupy the entire building at 45401 Research Ave. in Fremont, as per real estate services firm Colliers. The transaction stands as the second-largest R&D lease of the fourth quarter, trailing only a roughly 115,000-square-foot transaction by Figure AI in San Jose.
As noted in a Silicon Valley Business Journal report, Tesla’s new Fremont lease was completed with landlord Lincoln Property Co., which owns the facility. Colliers stated that Tesla’s Fremont expansion reflects continued demand from established technology companies that are seeking space for engineering, testing, and specialized manufacturing.
Tesla has not disclosed which of its business units will be occupying the building, though Colliers has described the property as suitable for office and R&D functions. Tesla has not issued a comment about its new Fremont lease as of writing.
AI investments
Silicon Valley remains a key region for automakers as vehicles increasingly rely on software, artificial intelligence, and advanced electronics. Erin Keating, senior director of economics and industry insights at Cox Automotive, has stated that Tesla is among the most aggressive auto companies when it comes to software-driven vehicle development.
Other automakers have also expanded their presence in the area. Rivian operates an autonomy and core technology hub in Palo Alto, while GM maintains an AI center of excellence in Mountain View. Toyota is also relocating its software and autonomy unit to a newly upgraded property in Santa Clara.
Despite these expansions, Colliers has noted that Silicon Valley posted nearly 444,000 square feet of net occupancy losses in Q4 2025, pushing overall vacancy to 11.2%.
In Pennsylvania, we got between 10 and 12 inches of snow over the weekend as a nasty Winter storm ripped through a large portion of the country, bringing snow to some areas and nasty ice storms to others.
I have had a Model Y Performance for the week courtesy of Tesla, which got the car to me last Monday. Today was my last full day with it before I take it back to my local showroom, and with all the accumulation on it, I decided to run a cool little experiment: How long would it take for Tesla’s Defrost feature to melt 8 inches of snow?
Tesla’s Defrost feature is one of the best and most underrated that the car has in its arsenal. While every car out there has a defrost setting, Tesla’s can be activated through the Smartphone App and is one of the better-performing systems in my opinion.
It has come in handy a lot through the Fall and Winter, helping clear up my windshield more efficiently while also clearing up more of the front glass than other cars I’ve owned.
The test was simple: don’t touch any of the ice or snow with my ice scraper, and let the car do all the work, no matter how long it took. Of course, it would be quicker to just clear the ice off manually, but I really wanted to see how long it would take.
Tesla Model Y heat pump takes on Model S resistive heating in defrosting showdown
Observations
I started this test at around 10:30 a.m. It was still pretty cloudy and cold out, and I knew the latter portion of the test would get some help from the Sun as it was expected to come out around noon, maybe a little bit after.
I cranked it up and set my iPhone up on a tripod, and activated the Time Lapse feature in the Camera settings.
The rest of the test was sitting and waiting.
It didn’t take long to see some difference. In fact, by the 20-minute mark, there was some notable melting of snow and ice along the sides of the windshield near the A Pillar.
However, this test was not one that was “efficient” in any manner; it took about three hours and 40 minutes to get the snow to a point where I would feel comfortable driving out in public. In no way would I do this normally; I simply wanted to see how it would do with a massive accumulation of snow.
It did well, but in the future, I’ll stick to clearing it off manually and using the Defrost setting for clearing up some ice before the gym in the morning.
Check out the video of the test below:
❄️ How long will it take for the Tesla Model Y Performance to defrost and melt ONE FOOT of snow after a blizzard?
Let’s find out: pic.twitter.com/Zmfeveap1x
— TESLARATI (@Teslarati) January 26, 2026
Tesla Robotaxi ride-hailing without a Safety Monitor is proving to be a difficult task, according to some riders who made the journey to Austin to attempt to ride in one of its vehicles that has zero supervision.
Last week, Tesla officially removed Safety Monitors from some — not all — of its Robotaxi vehicles in Austin, Texas, answering skeptics who said the vehicles still needed supervision to operate safely and efficiently.
BREAKING: Tesla launches public Robotaxi rides in Austin with no Safety Monitor
Tesla aimed to remove Safety Monitors before the end of 2025, and it did, but only to company employees. It made the move last week to open the rides to the public, just a couple of weeks late to its original goal, but the accomplishment was impressive, nonetheless.
However, the small number of Robotaxis that are operating without Safety Monitors has proven difficult to hail for a ride. David Moss, who has gained notoriety recently as the person who has traveled over 10,000 miles in his Tesla on Full Self-Driving v14 without any interventions, made it to Austin last week.
He has tried to get a ride in a Safety Monitor-less Robotaxi for the better part of four days, and after 38 attempts, he still has yet to grab one:
Wow just wow!
It’s 8:30PM, 29° out ice storm hailing & Tesla Robotaxi service has turned back on!
Waymo is offline & vast majority of humans are home in the storm
Ride 38 was still supervised but by far most impressive yet pic.twitter.com/1aUnJkcYm8
— David Moss (@DavidMoss) January 25, 2026
Tesla said last week that it was rolling out a controlled test of the Safety Monitor-less Robotaxis. Ashok Elluswamy, who heads the AI program at Tesla, confirmed that the company was “starting with a few unsupervised vehicles mixed in with the broader Robotaxi fleet with Safety Monitors,” and that “the ratio will increase over time.”
This is a good strategy that prioritizes safety and keeps the company’s controlled rollout at the forefront of the Robotaxi rollout.
However, it will be interesting to see how quickly the company can scale these completely monitor-less rides. It has proven to be extremely difficult to get one, but that is understandable considering only a handful of the cars in the entire Austin fleet are operating with no supervision within the vehicle.
Tesla leases new 108k-sq ft R&D facility near Fremont Factory
Tesla winter weather test: How long does it take to melt 8 inches of snow?
