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In 2022, Volkswagen’s board fired chair Herbert Diess after a rocky tenure in which, while pushing employees to move fast into the electric vehicle age, he reportedly angered powerful German labor leaders and regional government officials. The last straw, analysts said, was the failure of a core Diess project—internally designed software that would run its EVs and, Diess said, set the company apart from its competition, including Tesla. After Diess boasted that he would turn VW into a “software-driven mobility company,” VW EVs suffered delays, chronic connectivity glitches and screens that abruptly went dark and froze.

Diess’ successor, Oliver Blume, tried everything to fix the software nightmare, but nothing worked. Two months ago, he threw in the towel: He committed to invest up to $5 billion in electric truckmaker Rivian, whose operating software gets extremely high marks from critics; the exact amount will be based on undisclosed financial and technical milestones. Blume hopes that by leaning on Rivian’s technology, VW will finally produce EVs that its customers will covet and recommend to friends.

In a sense, Blume is continuing Diess’ strategy. Over the last six years, Volkswagen has invested more than $21.5 billion to acquire equity stakes in at least 15 EV, battery and software companies in the U.S., Europe and China, most of them startups, according to regulatory filings and deal announcements.

So far, none of the investments has made VW stand out in the EV race. In the first half of 2024, VW’s global EV sales were flat year on year, and in July, sales of VW’s electric ID.4 in Europe—the company’s main market—fell 40% from a year earlier. VW did not respond to emails seeking comment.

If VW is suffering buyer’s remorse, it’s not alone: All the major traditional car companies have put down multiple bets on EV, battery and materials startups over the last four or five years, and almost none has paid off, at least not yet: Tesla continues to struggle to ramp up production of dry battery electrodes five years after acquiring Maxwell Technologies, the San Diego startup that invented the technology. General Motors has had a similarly frustrating eight-year experience since acquiring Cruise, a developer of self-driving technology in which it has invested about $8 billion.

VW’s bets include $300 million for a 19.7% stake in California lithium-metal battery developer QuantumScape; $1.6 billion for a 20% share of Swedish battery maker Northvolt; $2.6 billion for a 42% stake in Argo AI, a self-driving startup; and $560 million for a 26% stake in Chinese battery maker Gotion.

VW made most of these and other investments from 2018 to 2021, a period when panic erupted among traditional automakers who feared the world was quickly shifting to EVs. All were desperate to catch up with Tesla, and to do so began throwing money at almost any startup promising a razzle-dazzle new EV battery, or an EV that might rival Tesla’s.

“The investments are symptomatic of what the industry looked at initially,” said Philippe Houchois, an industry analyst with Jefferies International. “The [automakers] took stakes to make sure they were up to speed on technology, one of which was batteries, with the view of following Tesla.”

“Of course, as time goes on, priorities change,” Houchois said. “So not all those investments necessarily make sense today.”

In the 2000s, major automakers mostly ridiculed Tesla CEO Elon Musk’s claims that the world was going electric. By the late 2010s, though, they were no longer laughing—Tesla’s Models 3 and Y were selling in large numbers around the world and generating fat profit margins. The incumbents went into a frenzy to catch up.

First, they sought to understand what Tesla was doing right. At VW, Diess decided that the company should vertically integrate, just as Tesla had done, said Tom Narayan, an industry analyst with RBC Capital Markets.

In 2018, Diess began scooping up equity stakes in startups that could prove of use to VW, including QuantumScape, Northvolt, Gotion and Argo. In 2021, he bought a 7.4% stake in electric van maker TuSimple, 25% of next-generation battery maker 24M Technologies, and 11% of battery maker Forge Nano. In 2022, Diess bought 3.5% of silicon battery developer Group14 Technologies and a 60% stake in a joint venture with Chinese autonomous driving startup Horizon Robotics.

But the buying spree did not seem to help VW gain an EV sales foothold. In July 2022, the VW board fired Diess. A year later, Blume, his successor, put his own stamp on VW strategy, one that looked a lot like Diess’: While choosing to largely ignore most of Diess’ early investments, Blume stuck with his predecessor‘s strategy of seeking outside help to resolve VW’s main shortcomings—disastrously low sales in China, and glitchy software. In 2023, Blume bought 4.99% of Chinese EV maker Xpeng Motors, and this year VW formed a 50-50 joint venture with Rivian.

With the investment in Rivian, Jefferies’ Houchois said, Blume had made a pragmatic move. “There is more realization that maybe it’s more complicated than we think and we may not have the skills. So instead of developing the software in-house, then let’s go seek help outside.’”

Over the last year or so, the heat has largely gone out of the EV and battery industries as consumers wait for better and cheaper models, as well as wider availability of public charging. I wondered what all those investments that VW—and its rivals—made added up to.

Houchois said they may not add up to anything, but that the spending made sense at the time. “In hindsight, would carmakers have made those investments in battery companies if they had known what they know now?” he said. “Probably not. But it’s easy to rewrite history.”

Narayan said I was asking the wrong question. “I don’t think of it like these are some home-run investments; it’s more about dipping your toe into different technologies,” he said. “We don’t really know how the industry is going to evolve; we do know EVs are going to be mainstream. These guys are just trying different routes.”