On December 14, the company’s management and labor representatives reached an agreement. Under the agreement, the troubled subsidiary will offer a voluntary severance buyout plan if CARIAD falls short of its 20% target. A spokeswoman for the company said a timetable for the voluntary buyout program has not yet been announced.

Internal disagreements and project overload have led to delays in the launch of key electric models from Audi and Porsche, affecting VW’s ability to compete with the likes of Tesla and China’s BYD. In an effort to restructure Europe’s largest automaker, Blume has viewed fixing CARIAD’s problems as an important piece of the puzzle.

In June, Blume said CARIAD would accelerate development of its long-delayed high-end software. The technology, called E3 1.2, will be used in Porsche’s Macan electric car and Audi’s Q6 e-tron electric car, which will go on sale in 2024.

CARIAD currently owns stakes in about 40 companies and employs 6,500 people, most of them in Europe. In May of this year, VW Group fired most of CARIAD’s executives, including its then-CEO, in order to address development issues. At the time, Blume said Volkswagen’s software strategy would undergo “significant changes,” and rumors of layoffs at CARIAD have swirled ever since. Manager Magazine reported last month that VW Group plans to cut 2,000 jobs at CARIAD as part of a restructuring plan that begins in 2024.

A company spokeswoman said the deal struck on Dec. 14 could put CARIAD at the forefront of software management and partnerships, including oversight of in-vehicle artificial intelligence functions. In addition, Sanjay Lal, head of CARIAD’s Software Defined Vehicle Research and Development Center, will become CARIAD’s chief software officer starting next January.