I think you are right on the money. VW tried to do too much at the same time with ID.3 and a lot of it is because "Tesla did it this way".I think the article (and perhaps VW management) is conflating two independent issues. There's no fundamental reason why an EV needs to be "more connected" than an ICE car. It happens that Tesla brought those two things together and has been praised by some for doing it, but they're not inextricably linked. You can make a perfectly fine EV that doesn't get over-the-air updates or drive itself or move all functions to a touch screen.
Frankly, that's what I think Volkswagen should be focused on, particularly for the European market. There's going to be a tremendous demand for affordable EVs as the regulators continue to push toward looming bans on new ICE cars. VW's brands are well-positioned to fill that role, and the regulators don't care whether the car updates itself. But instead they bit off more than they could chew with this project. The real meat of EV success is moving away from trying to cram EV components into an ICE platform and toward dedicated EV platforms. That should have been the focus of the ID project, instead of getting hung up on tech stuff that's not central to the EV mission.
Tesla needed OTA update because it didn't have dealers in every zip code in the US. It was an imperative based on lack of scale and resources to build a service network from day one. But traditional car companies somehow didn't grasp that they have an actual competitive advantage over Tesla... their cars can be serviced by a nationwide (or in the case of Europe, continent-wide) network of dealers.