Autoliv and Volvo Cars have signed a final agreement regarding the formation of a joint venture to develop software for autonomous driving and driver assistance systems, based on the letter of intent announced last year.

The joint venture, named Zenuity, will create a new entrant in the growing global market for autonomous driving software systems. It marks the first time a leading premium car maker has joined forces with a tier one supplier to develop new advanced driver assist systems (ADAS) and autonomous driving (AD) technologies.

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As part of the agreement announced on 3 January 2017, at the time of closing Autoliv will make a total investment of around SEK1.1bn (US$120m) into the joint venture, the large majority of which is an initial cash contribution, and which also includes certain assets. Volvo Cars will also contribute certain assets to the joint venture. As previously announced, Autoliv and Volvo Cars will own the joint venture 50/50.

Headquartered in Gothenburg, Sweden and with additional operations in Munich, Germany, and Detroit, US, the initial workforce of around 200 people will come from Autoliv and Volvo Cars. The company is expected to grow to over 600 employees in the medium term. Operations are expected to start during the first half of 2017, after approvals from relevant competition authorities in several countries have been obtained and other customary closing conditions have been satisfied.

Both Autoliv and Volvo Cars will license and transfer the intellectual property for their ADAS systems to the joint venture. From this base, the company will develop new ADAS products and AD technologies. The new company is expected to have its first driver assistance products available for sale by 2019 with autonomous driving technologies following shortly thereafter.

The mission for the joint venture is to use the latest ADAS/AD know-how to create robust and flexible solutions that are at the technological forefront – for today and tomorrow. This will be achieved by a speed to market with robust solutions, utilising extensive experience and real-life tested solutions. Customers will be offered flexibility to choose based on a platform with modular solutions. The joint venture is further committed to shape the industry through delivering spearhead solutions that continuously push the AD boundaries.

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Autoliv will be the exclusive supplier and distribution channel for all the new company’s products sold to third parties, and there will be no exclusivity toward any customer or the owners. Volvo Cars will source such products directly from the new joint venture.

As previously announced, Dennis Nobelius will be the chief executive officer of the joint venture. The joint venture will be governed by a separate board of directors, and independently operate within its own facilities.