Under the agreement, Volvo will set up a new stand-alone company to take over Zenuity's current development and commercialization of unsupervised autonomous driving software.
Veoneer will integrate and operate the current Zenuity business focused on development and commercialization of advanced driver assistance system (ADAS) software.
"The intent is for each party to pursue what’s the most critical core competence for them," Veoneer Chief Technology Officer Nishant Batra told Automotive News Europe. "Volvo wants to be a leader in autonomous driving and our intent is to more effectively pursue what we call advanced ADAS in the collaborative driving space."
Since Veoneer serves all automakers, Batra said it made sense for it to take the part of Zenuity that works on ADAS because there is a much large market for driver assistance solutions than for autonomous driving technology.
"A lot of the ADAS software within Zenuity is very mature," Batra said. "We are taking on something that we can use right away because there are already existing contracts."
Those include providing the ADAS system in the full-electric Volvo XC40 Recharge compact SUV and the first volume model from Volvo subsidiary Polestar, the battery-driven Polestar 2 midsize sedan.
Zenuity CEO Dennis Nobelius said that the supplier is not just providing its technology to Volvo, Polestar and other brands owned by China's Zhejiang Geely Holding.
"Of the seven contracts we have for our ADAS business, four are with global brands outside of the Geely-Volvo Group," Nobelius told ANE.
Zhejiang Geely also owns Geely Auto, Lynk & CO and UK sports-car unit Lotus.