The automotive technology company Veoneer, Inc. (NYSE: VNE and SSE: VNE SDB), have following a strategic review, entered into a non-binding agreement with Volvo Cars to split their 50/50 joint venture Zenuity.
The parties have agreed in principle that Veoneer will integrate and operate the current Zenuity business focused on the development and commercialization of advanced driver assistance system (ADAS) software for collaborative driving. Volvo Cars will setup a new stand-alone company to take over Zenuity’s current development and commercialization of unsupervised autonomous drive software (AD).
According to Veoneer’s estimates, in the next decade more than 90% of its available market will be for advanced driver assistance systems (ADAS). Veoneer’s strategy is to build a scalable ADAS system that addresses the needs of all parts of the light vehicle market. This system, including Zenuity developed software and functionality for hands-free driving, was successfully demonstrated at CES in Las Vegas earlier this year.
“The split will allow Veoneer to more effectively drive our business strategy. After successfully developing a strong software platform in Zenuity together with Volvo Cars, we are now taking the next steps in the development of collaborative driving and advanced driver assistance systems addressing the total light vehicle market. Veoneer will continue the development of automated driving in time for the broad commercialization of AD technologies”, says Jan Carlson, Chairman, President & CEO, Veoneer.
The plan is for Zenuity to become a passive IP-holding company retaining the current ownership structure. Both companies will have full access to Zenuity-owned technologies for all levels of advanced driver assistance systems and automated driving for the benefit of all potential customers. Veoneer will be able to freely use the intellectual property rights licensed to Zenuity by Volvo Cars at the time of formation of the joint venture.
Veoneer expects to bring more than 200 of the current Zenuity employees into its systems and software team. The Zenuity development centers in Novi, Michigan, and Munich, Germany will become part of Veoneer’s research and development organization. The development centers in Gothenburg, Sweden and Shanghai, China will become part of a new stand-alone company wholly owned by Volvo Cars. Veoneer expects to achieve annual savings of around $30 – $40 million through the agreement. As part of the intended transaction Veoneer expects to receive a payment of around $15 MUSD, subject to final agreement.
The process to split the Zenuity joint venture starts now and is expected to be finalized latest during the third quarter 2020. Veoneer will take the necessary steps to ensure all customer commitments and deliveries are made as contracted with its customers.