Veoneer has entered a non-binding agreement with Volvo Cars to split their 50/50 joint venture Zenuity following a strategic review.

The agreement means Veoneer will integrate and operate the Zenuity business.

This business focuses on the development and commercialisation of advanced driver assistance system (ADAS) software necessary for collaborative driving.

Zenuity’s current development and commercialisation of unsupervised autonomous drive software (AD) will be taken over by a new stand-alone company set up by Volvo Cars.

Veoneer’s strategy is to develop a scalable ADAS system, which can address the needs of all parts of the light vehicle market.

The splitting process of the joint venture has commenced and will conclude by the third quarter of 2020.

Veoneer chairman, president and CEO Jan Carlson said: “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 commercialisation of AD technologies.”

Under the agreement, companies will have full access to Zenuity-owned technologies, which include all levels of advanced driver assistance systems and automated driving benefiting all customers.

Veoneer will be able to use the intellectual property rights licensed to Zenuity by Volvo Cars when the JV was formed.

The existing development centres of Zenuity, including Novi, Michigan and Munich, Germany, will become part of Veoneer’s research and development organisation.

The new stand-alone will operate the development centres of Zenuity in Gothenburg, Sweden and Shanghai, China.

Veoneer expects to save $30m-$40m annually with this deal. The company expects to receive a payment of around $15m, subject to final agreement.