Volvo Cars and Autoliv autonomous driving joint venture Zenuity starts operations

Zenuity, the joint venture between Volvo Cars and Autoliv, Inc. (NYSE: ALV and SSE: ALIVsdb), starts its operations today. Zenuity is a new entrant in the growing global market for autonomous driving software systems. It marks the first time a premium car maker has joined forces with a tier one supplier to develop leading advanced driver assist systems (ADAS) and autonomous driving (AD) technologies.

“Volvo Cars combined its know-how with Autoliv’s to create a world leader in autonomous driving safety systems. With Zenuity starting operations we move a step closer to delivering this exciting technology,” said Håkan Samuelsson, President and Chief Executive Officer of Volvo Cars.

“Zenuity will enable us to deliver world leading, robust solutions for autonomous driving. The combined experience of Autoliv, the worldwide leader in automotive safety systems, and Volvo Cars, the premium car maker, will ensure solutions that meet the needs of car occupants in real life road conditions”, said Jan Carlson, Chairman, President & CEO of Autoliv.

“In the last nine months we have worked hard to get Zenuity started and I am very pleased that we are now ready to start operations. The initial interest from automakers in Zenuity is very encouraging and we look forward to being a leader in the development of the next generation of safer and more automated cars,” said Dennis Nobelius, CEO of Zenuity.

At today’s closing, Autoliv will make a total investment of around 1.1 billion SEK into the joint venture, the large majority of which is an initial cash contribution, but it also includes intellectual property, know-how and personnel. At the same time Volvo Cars will contribute intellectual property, know-how and personnel into the joint venture. As previously announced, Volvo Cars and Autoliv own the joint venture 50/50. The formation of the joint venture was first announced in September 2016.

Background

Headquartered in Gothenburg, Sweden and with additional operations in Munich, Germany, and Detroit, USA, the initial workforce of close to 300 people is from Volvo Cars and Autoliv as well as some new hires. The joint ventures workforce is expected to grow to over 600 employees in the medium term.

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

The mission for Zenuity 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 utilizing extensive experience and real-life tested solutions. Customers will be offered flexibility to choose based on a platform with modular solutions, all offered in a timely manner to the market. Zenuity is further committed to shape the industry through the delivery of spearhead solutions that continuously push the AD boundaries.

By being a leader in AD technology, combined with the business model for Zenuity, the owners expect three elements of value creation. Firstly, the business model means the value of the joint venture will increase going forward. Secondly, for Autoliv this is a clear step in the development of its active safety focus. Thirdly, for Volvo Cars the joint venture ensures world leading competence in a key technology area.

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

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Volvo Car Group in 2016

For the 2016 financial year, Volvo Car Group recorded an operating profit of 11,014 MSEK (6,620 MSEK in 2015). Revenue over the period amounted to 180,672 MSEK (164,043 MSEK). For the full year 2016, global sales reached a record 534,332 cars, an increase of 6.2 per cent versus 2015. The record sales and operating profit cleared the way for Volvo Car Group to continue investing in its global transformation plan.

About Volvo Car Group

Volvo has been in operation since 1927. Today, Volvo Cars is one of the most well-known and respected car brands in the world with sales of 534,332 cars in 2016 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding (Geely Holding) of China since 2010. It formed part of the Swedish Volvo Group until 1999, when the company was bought by Ford Motor Company of the US. In 2010, Volvo Cars was acquired by Geely Holding.

As of December 2016, Volvo Cars had over 31,000 employees worldwide. Volvo Cars head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars head office for China is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium), Chengdu and Daqing (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China) and body components in Olofström (Sweden).