Fiat Chrysler is joining forces with Silicon Valley-based technology upstart Aurora to build driverless cars.

The two companies said Monday they had signed an agreement that lays the groundwork for a "powerful partnership in self-driving commercial vehicles."

The deal will enable Aurora to expand the scope of its self-driving software, the firm said, "allowing us to offer a variety of solutions to strategic customers in logistics, transit, and other use cases."

Financial terms of the deal were not disclosed.

The news comes just under a week after the Italian-American automaker dropped its merger offer for French rival Renault.

The deal could have helped the two align their strategy on innovations like electric and self-driving cars, a space that has become a central battleground for major carmakers worldwide.

"As part of FCA's autonomous vehicle strategy we will continue to work with strategic partners in this space to address the needs of consumers in a rapidly changing industry," Fiat Chrysler CEO Mike Manley said in a statement Monday.

"Aurora brings a unique skillset combined with advanced and purposeful technology that complements and enhances our philosophy on self-driving."

Aurora is already partnered with household names in the industry like Volkswagen and Hyundai. The firm boasts talent from founders who all previously worked at tech giants including Alphabet, Tesla and Uber.

The Palo Alto, California-based company raised $530 million earlier this year, in a round that was backed by leading venture capital firm Sequoia and e-commerce titan Amazon.

The race toward full self-driving capability has become a heated one, with tech firms and automakers alike looking to make waves in the field.

Just last week, it was reported that Apple was looking to buy driverless shuttle service Drive.ai. The firm's autonomous driving division, known as Project Titan, underwent a big restructuring earlier this year, laying off over 200 employees.