A flag bearing the Tencent logo is displayed alongside a Chinese flag outside the company's offices in Beijing, China.

German automaker BMW and Chinese online gaming giant Tencent Holdings are teaming up to launch a computing center in China that will help develop self-driving cars in the world's biggest auto market, the companies said on Friday.

The computing center, which will start operations by the end of the year, will provide cars with data-crunching capabilities to help them drive semi-autonomously and, eventually, autonomously.

The two companies did not disclose the investment in the center. Sources familiar with the deal said the center will be built in the eastern city of Tianjin.

The establishment of the center "will support BMW's autonomous driving development and innovation in China," Jochen Goller, head of BMW's China operations, said in a statement.

"BMW can, therefore, develop autonomous driving solutions that fit better with the specific driving conditions in China."

BMW said the new computing center will leverage Tencent's cloud computing and big data, and provide the automaker with infrastructure needed to develop the autonomous cars.