Volvo Cars, a Swedish luxury vehicle manufacturer, and Autoliv have signed a letter of intent to create a new jointly-owned company to develop next-generation autonomous driving software systems.

Headquartered in Sweden, the new company will have an initial workforce of approximately 200 employees taken from both companies, which is expected to increase to 600.

Volvo Cars president and chief executive Håkan Samuelsson said: “By combining our know-how and resources we will create a world leader in AD software development.

"This means we can introduce this exciting technology to our customers faster.”

Volvo Switzerland managing director Dennis Nobelius will be the chief executive of the new joint venture. The company is expected to start operations by next year.

The new company, which is yet to be named, will be developing advanced driver assistance systems (ADAS), as well as autonomous drive (AD) systems.

The ADAS and AD systems will be used in Volvo cars and will be sold exclusively by Autoliv to all car makers globally, with revenues shared by both companies.

"This new company is recognition of the fact that autonomous driving is the next step to transform road safety."

Autoliv chairman chief executive and president Jan Carlson said: “There are no two companies that can claim to have done more for automotive safety worldwide than Autoliv and Volvo.

"This new company is recognition of the fact that autonomous driving is the next step to transform road safety.”

The first ADAS products will be available for sale by 2019 with AD technologies available by 2021.

Image: Volvo and Autoliv to develop autonomous driving software. Photo: courtesy of Volvo Car Corporation.