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Another ADAS Supplier cuts losses after the latest results

ADAS Supplier Veoneer & Volvo split JV Zenuity after losses doubled in 3 years

The Swedish carmaker and the auto tech supplier Veoneer will split their jointly owned software venture Zenuity according to the company’s recent publication. Volvo Cars will take over Zenuity’s development and commercialization of unsupervised autonomous drive software in accordance with SAE level 4 and level 5, while Veoneer will integrate the current Zenuity business focused on ADAS software.

Volvo’s new company is expected to become operational in the third quarter of 2020. It will develop the unsupervised autonomous-driving software that will be introduced in the next generation of cars based on Volvo’s latest scalable product architecture (SPA2).

“Volvo Cars is committed to introduce safe, unsupervised autonomous drive on highways with its next generation of cars”

Hakan Samuelsson, Volvo CEO

Meanwhile, Veoneer plans to develop a scalable ADAS system that addresses the needs of the light vehicle market. This system includes Zenuity-developed software and hands-free driving functionality. According to Veoneer, the split will allow them to drive their business strategy more effectively.  Furthermore, the supplier expects to save around €28 to €38 million annually through the split. Alongside this Veoneer expects to receive a payment of roughly €14 million, subject to a final agreement.

Auto2x insights: Zenuity’s case in the ADAS Supplier competition

Zenuity was created to provide software development for Autonomous Driving and driver assistance systems Volvo cars would source ADAS and AD technologies from this new joint venture. Veoneer has no restrictions, to deliver software to OEMs around the globe.

Zenuity’s first ADAS products came in 2019 whereas Automated Driving technologies are coming in 2021 in Polestar and L4 in Volvo. In 2019, Veoneer was awarded Active Safety business with 16 OEMS around the world, including software awards for the Zenuity software suite with 4 customers, according to it’s 2019 Annual Report.

Veoneer’s losses amounted to $70 million in 2019 from its equity investment in Zenuity, $7m more than in 2018

ADAS Supplier
ADAS Supplier

In its 2019 Annual report, Veoneer stated: “The net loss for the full year of 2019 increased by $228 million to $522 million as compared to 2018. Veoneer’s net loss from its equity method investment (Zenuity) of $70 million for the full year of 2019 increased by $7 million as compared to 2018. This increase is mainly attributable to the hiring and continued build-up of software engineers through the first half of 2019”.

Veoneer, 2019 Annual report

Veoneer’s loss from Zenuity has increased from $31 million in 2017 to $63m in 2018 and $70m in 2019 according to the company. The cost have been associated with R&D.

New agreement indicates Veoneer attempt to invert the downward trend & strengthen its ADAS-to-Automotive revenue ratio

The split of the JV is expected to provide Veoneer with annual cash savings of $30-$40 million. It will also allow Veoneer to continue the development of automated driving but focus on ADAS which will be their core market for the next decade.

To learn more about Suppliers’ Strategies in ADAS read our report: Rankings & market shares of Top Tier-1 ADAS Suppliers by 2020.

ADAS Supplier
ADAS Supplier

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