Volvo Cars and Chinese Internet giant Baidu agreed to jointly develop electric vehicles capable of autonomously operating at level 4, with the aim of serving the robot-axi market in China.
The companies announced the deal during an event in China on Thursday without releasing financial details.
It is Volvo's newest move to become a leading player in the robot axis sector. Last year, Volvo signed an agreement with Uber to sell it to 24,000 XC90s, which will become part of the first robotic axi fleet of the attraction.
"We have taken a new step and show that we are serious about the robot axi segment," said Volvo CEO Hakan Samuelsson to Automotive News Europe prior to the official announcement of the deal. "Although we are not an operator in the sector, we will be there as a highly competent supplier of cars that are compatible with the software packages of each company."
With Baidu, this means that Volvo's vehicles are being modified to work with the Apollo autonomous operating software platform of the technology company.
Last year, Baidu decided to make Apollo available to third parties to accelerate the development of the system to better compete with US companies such as Tesla and Waymo. In July, Baidu also announced that it has signed a Memorandum of Understanding with BMW to grant access to the Apollo platform.
Volvo said in June that it wants autonomous cars to generate one third of global sales by 2025. Samuelsson told ANE that a "substantial" part of that number would be sold to robotic axi offices.
"These will be cars that are compatible with the software products whose big players will be in this area," he said. The CEO expects Baidu to be a sector leader in China and Uber will be strong in North America. "But there are still a number of others in the segment that could also be partners for us in the future," he added without working.
It is expected that Robotaxis will take the lead in using autonomous driving technology, with the automotive industry on track to spend 20 and 30 billion dollars (18 billion to 27 billion euros) in 2017 and 2022, analysts estimate.
China is ready to become the world's largest single market for autonomous cars with a volume of 14.5 million by 2040, according to Volvo's release based on data from market researcher IHS Markit, which expects a total of 33 million autonomous cars to be sold worldwide by that year.
Post 2020 product
Samuelsson said the Volvo and Baidu plan to have their first product ready "sometime after 2020" and although the partners still have to decide which type of car they will make, it will either be underpinned by the scalable platform architecture of the second generation of the Swedish automaker (known internally as SPA2) or the current version of its compact modular architecture.
The CEO said that both SPA2 and CMA are capable of supporting full electric cars and both architectures are or will be installed in its factories in China.
However, it appears that the most likely candidate is SPA2, as Volvo has said that the final level 4 would offer autonomy on the platform, which debuts with the launch of the third-generation XC90 crossover in 2021. The automaker also promised that by 2021 it will offer a vehicle with levels of level 4. In addition, Samuelsson said in September that Volvo "should have a specialized car for driving services" based on SPA2.
Samuelsson also pointed out that the final product of Baidu-Volvo can look very different from what is on the road today. "We have to look at possible adjustments to the body shape we are looking at," he said. "It is possible to do something that is truly tailor-made for this market segment."