The partnership will allow both companies to develop and sell these vehicles to potential Chinese customers, underlining the Swedish company’s aspirations to be the supplier of choice for mobility companies globally.

Volvo and Baidu will pool resources to take the next step and prepare for mass manufacturing of fully electric and autonomous cars, according to the agreement.

Baidu will contribute with its Apollo autonomous driving platform. Volvo will provide access to its expertise and advanced technologies of the car industry.

Industry forecasts show that China is likely to become the single largest market for autonomous cars in the world in the coming decades. Market research firm IHS Markit predicted* earlier this year that around 14.5m autonomous cars will be sold in China by 2040, on a total global volume of around 33m.

Håkan Samuelsson, President and Chief Executive of Volvo Cars, said: “There is a strong development in autonomous drive in China, where Baidu is a leading player, and the market there offers huge opportunities for us as the supplier of choice for autonomous fleets.”

In the coming years, Volvo Cars will seek to capitalise on and lead the disruption currently underway in the industry. This ambition is reflected in a new set of longer-term ambitions that Volvo Cars announced earlier this year, which focus on establishing a leading position in electrification, autonomous drive and new models of car ownership and access.

Volvo also aims to become a global and diversified mobility service provider, and sees autonomous drive as a key growth area as part of this strategy. By the middle of the next decade, it expects to generate one third of all annual sales from autonomous cars.