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Why Veoneer Is Soaring Today

By Rich Duprey – Aug 27, 2020 at 12:52PM

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The auto tech specialist could have a major software development opportunity on its hands.

What happened

Shares of Veoneer (VNE) are soaring 18% in morning trading Thursday after the automotive tech company announced a partnership with Qualcomm (QCOM 3.00%) to develop integrated software and systems on a chip for advanced driver assistance and autonomous driving vehicle platforms.

So what

The partnership could represent a leap forward for its advanced driver assistance systems (ADAS) as the auto industry suffered major setbacks during the pandemic. Veoneer also ended a joint venture with Volvo Group in April that saw them divvy up Zenuity, the joint venture that sought to develop and commercialize ADAS software. The two companies each took separate components of Zenuity to pursue on their own.

A driver pressing a self-driving auto button in car

Image source: Getty Images.

Now what

While the announcement is hopeful for Veoneer, it doesn't amount to much yet. The auto tech specialist merely said it had signed a non-binding letter of intent and expects to finalize a definitive agreement by the end of the year.

Veoneer estimates more than 90% of its available market will be for ADAS in the next decade. It supplies carmakers Ford Motor and Honda Motor, among others. It anticipates the systems developed with Qualcomm to be available for 2024 vehicle production.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Qualcomm. The Motley Fool has a disclosure policy.

Stocks Mentioned

Veoneer, Inc. Stock Quote
Veoneer, Inc.
VNE
Qualcomm Stock Quote
Qualcomm
QCOM
$121.75 (3.00%) $3.54
Ford Motor Stock Quote
Ford Motor
F
$13.12 (0.15%) $0.02
Honda Motor Stock Quote
Honda Motor
HMC
$23.89 (0.17%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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