Continental will buy Elektrobit Automotive to strengthen “its technology development of systems for automated driving,” the German tire-maker said in a statement on Tuesday.
Elektrobit, part of Finnish-listed Elektrobit Corporation but based in Erlangen in southern Germany, makes software to navigate cars, enable speech recognition and allow vehicles to drive automatically.
Cars that can park by themselves or brake to prevent an accident are seen as an important growth market, and self-driving cars, which don’t require a driver steering the wheel or pushing the pedal, are expected to come to market in the next decade.
“Cars are becoming increasingly connected and automated driving is another megatrend in the car industry.”
Partially self-driving cars could hit the road in large numbers in 2017, and the market could grow to about $42 billion (€37.5 billion) in 2025, Boston Consulting Group forecast in January.
German carmakers Audi and Daimler, as well as Google, are all developing self-driving cars. Apple, the iPhone and iPad maker, may also be looking at producing its own car, according to reports in February.
German car parts maker ZF Friedrichshafen last year agreed to buy American competitor TRW for $12.4 billion to boost its automated driving-assistance technology.
“Cars are becoming increasingly connected and automated driving is another megatrend in the car industry,” Jukka Harju, Elektrobit Corporation’s chief executive, said.
Hannover-based tire and parts maker Continental, which had sales of €34.5 billion in 2014, is already a supplier of automated driving and information software to Google and Tesla, the electric carmaker founded in Silicon Valley in 2003.
The purchase of Elektrobit Automotive marks another big takeover for Continental. In January, for example, it paid €1.4 billion for U.S. rubber firm Veyance Technologies.
Elektrobit Automotive, which had sales of €171 million last year and an operating profit of €16 million, has worked together with Continental for more than ten years.
The Finnish firm sells its products to a range of carmakers and car parts suppliers, including Audi, BMW, Daimler, Delphi and Ford.
It employs 1,431 people, mostly in Germany, and has a 51 percent stake in e.solutions, a German joint venture with Audi which develops entertainment and information software for Volkswagen Group cars. Volkswagen brands include VW, Audi, Porsche and Skoda.
The 51 percent stake will also transfer to Continental, Elektrobit said.
The transaction is subject to approval from Elektrobit Corporation shareholders, regulators and other customary closing conditions, it added.
Video: Rolf Dubitzky, head of driver assistance at elektrobit Automotive talks about the technology behind self-driving cars
Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. To contact the author: email@example.com