“With Aurora, VW gains access to an experienced and globally leading development team in software and hardware for driverless vehicles,” the Wolfsburg-based group said in a statement.

Founded by former autonomous driving chiefs from Google, Tesla and Uber, Aurora makes technology that has already been tested in SUVs from VW subsidiary Audi with “good results,” German business daily Handelsblatt reported.

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In 2018, VW plans to outfit scores of cars with the self-driving system as a test fleet, the paper added.

Like other firms in the autonomous driving field, Aurora – labelled “America's hottest self-driving startup” by Silicon Valley bible Wired magazine – has sought out an established carmaker to make its high-tech visions a reality.

The difficulty for auto newcomers going it alone has been highlighted by Tesla, which has fallen far short of flamboyant billionaire founder Elon Musk's production targets for its coveted mass-market Model 3 electric car.

“Our priority at Aurora is making self-driving vehicles a reality… we know we'll get there sooner if we enter a partnership,” chief executive and Google veteran Chris Urmson said.

Electric future

The Volkswagen deal also offers Aurora an income stream, Handelsblatt reported, first from licensing fees paid by VW and later with a share of the revenue from the hoped-for fleets of autonomous taxis – slated for testing in Silicon Valley and the northern German city of Hamburg in the coming years.

Wolfsburg-based VW is joined in the partnership with Aurora by South Korea's Hyundai, which also hopes its autonomous vehicles will put rubber to the road by 2021.

Harried by massive financial and reputational damage from its “dieselgate” emissions cheating scandal, Volkswagen has since 2015 strived to show it is building an electric-powered, autonomous future.

“We thought long and hard” about the risk of being exploited for an image-polishing campaign, Urmson told Handelsblatt.

“But the VW leadership showed us that they now want to execute a technological transformation in their company and work towards the future.”

Thursday also saw digital mapping firm Here Technologies announce investments from German auto parts stalwarts Continental and Bosch, with each company taking a five-percent stake.

Luxury carmakers Audi, BMW and Daimler and US chipmaker Intel have all bought chunks of Here, seeing the company's ultra-detailed, up-to-the-minute maps as a vital building block for fully autonomous cars.