10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No.: 001-38471

Veoneer, Inc.

(Exact name of registrant as specified in its charter)

Delaware	82-3720890
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Klarabergsviadukten 70, Section C6
Box 13089

Stockholm Sweden

(Address of principal executive offices)

SE- 103 02

(Zip Code)

+46 8 527 762 00

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $1.00 par value	VNE	New York Stock Exchange

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes:  ☒ No: ☐

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes:  ☒    No:  ☐

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging Growth Company	☐

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: ☐     No:  ☒ 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of October 16, 2020, there were 111,594,984 shares of common stock of Veoneer, Inc., par value $1.00 per share, outstanding.

Exhibit index located on page 43

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including without limitation, statements regarding management’s examination of historical operating trends and data, estimates of future sales (including estimates related to order intake), operating margin, cash flow, RD&E spend, taxes or other future operating performance or financial results, are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “may,” “likely,” “might,” “would,” “should,” “could,” or the negative of these terms and other comparable terminology, although not all forward-looking statements contain such words. We have based these forward-looking statements on our current expectations and assumptions and/or data available from third parties about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs.

New risks and uncertainties arise from time to time, and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Factors that could cause actual results to differ materially from these forward-looking statements include, without limitation, the following: general economic conditions; the cyclical nature of automotive sales and production; the impact of the coronavirus pandemic (COVID-19) on the Company’s financial condition, business operations and liquidity; the impact of COVID-19 on our customers and their production and product launch schedules; the impact of COVID-19 on our suppliers and availability of components for our products; our ability to complete the transaction contemplated by the non-binding agreement with Qualcomm Technologies, which is subject to the negotiation and documentation of a definitive agreement; changes in general industry and market conditions or regional growth or decline; further decreases in light vehicle production; our ability to achieve the intended benefits from our separation from our former parent; our ability to be awarded new business or loss of business from increased competition; higher than anticipated costs and use of resources related to developing new technologies; higher raw material, energy and commodity costs; component shortages; changes in customer and consumer preferences for end products; market acceptance of our new products; dependence on and relationships with customers and suppliers; our ability to share RD&E costs with our customers; unfavorable fluctuations in currencies or interest rates among the various jurisdictions in which we operate; costs or difficulties related to the integration of any new or acquired businesses and technologies; successful integration of acquisitions and operations of joint ventures; successful implementation of strategic partnerships and collaborations; product liability, warranty and recall claims and investigations and other litigation and customer reactions thereto; higher expenses for our pension and other post-retirement benefits, including higher funding needs for our pension plans; work stoppages or other labor issues; possible adverse results of future litigation, regulatory actions or investigations or infringement claims; our ability to protect our intellectual property rights; tax assessments by governmental authorities and changes in our tax rate; dependence on key personnel; legislative or regulatory changes impacting or limiting our business; political conditions; and other risks and uncertainties identified in Part I Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A -“Risk Factors” and in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission ("SEC") on February 21, 2020.

For any forward-looking statements contained in this Quarterly Report on Form 10-Q or any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we assume no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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Veoneer, Inc.

Table of Contents

	Page
Part I – Financial Information	5
Item 1 – Condensed Consolidated Financial Statements	5
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	41
Item 4 - Controls and Procedures	41
Part II – Other Information	42
Item 1 - Legal Proceedings	42
Item 1A - Risk Factors	42
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3 – Defaults Upon Senior Securities	43
Item 4 – Mine Safety Disclosures	43
Item 5 – Other Information	43
Item 6 - Exhibits	44
Signature	45

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Part I – Financial Information

Item 1 – Condensed Consolidated Financial Statements

Veoneer, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(U.S. DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)

		Three Months Ended September 30				Nine Months Ended September 30
		2020		2019		2020		2019
Net sales	Note 3	$	371	$	462	$	918	$	1,446
Cost of sales		(317)		(389)		(808)		(1,211)
Gross profit		54		73		110		235
Selling, general and administrative expenses		(43)		(45)		(124)		(148)
Research, development and engineering expenses, net		(124)		(144)		(299)		(459)
Amortization of intangibles		(1)		(6)		(4)		(17)
Other income, net		11		—		27		1
Operating loss		(103)		(122)		(290)		(388)
Loss on divestiture and assets impairment charge, net	Note 5, 10	(24)		—		(91)		—
Loss from equity method investment	Note 10	(1)		(16)		(39)		(50)
Interest income		1		7		8		14
Interest expense		(5)		(5)		(15)		(7)
Other non-operating items, net		—		—		—		1
Loss before income taxes	Note 16	(132)		(136)		(427)		(430)
Income tax (expense) benefit	Note 8	—		(3)		(26)		1
Net loss		(132)		(139)		(453)		(429)
Less: Net income (loss) attributable to non-controlling interest		—		(6)		1		(26)
Net loss attributable to controlling interest		$	(132)	$	(133)	$	(454)	$	(403)
Net loss per share - basic and diluted	Note 15	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)
Weighted average number of shares outstanding (in millions)		111.59		111.40		111.55		98.32
Weighted average number of shares outstanding, assuming dilution (in millions)		111.59		111.40		111.55		98.32

See notes to the unaudited condensed consolidated financial statements.

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Veoneer, Inc.

Condensed Consolidated Statements of Comprehensive Loss (Unaudited)

(U.S. DOLLARS IN MILLIONS)

	Three Months Ended September 30				Nine Months Ended September 30
	2020		2019		2020		2019
Net loss	$	(132)	$	(139)	$	(453)	$	(429)
Other comprehensive loss, before tax:
Change in cumulative translation adjustment	15		(27)		15		(40)
Other comprehensive income (loss), before tax	15		(27)		15		(40)
Other comprehensive income (loss), net of tax	15		(27)		15		(40)
Comprehensive loss	(117)		(166)		(438)		(469)
Less: Comprehensive income (loss) attributable to non-controlling interest	—		(7)		2		(26)
Comprehensive loss attributable to controlling interest	$	(117)	$	(159)	$	(440)	$	(443)

See notes to the unaudited condensed consolidated financial statements.

6

Veoneer, Inc.

Condensed Consolidated Balance Sheets

(U.S. DOLLARS IN MILLIONS)

		(unaudited)
		September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents		$	846	$	859
Receivables, net		245		253
Inventories, net	Note 9	124		144
Related party receivables	Note 17	6		11
Prepaid expenses and other contract assets		32		47
Other current assets		20		18
Assets held for sale	Note 5	—		317
Total current assets		1,273		1,649
Property, plant and equipment, net		413		473
Operating lease right-of-use assets		86		100
Equity method investment	Note 10	129		87
Goodwill		314		290
Intangible assets, net		22		17
Deferred tax assets		6		7
Investments		9		9
Other non-current assets		27		111
Total assets		$	2,279	$	2,743
Liabilities and equity
Accounts payable		$	223	$	233
Related party payables	Note 17	1		3
Accrued expenses	Note 11	230		192
Income tax payable		28		7
Related party short-term debt	Note 17	14		1
Other current liabilities		51		37
Liabilities held for sale	Note 5	—		118
Total current liabilities		547		591
4.00% Convertible Senior Notes due 2024	Note 6	167		160
Related party long-term debt	Note 17	103		—
Pension liability	Note 12	18		17
Deferred tax liabilities		10		13
Operating lease non-current liabilities		68		82
Finance lease non-current liabilities		42		33
Other non-current liabilities		26		29
Total non-current liabilities		434		334
Equity
Common stock (par value $1.00, 325 million shares authorized, 111 million shares issued and outstanding as of September 30, 2020 and December 31, 2019)		111		111
Additional paid-in capital		2,349		2,343
Accumulated deficit		(1135)		(681)
Accumulated other comprehensive loss		(27)		(44)
Total equity		1,298		1,729
Non-controlling interest		—		89
Total equity and non-controlling interest		1,298		1,818
Total liabilities, equity and non-controlling interest		$	2,279	$	2,743

See notes to the unaudited condensed consolidated financial statements.

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Veoneer, Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(U.S. DOLLARS IN MILLIONS)

	Nine months ended September 30, 2020
	Equity attributable to
	Common Stock		Additional Paid In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-controlling Interest		Total
Balance at beginning of period	$	111	$	2,343	$	(681)	$	(44)	$	89	$	1,818
Net loss	—		—		(454)		—		1		(453)
Foreign currency translation	—		—		—		14		1		15
Stock based compensation expense	—		6		—		—		—		6
Business divestitures	—		—		—		3		(91)		(88)
Balance at end of period	$	111	$	2,349	$	(1,135)	$	(27)	$	—	$	1,298

	Nine months ended September 30, 2019
	Equity attributable to
	Common Stock		Additional Paid In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non-controlling Interest		Total
Balance at beginning of period	$	87	$	1,938	$	(181)	$	(19)	$	101	$	1,927
Comprehensive Income (Loss):
Net loss	—		—		(403)		—		(26)		(429)
Foreign currency translation	—		—		—		(40)		—		(40)
Stock based compensation expense	—		5		—		—		—		5
Issuance of common stock	24		379		—		—		—		403
Purchase of minority interest	—		(14)		—		—		14		—
Equity component of issuance of convertible notes, net (Note 6)	—		35		—		—		—		35
Balance at end of period	$	111	$	2,343	$	(584)	$	(59)	$	89	$	1,900

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Veoneer, Inc.

Condensed Consolidated Statements of Cash Flow (Unaudited)

(U.S. DOLLARS IN MILLIONS)

	Nine Months Ended September 30
	2020		2019
Operating activities
Net loss	$	(453)	$	(429)
Depreciation and amortization	73		90
Gain on divestitures	(77)		—
Assets impairment charge	168		—
Undistributed loss from equity method investments	39		50
Stock-based compensation	6		5
Deferred income taxes	(3)		(7)
Other, net	3		(7)
Change in operating assets and liabilities:
Receivables, gross	36		48
Accrued expenses	45		42
Related party receivables and payables, net	4		37
Accounts payable	(8)		(18)
Prepaid expenses and other contract assets	14		(10)
Inventories, gross	15		1
Income taxes	20		—
Other current assets and liabilities, net	3		(23)
Net cash used in operating activities	(115)		(221)
Investing activities
Proceeds from divestitures	198		—
Capital expenditures	(70)		(168)
Equity method investment	10		(32)
Short-term investments mature into cash	—		5
Long term investments	(1)		(3)
Proceeds from sale of property, plant and equipment	10		—
Acquisition of intangible assets	(10)		—
Acquisition of business net of cash acquired	(33)		—
Net cash provided by (used in) investing activities	104		(198)
Financing activities
Issuance of common stock	—		405
Dividend paid to non-controlling interest	(5)		—
(Payments for) proceeds from long-term debt	(1)		206
(Payments for) Proceeds from short-term debt	(2)		22
Net increase in related party short-term debt	—		1
Net cash (used in) provided by financing activities	(8)		634
Effect of exchange rate changes on cash and cash equivalents	6		(17)
Increase (decrease) in cash and cash equivalents	(13)		198
Cash and cash equivalents at beginning of period	859		864
Cash and cash equivalents at end of period	$	846	$	1,062

See notes to the unaudited condensed consolidated financial statements.

9

Veoneer, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(U.S. DOLLARS IN MILLIONS)

Note 1. Basis of Presentation

Spin-Off

On June 29, 2018 (the “Distribution Date”), Veoneer, Inc. (“Veoneer” or “the Company”) became an independent, publicly-traded company as a result of the distribution by Autoliv, Inc. (“Autoliv” or “Former Parent”) of 100 percent of the outstanding common stock of Veoneer to the stockholders of Autoliv (the “Spin-Off”). Each Autoliv stockholder and holder of Autoliv’s Swedish Depository Receipts (SDRs) of record as of certain specified dates received one share of Veoneer common stock or one Veoneer SDR, respectively, for every one share of Autoliv common stock or Autoliv SDR. The Spin-Off was completed on June 29, 2018 in a tax free transaction pursuant to Section 355 of the U.S. Internal Revenue Code.

On July 2, 2018, Veoneer common stock began regular trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “VNE” and Veoneer SDRs began trading on Nasdaq Stockholm under the symbol “VNE-SDB”. Agreements entered into between Veoneer and Autoliv in connection with the Spin-Off govern the relationship between the parties following the Spin-Off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided on a temporary basis between the parties.

The Company has two operating segments, Electronics and Brake Systems. Electronics includes all electronics resources and expertise, Restraint Control Systems and Active Safety products, and Brake Systems provides brake control and actuation systems. The Asian business of the Brake Systems segment was sold on February 3, 2020 and the majority of the Brake Systems business in North America was sold on August 10, 2020. The remaining Brake Systems business is no longer a reportable segment due to immateriality.

The accompanying unaudited condensed consolidated financial statements for Veoneer do not include all of the information and notes required by the accounting principles generally accepted in the U.S. (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Veoneer’s Audited Consolidated Financial Statements for the year ended December 31, 2019 and corresponding notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Certain amounts in the unaudited condensed consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have been calculated using unrounded amounts.

Follow-on Offerings

On May 28, 2019, the Company completed follow-on public offerings of 24,000,000 shares of common stock and $207 million aggregate principal amount of 4.00% Convertible Senior Notes due 2024 (the “Notes”) (including $27 million aggregate principal amount pursuant to the underwriters’ over-allotment option to purchase additional notes). The public offering price for the Company's common stock offering was $17.50 per share. The Company received net proceeds of approximately $403 million from the common stock offering and approximately $200 million from the Notes offering, in each case after deducting the underwriting discounts and issuance costs directly attributable to each offering.

Divestiture of Veoneer Nissin Brake System ("VNBS")

On October 30, 2019, Veoneer signed definitive agreements to sell its 51% ownership in Veoneer Nissin Brake Japan ("VNBJ") and Veoneer Nissin Brake China ("VNBZ") entities that comprise VNBS to its joint venture partner Nissin-Kogyo Co., Ltd. (“Nissin Kogyo”), and Honda Motor Co., Ltd. The aggregate purchase price was $176 million. The divestiture of VNBJ and VNBZ was structured as two separate transactions each of which was completed on February 3, 2020, and the VNBS joint venture was terminated. See Note 5 "Divestiture and held for sale" for additional information.

Divestiture of Veoneer Brake Systems ("VBS")

On August 10, 2020 Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF Friedrichshafen AG ("ZF"). The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement. See Note 5 "Divestiture and held for sale" for additional information.

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Note 2. Summary of Significant Accounting Policies

A summary of significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Other Income, Net

On March 30, 2020, Veoneer commenced arbitration against Nissin Kogyo regarding a dispute arising out of a Share Purchase Agreement (“SPA”) dated September 2015. On June 30, 2020, Veoneer agreed to settle the proceedings, along with any and all legal claims arising out of or relating to the SPA dispute, for $20 million. The cash settlement was received by the Company on June 30, 2020 and is reported among Other income, net in the unaudited Condensed Consolidated Statements of Operations.

Research, development and engineering

In early 2019, as a result of multiple factors, including general market conditions, numerous customer change requests, and challenges involved in developing new technologies for various customer programs, Veoneer launched a broad initiative to have its customers contribute more to the cost of developing these programs. The Company began to approach customers to negotiate or renegotiate new or existing agreements to provide for more favorable cost sharing terms. As part of this initiative, Veoneer approached a certain customer to adjust the terms of existing award agreements. On May 20, 2020, the Company entered into an adjustment agreement with such customer and received a lump sum settlement of $65 million for past research, development and engineering costs and implementation of change requests, and $11 million for software specific future development.

During the second quarter of 2020, the Company received a total of $76 million from the adjustment agreement. According to the Company’s accounting policies, research, development and most engineering expenses are expensed as incurred. These expenses are reported net of expense reimbursements from contracts to further customize existing products for specific customers.

For the nine months ended September 30, 2020, the Company recognized a total reimbursement from customers of $82 million for past completed engineering services as a reduction of research, development and engineering costs on the unaudited Condensed Consolidated Statement of Operations.

In addition, as of September 30, 2020, the Company recognized $15 million from the adjustment agreement as deferred income reported among Other current liabilities in the unaudited Condensed Consolidated Balance Sheet. The deferred amount will be recognized in a systematic way and in proportion to the completion of the future engineering services related to the adjustment agreement as reimbursement from customers.

Accounting for credit losses

The Company has evaluated the available adoption options of common credit loss methods that are acceptable as per FASB Accounting Standards Codification Topic 326, Credit Losses. The Company adopted the available Loss-rate method where the impairment is calculated using an estimated loss rate and multiplying it by the asset’s amortized cost at the balance sheet date. This method appropriately reflects the Company´s risk pattern in relation to its accounts receivables.

The key components of the Company’s Loss-rate model are as follows:

•A list of the Company's customers credit rating and credit default risk rate from Bloomberg.

•Actual write-offs or reversals of previous write-offs of accounts receivables.

•Evaluation of other unusual facts and circumstances which could impact the credit loss rate, such as risk of bankruptcy or potential collectability issues.

The Company’s credit loss model includes the Company’s customer list. The customer list captures the existing customers. The list is put into a Bloomberg data query to generate customers short-term credit rating. The credit default risk rate is used to calculate the credit loss rate or estimated loss rate.

For customers that do not have credit default risk rate, management uses the six-month LIBOR rate as a credit rating and a credit default risk rate. Management believes that the six-month LIBOR rate adequately reflects the short-term nature of the Company’s trade receivables and is also in line with the Company’s invoice payment terms.

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Concentration of Credit Risk

A substantial majority of the Company’s trade receivables are derived from sales to OEMs. For the three and nine months ended September 30, 2020 the Company’s four largest customers accounted for 55% and 57% of net sales, respectively and for the three and nine months ended September 30, 2019, the Company’s four largest customers accounted for 61% and 59% of net sales, respectively. Additionally, as of September 30, 2020 and December 31, 2019, these four largest customers accounted for 41% and 39%, respectively, of the Company’s accounts receivables. The Company believes that the receivable balances from these largest customers do not represent a significant credit risk based on past collection experience. The Company has adopted credit policies and standards intended to accommodate industry growth and inherent risk. The Company believes that credit risks are moderated by the financial stability of the Company’s major customers.

New Accounting Standards

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s condensed consolidated financial statements.

Adoption of New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019, and earlier adoption is permitted for annual periods beginning after December 15, 2018. The Company adopted ASU 2016-13 effective January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance. The adoption of ASU 2016-13 did not have a material impact on the Company's condensed consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18 Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606, which (1) clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC Topic 606, Revenue from Contracts with Customers (Topic 606), when the collaborative arrangement participant is a customer in the context of a unit of account, (2) adds unit-of-account guidance in Topic 808 to align with Topic 606 when an entity is assessing whether the collaborative arrangement, or a part of the arrangement, is within the scope of Topic 606, (3) precludes presenting transactions together with revenue when those transactions involve collaborative arrangement participants that are not directly related to third parties and are not customers. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 did not have a material impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 affects any entity that enters into a lease, with some specified scope exceptions. For public business entities, the amendments in ASU 2016-02 are effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 in the annual period beginning January 1, 2019. The Company applied the modified retrospective transition method and elected the transition option to use the effective date January 1, 2019,

12

as the date of initial application. The Company did not adjust its comparative period financial statements for effects of ASU 2016-02, and has not made the new required lease disclosures for periods before the effective date. The Company has recognized its cumulative effect transition adjustment as of the effective date. In addition, the Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, have allowed the Company to carry forward the historical lease classification. The adoption of the new standard resulted in recording operating lease assets and lease liabilities of approximately $75 million as of January 1, 2019. The adoption of the new lease standard did not have a material impact on the Company's condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. ASU 2019-12 is effective for public business entities for annual periods beginning after December 15, 2020, and early adoption is permitted. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company plans to adopt ASU 2019-12 as of January 1, 2021. The Company has concluded that the pending adoption of ASU 2019-12 will not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. ASU 2018-14 removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the employer; and the effects of a one-percentage point change in assumed health care cost trend rates. ASU 2018-14 requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact on the Company's condensed consolidated financial statements.

Note 3. Revenue

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary region and products.

Net Sales by Region

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	85	$	—	$	85	$	80	$	77	$	157
Americas	123		13		136		133		14		147
Europe	150		—		150		158		—		158
Total net sales	$	358	$	13	$	371	$	371	$	91	$	462

Net Sales by Region

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	202	$	24	$	226	$	259	$	229	$	488
Americas	283		33		316		432		46		478
Europe	376		—		376		480		—		480
Total net sales	$	861	$	57	$	918	$	1,171	$	275	$	1,446

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Net Sales by Products

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	188	$	—	$	188	$	193	$	—	$	193
Active Safety products	170		—		170		178		—		178
Brake Systems	—		13		13		—		91		91
Total net sales	$	358	$	13	$	371	$	371	$	91	$	462

Net Sales by Products

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	450	$	—	$	450	$	617	$	—	$	617
Active Safety products	411		—		411		554		—		554
Brake Systems	—		57		57		—		275		275
Total net sales	$	861	$	57	$	918	$	1,171	$	275	$	1,446

Note 4. Business Combinations

Business combinations generally take place to either gain key technology or strengthen Veoneer’s position in a certain geographical area or with a certain customer. The results of operations and cash flows from the Company’s acquisitions have been included in the Company’s unaudited condensed consolidated financial statements prospectively from their date of acquisition.

Zenuity, Inc and Zenuity GmbH

On April 2, 2020, the Company entered into a non-binding agreement with Volvo Cars Corporation (VCC) to separate Zenuity, a 50% ownership joint venture with VCC in order for each company to more effectively drive their respective strategies. The parties entered into definitive agreements and effected the separation on July 1, 2020. As part of the transaction the Company paid approximately $37 million to Zenuity for 200 software engineers and two business units located in Germany and the US.

The Company applied the acquisition method of accounting to the Zenuity, Inc and Zenuity GmbH entities, whereby the excess of the fair value of the business over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the workforce. The recognized goodwill of $23 million recorded as part of this acquisition is included in the Electronics reportable segment and is not deductible for tax purposes. The preliminary opening balance sheet is subject to adjustment based on final assessment of the fair values of certain acquired assets, principally intangibles, and certain assumed liabilities. The Company used discounted cash flow ("DCF") analyses, which represent Level 3 fair value measurements, to assess the purchase price allocation. As the Company finalizes the fair value of the acquired assets and assumed liabilities, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments occur.

Total Zenuity, Inc and Zenuity GmbH acquisition related costs were approximately $1 million for the period ended September 30, 2020. These costs were reflected in Selling, general and administrative expenses in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

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The following table summarizes the estimated fair values of identifiable acquired assets and assumed liabilities:

Assets	As of July 1, 2020
Cash and cash equivalents	$	4
Receivable, net	12
Property, plant and equipment, net	3
Operating lease right-of-use assets	10
Goodwill	23
Total assets	$	52
Tax payable	2
Accrued liabilities	3
Operating lease non-current liabilities	10
Total liabilities	$	15
Net assets acquired	$	37

Intellectual property

In addition, the Company acquired the right to use VCC intellectual property of $10 million in a transaction outside of the business combination. The acquired intangible asset will be assigned a useful life of 8 years and amortized over the useful life on a straight-line basis.

Separately, the Company has licensed intellectual property for $10 million to VCC with zero cost base in a transaction outside of the business combination and recognized this amount as Other Income in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

Note 5. Divestiture and held for sale

VBS

In 2019, the Company started exploring strategic options for its non-core business in the Brake Systems segment. In the first quarter of 2020, management committed and approved a plan to sell VBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of June 30, 2020 and were required to be adjusted to the lower of fair value less cost to sell or carrying value. This resulted in an impairment charge of approximately $144 million which was recorded within Gain/(loss) on divestiture and assets held for sales, net on the unaudited Condensed Consolidated Statements of Operations during the period ended June 30, 2020. The impairment was measured using third party sales pricing to determine fair values of the assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The assets and liabilities associated with the transaction are separately classified as held for sale in the unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 and depreciation of long-lived assets ceased on June 30, 2020. The divestiture did not meet the criteria for presentation as a discontinued operation.

On August 10, 2020 Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF. The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement. The reimbursement cost was recognized as asset and liability held for sale on the unaudited Condensed Consolidated Balance sheet as of June 30, 2020.

VNBS

In the fourth quarter of 2019, management approved a plan to sell VNBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of December 31, 2019, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.

On October 30, 2019, the Company entered into definitive agreements with Nissin-Kogyo Co., Ltd. and Honda Motor Co., Ltd to divest VNBS. On February 3, 2020, the Company completed the sale of VNBS. The aggregate purchase price of the transaction was $176 million, subject to certain adjustments. The net cash proceeds after adjusting for closing costs was $175 million. The Company recognized a gain on the divestiture of $77 million, net of closing costs.

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The major classes of assets and liabilities held for sale were as follows:

(Dollars in millions)	As of
Assets held for sale	December 31, 2019
Cash and cash equivalents	$	35
Receivables, net	58
Inventories, net	17
Property, plant and equipment, net	126
Intangible assets, net	66
Other current assets	15
Total assets held for sale	$	317
Liabilities held for sale
Accounts payable	50
Accrued expenses	20
Related party short-term debt	12
Pension liability	8
Other current liabilities	28
Total liabilities held for sale	$	118

Note 6. Debt

The Company’s short and long-term debt consists of the following:

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Short-Term Debt:
Short-term borrowings	$	3	$	3
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	167		160
Other long-term borrowings	6		8
Total Debt	$	176	$	171

Long-Term Debt:

4.00% Convertible Senior Notes

On May 28, 2019, the Company issued, in a registered public offering in the U.S., Convertible Senior Notes (the “Notes”) with an aggregate principal amount of $207 million. The Notes bear interest at a rate of 4.00% per year payable semi-annually in arrears on June 1 and December 1 of each year, beginning December 1, 2019. The Notes will mature on June 1, 2024, unless repurchased, redeemed or converted in accordance with their terms prior to such date.

The net proceeds from the offering of the Notes were approximately $200 million, after deducting issuance costs of $7 million. The Company accounted for these issuance costs as a direct deduction from the carrying amount of the Notes. These costs are being amortized into interest expense for 5 years or through June 2024.

The conversion rate is 44.8179 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $22.3125 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or notice of redemption, as the case may be. In no event will the conversion rate per $1,000 principal amount of notes as a result of this adjustment exceed 57.1428 shares of common stock, as stipulated in the indenture.

The Company may not redeem the Notes prior to June 1, 2022. On or after this date, the Company may redeem for cash, shares or both all or any portion of the Notes, at our option, if the last reported sale price of the Company's common stock has been at

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least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

If the Company undergoes a fundamental change (as defined in the indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Notes are the Company's general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment with all of the Company's liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

Holders may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding March 1, 2024 only under the following circumstances: (1) if the last reported sale price of the Company's common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the "trading price" (as defined in the indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.

On or after March 1, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at the Company's election, as stipulated in the indenture.

In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, which does not meet the criteria for separate accounting as a derivative as it is indexed to the Company's own stock, was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the unaudited Consolidated Condensed Balance Sheet and amortized to interest expense using the effective interest method over the term of the Notes. The effective interest rate on the Notes is 10%. The equity component of the Notes of approximately $46 million is included in additional paid-in capital in the unaudited Condensed Consolidated Balance Sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The Company allocated transaction costs related to the Notes using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the unaudited Condensed Consolidated Balance Sheet and amortized to interest expense over the term of the Notes, and transaction costs attributable to the equity component were netted with the equity component in shareholders’ equity.

The following table presents the outstanding principal amount and carrying value of the Notes:

4.00% Convertible Senior Notes due 2024	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Principal amount (face value)	$	207	$	207
Unamortized issuance cost	(4)		(5)
Unamortized debt discount	(36)		(42)
Net Carrying value	$	167	$	160

The Company recognized total interest expense related to the Notes of $4 million and $4 million for three months ended September 30, 2020 and 2019, respectively, and $13 million and $6 million for the nine months ended September 30, 2020 and 2019, respectively, in the unaudited Condensed Consolidated Statements of Operations.

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The estimated fair value of the Notes was $198 million as of September 30, 2020. The estimated fair value of the Notes was determined through consideration of quoted market prices. The fair value is classified as Level 2, as defined in Note 7 "Fair Value Measurements".

Note 7. Fair Value Measurements

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs.

Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

Level 2 - Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 - Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Assets which are valued at net asset value per share ("NAV"), or its equivalent, as a practical expedient are reported outside the fair value hierarchy, but are included in the total assets for reporting and reconciliation purposes.

Items Measured at Fair Value on a Recurring Basis

Derivative instruments - The Company uses derivative financial instruments, “derivatives”, to mitigate the market risk that occurs from its exposure to changes in interest and foreign exchange rates. The Company does not enter into derivatives for trading or other speculative purposes. The Company’s use of derivatives is in accordance with the strategies contained in the Company’s overall financial risk policy. The derivatives outstanding as of September 30, 2020 were foreign exchange swaps. All swaps principally match the terms and maturity of the underlying obligation and no swaps have a maturity beyond six months. All derivatives are recognized in the unaudited condensed consolidated financial statements at fair value. Certain derivatives are from time to time designated either as fair value hedges or cash flow hedges in line with the hedge accounting criteria. For certain other derivatives hedge accounting is not applied either because non-hedge accounting treatment creates the same accounting result or the hedge does not meet the hedge accounting requirements, although entered into applying the same rationale concerning mitigating market risk that occurs from changes in interest and foreign exchange rates. The Company’s derivatives are classified as Level 2 of the fair value hierarchy and there were no transfers between the levels during this or comparable periods.

Financial Statement Presentation

The Company enters into master netting agreements, International Swaps and Derivatives Association (ISDA) agreements with all derivative counterparties. The netting agreements allow for netting of exposures in the event of default or breach of the counterparty agreement. The fair values in the Condensed Consolidated Balance Sheets have been presented on a gross basis. Derivative financial instruments designated and non-designated as hedging instruments are included in the Company’s Condensed Consolidated Balance Sheets. The notional value of the derivatives not designated as hedging instruments was $198 million as of September 30, 2020 and $291 million as of December 31, 2019. As of September 30, 2020, derivatives not designated as hedging instruments was an asset of $3 million, and as of December 31, 2019, the derivatives not designated as hedging instruments was a liability of $1 million. There were no derivatives designated as hedging instruments.

Gains and losses on derivative financial instruments recognized in the unaudited Condensed Consolidated Statements of Operations for the three months ended September 30, 2020 and 2019 were a gain of $2 million and a loss of less than $1 million, respectively, and for the nine months ended September 30, 2020 and 2019 were a gain of $4 million and a gain of $1 million, respectively.

Items Measured at Fair Value on a Non-Recurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. The fair value measurements are generally determined using unobservable inputs and are classified within Level 3 of the fair value hierarchy. These assets include long-lived assets, intangible assets and investments in affiliates, which may be written down to fair value as a result of impairment. The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets and settlements of liabilities, as observable inputs are not available. The Company has determined that each of these fair value measurements reside within Level 3 of the

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fair value hierarchy. To determine the fair value of long-lived assets, the Company utilizes the projected cash flows expected to be generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets. VBS assets and liabilities classified as held for sale and the related impairment were measured using third party sales pricing to determine fair values of the assets. See Note 5 "Divestiture and held for sale" for additional information.

Investments

The Company may, as a practical expedient, estimate the fair value of certain investments using NAV of the investment as of the reporting date. This practical expedient generally deals with investments that permit an investor to redeem its investment directly with, or receive distributions from, the investee at times specified in the investee’s governing documents. Examples of these investments (often referred to as alternative investments) may include ownership interests in real assets, certain credit strategies, and hedging and diversifying strategies. They are commonly in the form of limited partnership interests. The Company uses NAV as a practical expedient when valuing investments in alternative asset classes and funds which are a limited partnership or similar investment vehicle.

On June 30, 2017, Veoneer committed to make a $15 million investment in Autotech Fund I, L.P. pursuant to a limited partnership agreement, and as a limited partner, periodically makes capital contributions toward this total commitment amount. As of September 30, 2020 and December 31, 2019, Veoneer contributed approximately $12 million and $10 million, respectively, to the investment in Autotech Fund I, L.P. As of September 30, 2020 the Company has received distributions of $3 million from the partnership and was recognized as reduction of the investment amount.

The carrying amounts of $9 million reflected in the unaudited Condensed Consolidated Balance Sheet in Investments for AutoTech Fund I, L.P approximates its fair value as of June 30, 2020 as this is the most recent information available to the Company at this time.

Note 8. Income Taxes

The tax expense for the three and nine month periods ended September 30, 2020, was less than $1 million and $26 million, respectively. During the three and nine month periods ended September 30, 2019, the Company recorded a tax expense of $3 million and a tax benefit of $1 million, respectively. Discrete items, net were a benefit of $2 million and expense of $17 million for the three and nine month periods ended September 30, 2020, respectively, and a benefit of less than $1 million and $6 million for the three and nine month periods ended September 30, 2019, respectively. The discrete item in the nine month period ended September 30, 2020 was primarily related to the tax impact of the divestiture of VNBS. Veoneer's effective tax rate differs from an expected statutory rate primarily due to the discrete item and losses in certain jurisdictions that are not benefited.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company assesses all available evidence, both positive and negative, to determine the amount of any required valuation allowance. Valuation allowances have been established for the Company’s operations in United States, Sweden, France, Japan and China.

Note 9. Inventories

Inventories are stated at the lower of cost (according to first-in-first-out basis, "FIFO") and net realizable value. The components of inventories were as follows:

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Raw materials	$	93	$	99
Work in progress	11		8
Finished products	48		62
Inventories	152		169
Inventory valuation reserve	(28)		(25)
Total inventories, net of reserve	$	124	$	144

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Note 10. Equity Method Investment

On April 2, 2020, the Company entered into a non-binding agreement with VCC to separate Zenuity, a 50% ownership joint venture with VCC in order for each company to more effectively drive their respective strategies. The parties entered into definitive agreements and effected the separation on July 1, 2020.

On July 1, 2020, the Company finalized the split of Zenuity. As part of the transaction the Company paid approximately $37 million to Zenuity for 200 software engineers and two business units located in Germany and the US. Veoneer acquired the right to use Zenuity's intellectual property for a total consideration of SEK 1,067 million (approximately $114 million) payable in ten annual installment payments, with the first payment due on July 1, 2021.

As the transaction resulted in all of the business of Zenuity being transferred to one of its two owners, the Company determined that the remaining value of that equity investment was equal only to the expected future dividends to be received. This resulted in an impairment charge of approximately $24 million that was recorded in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

As the transaction was between the investor and investee, the Company did not recognize any gain from the transaction.

Following completion of the transaction, Veoneer and VCC continue to own 50% each of Zenuity AB. The joint venture was not dissolved as part of the transaction but continues as a holding company that owns the IP of Zenuity.

During the third quarter of 2020, the Company received dividend of SEK 327 million (approximately $35 million) in cash (representing 50% of the total dividend, with the remainder received by VCC) from Zenuity.

During the second quarter of 2020, Veoneer contributed SEK 90 million (approximately $9 million) in cash (representing 50% of the total contribution, with the remainder made by VCC) into Zenuity to support its current operating cash flow needs.

During the first quarter of 2020, Veoneer contributed SEK 150 million (approximately $16 million) in cash (representing 50% of the total contribution, with the remainder made by VCC) into Zenuity to support its future operating cash flow needs.

The profit and loss attributed to the investment is shown in the line item Loss from equity method investment in the unaudited Condensed Consolidated Statements of Operations. Veoneer’s share of Zenuity’s loss for the three and nine month periods ended September 30, 2020 was $1 million and $39 million, respectively. Veoneer's share of Zenuity's loss for the three and nine month periods ended September 30, 2019, was $16 million and $50 million, respectively. As of September 30, 2020 and December 31, 2019, the Company’s equity investment in Zenuity was $129 million and $87 million, respectively.

Note 11. Accrued Expenses

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Operating related accruals	$	79	$	43
Employee related accruals	88		76
Customer pricing accruals	22		39
Product related liabilities1	19		15
Other accruals	22		19
Total Accrued Expenses	$	230	$	192

¹ As of September 30, 2020 and December 31, 2019, $10 million and $8 million, respectively, of product related liabilities were indemnifiable losses subject to indemnification by Autoliv and an indemnification asset is included in Other current assets.

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Note 12. Retirement Plans

Defined Benefit Pension Plans

The Company’s net periodic benefit costs for plans for the three and nine months ended September 30, 2020 and 2019 were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Service cost	$	1	$	1	$	3	$	4
Interest cost	1		—		2		1
Expected return on plan assets	(1)		(1)		(2)		(1)
Net periodic benefit cost	$	1	$	—	$	3	$	4

The service cost and amortization of prior service cost components are reported among employee compensation costs in the unaudited Condensed Consolidated Statements of Operations. The remaining components (interest cost, expected return on plan assets and amortization of actuarial loss) are reported in Other non-operating items, net in the unaudited Condensed Consolidated Statements of Operations.

Note 13. Stock Incentive Plan

The Veoneer, Inc. 2018 Stock Incentive Plan was established and effective on June 29, 2018 to govern the Company’s stock-based awards that will be granted in the future. The Veoneer, Inc. 2018 Stock Incentive Plan authorizes the grant of 3 million shares of Veoneer common stock for future equity awards to Veoneer employees and non-employee directors and authorizes up to 1.5 million additional shares to be used for the conversion of outstanding Autoliv stock awards in connection with the Spin-Off. Approximately 1 million shares were used for the conversion of the outstanding grants.

During the nine months ended September 30, 2020 under the Company’s long-term incentive (LTI) program, certain employees and non-employee directors received restricted stock units (RSUs) without dividend equivalent rights and performance shares (PSs) without dividend equivalent rights. The allocation between RSUs and PSs was 777,466 RSUs and 415,381 PSs at 100% target.

The majority of the RSUs granted will vest on the third anniversary of the grant date, subject to the grantee’s continued employment with the Company on the vesting date and acceleration of vesting in certain circumstances. The fair value of RSUs and PSs granted in 2020 were calculated by using the closing stock price on the grant dates. The grant date fair value for the RSUs and PSs, granted in 2020 was $11 million.

PSs granted in 2020 will earn out during the first quarter of 2023, upon the Compensation Committee’s certification of achievement of the applicable performance goals. The grantee may earn 0%-200% of the target number of PSs based on the Company’s achievement of specified targets. The performance target is the Company’s gross margin for the applicable performance period. Each PS represents a promise to transfer a share of the Company’s common stock to the employee following completion of the performance period, provided that the performance goals mentioned above are met and provided, further, that the grantee remains employed through the performance period, subject to certain limited exceptions.

Veoneer recognized total stock (RSUs, PS and Stock Options) compensation cost of $1 million and $5 million for the three and nine month periods ended September 30, 2020, respectively. During the three and nine month periods ended September 30, 2019, the Company recorded $2 million and $5 million, respectively.

Note 14. Contingent Liabilities

Legal Proceedings

Various claims, lawsuits and proceedings are pending or threatened against the Company, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters. Litigation is subject to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, it is the opinion of management that the various legal proceedings and investigations to which the Company currently is a party will not have a material adverse impact on the condensed consolidated financial position of Veoneer, but the Company cannot provide assurance that Veoneer will not experience material litigation, product liability or other losses in the future.

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Product Warranty, Recalls, and Intellectual Property

Veoneer is exposed to various claims for damages and compensation if its products fail to perform as expected. Such claims can be made, and result in costs and other losses to the Company, even where the product is eventually found to have functioned properly. Where a product (actually or allegedly) fails to perform as expected or is defective, the Company may face warranty and recall claims. Where such (actual or alleged) failure or defect results, or is alleged to result, in bodily injury and/or property damage, the Company may also face product liability and other claims. There can be no assurance that the Company will not experience material warranty, recall or product (or other) liability claims or losses in the future, or that the Company will not incur significant costs to defend against such claims. The Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. Government safety regulators may also play a role in warranty and recall practices. A warranty, recall or product-liability claim brought against the Company in excess of its insurance may have a material adverse effect on the Company’s business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold the Company responsible for some, or all, of the repair or replacement costs of products when the product supplied did not perform as represented by the Company or expected by the customer. Accordingly, the future costs of warranty claims by the customers may be material. However, the Company believes its established reserves are adequate. Veoneer’s warranty reserves are based upon the Company’s best estimates of amounts necessary to settle future and existing claims. The Company regularly evaluates the adequacy of these reserves, and adjusts them when appropriate. However, the final amounts actually due related to these matters could differ materially from the Company’s recorded estimates.

In addition, as vehicle manufacturers increasingly use global platforms and procedures, quality performance evaluations are also conducted on a global basis. Any one or more quality, warranty or other recall issue(s) (including those affecting few units and/or having a small financial impact) may cause a vehicle manufacturer to implement measures such as a temporary or prolonged suspension of new orders, which may have a material impact on the Company’s results of operations.

The Company carries insurance for potential recall and product liability claims at coverage levels based on the Company’s prior claims experience. Veoneer cannot assure that the level of coverage will be sufficient to cover every possible claim that can arise in the Company’s businesses, now or in the future, or that such coverage always will be available should the Company, now or in the future, wish to extend, increase or otherwise adjust the Company’s insurance.

In its products, the Company utilizes technologies which may be subject to intellectual property rights of third parties. While the Company does seek to procure the necessary rights to utilize intellectual property rights associated with its products, it may fail to do so. Where the Company so fails, the Company may be exposed to material claims from the owners of such rights. Where the Company has sold products which infringe upon such rights, its customers may be entitled to be indemnified by the Company for the claims they suffer as a result thereof. Such claims could be material.

Product Related Liabilities

The Company records liabilities for product related risks when probable claims are identified and when it is possible to reasonably estimate costs. Provisions for warranty claims are estimated based on prior experience, likely changes in performance of newer products, and volume of the products sold. The provisions are recorded on an accrual basis.

The table below summarizes the change in product related liabilities in the unaudited Condensed Consolidated Balance Sheet.

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Reserve at beginning of the period	$	18	$	14	$	15	$	16
Change in reserve	2		—		8		1
Cash payments	(1)		—		(4)		(3)
Reserve at end of the period	$	19	$	14	$	19	$	14

For the three and nine month periods ended September 30, 2020 and 2019, cash paid primarily relate to warranty related issues. The increase in the reserve balance as of September 30, 2020 compared to the prior year was due to a recall related reserve liability. Agreements entered into between Autoliv and Veoneer in connection with the Spin-Off provide for Autoliv to indemnify Veoneer for certain liabilities related to electronics products manufactured before April 1, 2018. As of September 30,

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2020 and December 31, 2019, $10 million and $8 million, respectively, of product related liabilities were indemnifiable losses subject to indemnification by Autoliv and an indemnification asset is included in Other current assets.

Guarantees

The Company provided lease guarantees to Zenuity of $14 million and $7 million as of September 30, 2020, and December 31, 2019, respectively. These represent the maximum potential amount of future (undiscounted) payments that Veoneer could be required to make under the guarantees in the event of default by the guaranteed parties. These guarantees will generally cease upon expiration of current lease agreements between 2020 and 2022. There are no liabilities recorded in the unaudited Condensed Consolidated Balance Sheet as of September 30, 2020 and December 31, 2019 related to these guarantees.

Note 15. Loss per share

Basic loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and equity incentive awards is reflected in diluted loss per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions, except per share amounts)	2020		2019		2020		2019
Numerator:
Basic and diluted:
Net loss attributable to Veoneer	$	(132)	$	(133)	$	(454)	$	(403)
Denominator:
Basic: Weighted average number of shares outstanding (in millions)	111.59		111.4		111.55		98.32
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)1	111.59		111.4		111.55		98.32
Basic loss per share	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)
Diluted loss per share	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)

¹ Shares in the diluted loss per share calculation represent basic shares due to the net loss.

In periods when the Company has a net loss, equity incentive awards are excluded from the Company's calculation of earnings per share as their inclusion would have an anti-dilutive effect. The Company excluded equity incentive awards of 963,171 and 741,120 shares for the three and nine month periods ended September 30, 2020, respectively, and 295,526 and 285,975 for the three and nine month periods ended September 30, 2019, respectively, from the diluted loss per share calculations.

The Company may settle the conversion of the Notes in cash, shares of the Company's common stock or any combination thereof at its election. For the Notes, the number of shares of the Company's common stock issuable at the conversion price of $22.3125 per share would be 9,277,305 shares if the Company elected to settle the conversion wholly in shares. See Note 6 "Debt". Due to anti-dilutive effects, the Company excluded potential convertible shares due under the Notes of 9,277,305 for the three and nine month periods ended September 30, 2020, respectively, and 9,277,305 and 4,247,850 for the three and nine month periods ended September 30, 2019, respectively, from the diluted loss per share calculations.

Note 16. Segment Information

Financial results for the Company's reportable segments have been prepared using a management approach, which is consistent with the basis and manner in which financial information is evaluated by the Company's Chief Operating Decision Maker (CODM) in allocating resources and in assessing performance. The Company has two operating segments, Electronics and Brake Systems. Electronics includes all of electronics resources and expertise, restraint control systems and active safety products and Brake Systems provides brake control and actuation systems. The operating results of the operating segments are

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regularly reviewed by the Company’s CODM, the Chief Executive Officer, to assess the performance of the individual operating segments and to make decisions about resources to be allocated to the operating segments.

The Asian business of the Brake Systems segment was sold on February 3, 2020 and the majority of the Brake Systems business in North America was sold on August 10, 2020. The remaining Brake Systems business is no longer a reportable segment due to immateriality.

The accounting policies for the reportable segments are the same as those described in Note 2 "Summary of Significant Accounting Policies" included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Loss Before Income Taxes	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Electronics	$	(80)	$	(90)	$	(202)	$	(281)
Brake Systems	(3)		(17)		(37)		(54)
Segment operating loss	(83)		(107)		(239)		(335)
Corporate and other	(20)		(15)		(51)		(53)
Loss on divestiture and assets impairment charge, net	(24)		—		(91)		—
Interest and other non-operating items, net	(4)		2		(7)		8
Loss from equity method investment	(1)		(16)		(39)		(50)
Loss before income taxes	$	(132)	$	(136)	$	(427)	$	(430)

Note 17. Relationship with Former Parent and Related Entities

Transactions with Related Parties

Veoneer and Autoliv entered into a Transition Services Agreement ("TSA") under which certain services are provided by Autoliv to Veoneer and certain services are provided by Veoneer to Autoliv. The Company recognized less than $1 million of expense under the TSA for the three and nine month periods ended September 30, 2020, and $1 million and $4 million of expense under the TSA for the three and nine month periods ended September 30, 2019 respectively. The Company recognized less than $1 million of income under the TSA for the three and nine month periods ended September 30, 2020 and 2019.

Throughout the periods covered by the unaudited condensed consolidated financial statements, Veoneer sold finished goods to Autoliv and Nissin Kogyo, the 49% owner in VNBS (a former 51% owned subsidiary). Related party sales amounted to $18 million and $48 million for the three and nine month periods ended September 30, 2020, respectively and $24 million and $77 million for the three and nine month periods ended September 30, 2019, respectively.

Related Party Balances

Amounts due to and due from related parties are summarized in the below table:

Related Party	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Related party receivable	$	6	$	11
Related party payables	1		3
Related party short-term debt	14		1
Related party long-term debt	103		—

Related party receivables are mainly driven by reseller agreements put in place in connection with the Spin-Off. The reseller agreements are between Autoliv and Veoneer and facilitate the temporary arrangement of the sale of Veoneer products manufactured for certain customers for a limited period after the Spin-Off. Autoliv will collect the customer payments and will remit the payments to Veoneer.

Related party short-term and long-term debt mainly related to Zenuity's intellectual property that Veoneer acquired the right to use for a total consideration of approximately $114 million payable in ten annual installment payments, with the first payment due on July 1, 2021.

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Note 18. Factoring

The Company receives bank notes generally maturing within six months from certain of its customers in China to settle trade accounts receivable. The Company may hold such bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash.

For the nine months ended September 30, 2020 and 2019, the Company has entered into arrangements with financial institutions and sold $38 million and $59 million, respectively, of trade receivables without recourse and $10 million and $37 million, respectively, of bank notes without recourse, which qualify as sales as all rights to the trade and notes receivable have passed to the financial institution.

As of September 30, 2020, the Company had $7 million of trade notes receivables which remain outstanding and will mature within the fourth quarter of 2020. The collections of such bank notes are included in operating cash flows based on the substance of the underlying transactions, which are operating in nature.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations, financial condition and cash flows of Veoneer, Inc. (“Veoneer,” the “Company,” “we,” or “our”). This MD&A should be read in conjunction with the financial statements and accompanying notes to the financial statements included elsewhere herein, as well as the risk factors and other disclosures made in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Introduction

The following MD&A is intended to help you understand the business operations and financial condition of the Company. This MD&A is presented in the following sections:

•Executive Overview

•COVID-19 Commentary

•2020 Outlook

•Trends, Uncertainties and Opportunities

•Market Overview

•Results of Operations

•Non-U.S. GAAP Financial Measures 

•Liquidity and Capital Resources

•Off-Balance Sheet Arrangements and Other Matters

•Contractual Obligations and Commitments

•Significant Accounting Policies and Critical Accounting Estimates

Veoneer is a Delaware corporation with its principal executive offices in Stockholm, Sweden. The Company functions as a holding corporation and owns two principal operating subsidiaries, Veoneer AB and Veoneer US, Inc. On June 29, 2018 the spin-off of Veoneer from Autoliv, Inc. ("Autoliv") was completed through the distribution by Autoliv of all the outstanding shares of common stock of Veoneer to Autoliv’s stockholders as of the close of business on June 12, 2018, the common stock record date for the distribution, in a tax-free, pro rata distribution (the "Spin-Off"). On July 2, 2018, the shares of Veoneer common stock commenced trading on the New York Stock Exchange under the symbol “VNE” and the Veoneer Swedish Depository Receipts representing shares of Veoneer common stock commenced trading on Nasdaq Stockholm under the symbol “VNE SDB.”

Veoneer is a global leader in the design, development, manufacture, and sale of automotive safety electronics with a focus on innovation, quality and manufacturing excellence. Prior to the Spin-Off, Veoneer operated for almost four years as an operating segment within Autoliv. Veoneer's safety systems are designed to make driving safer and easier, more comfortable and convenient for the end consumer and to intervene before a collision to avoid a potentially hazardous situation. Veoneer endeavors to prevent vehicle accidents or reduce the severity of impact in the event a crash is unavoidable. Through our customer focus, and being an expert partner with our customers, we intend to develop human centric systems that benefit vehicle occupants.

Veoneer’s current product offerings include automotive radars, mono and stereo vision cameras, night vision systems, positioning systems, advanced driver assist systems ("ADAS") electronic control units, passive safety electronics (airbag control units and crash sensors), brake control systems and a complete ADAS software offering towards highly automated driving ("HAD") and eventually autonomous driving. In addition, we offer driver monitoring systems, LiDAR sensors, RoadScape positioning and other technologies critical for HAD and AD solutions by leveraging our partnership network and internally developed intellectual property.

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Executive Overview

Health and safety continue to be our first priorities and we are closely monitoring the development of the COVID-19 pandemic, which unfortunately shows signs of becoming more severe again, and we are staying ready to take the necessary safety precautions and business actions.

Vehicle production accelerated through the quarter, leading to a rapid increase in demand in the entire automotive supply chain, in a time when we are still fighting the effects of the global COVID-19 pandemic. In this challenging environment we executed a record number of activities including: successful vehicle launches, continued market adjustment initiatives, signing of a letter of intent with Qualcomm, finalizing the split of Zenuity and the divestment of our brake business. To summarize our underlying performance improved in almost all metrics. We are pleased with Veoneer’s operational performance in the third quarter and would like to thank the entire Veoneer team for their focus, dedication and discipline during this highly unusual year.

Cash flow was particularly strong in the quarter and while it included certain timing effects it allows us to expect a better 2020 full year cash flow before financing than previously expected. Our market adjustment initiatives also continue to deliver the targeted improvements, we are establishing new levels of run- rate for cash flow and capital expenditures and continue to drive improvements in RD&E efficiency.

Our daily execution is the foundation that will allow our plans to materialize, and we are managing key launches well including the flagship Mercedes S-Class, the Subaru Levorg and the Volvo XC40 Electric. We are on track for additional fourth quarter and early 2021 launches. This development is fundamental to achieving our stated target to return to organic growth towards the later part of 2020. The selection by EuroNCAP of the Mercedes GLE as the best vehicle in its 2020 test for assisted driving, where most of the active safety content comes from Veoneer is another recent important technology proof-point.

The Qualcomm collaboration is important to Veoneer for multiple reasons. Technologically, it strengthens our capability to provide a full scalable system for the next generation ADAS and later autonomous driving. The combination of Veoneer's software for perception and drive policy and Qualcomm’s powerful and energy efficient System On a Chip (SoC) will bring a competitive offer to the market for vehicle launches in 2024 and beyond. Commercially, the go-to-market strategy led by Qualcomm will allow for broader access to the market.

Our focus areas first outlined at the beginning of 2020 remain: successful customer launches in 2020 and heading into 2021, market adjustment initiatives to continue to drive efficiencies and improve cash flow, and continuing to win profitable new business.

COVID-19 Commentary

The COVID-19 pandemic continues to cause significant uncertainty in the global economy. This includes the automotive industry and light vehicle production ("LVP") for 2020 and the upcoming years ahead, which are dependent on underlying consumer demand.

During the third quarter, our customers in Europe and North America generally experienced a sharp ramp-up of their production, after most factories had been idled, or running on very reduced schedules during the latter part of the first quarter and the early part of the second quarter. However, during the third quarter, we experienced an even stronger increase in production ramp-ups by our customers in China, while there has been a stabilization of production in other Asian vehicle producing countries from the initial recovery during the second quarter this year. The strong customer call-offs, predominately in China have continued in the fourth quarter and are creating some challenges in the supply chain for certain key components in the restraint control business.

Our updated planning assumptions reflect the stronger than expected recovery of global LVP during the third quarter and our current customer forecasts for the fourth quarter. The latest IHS forecast implies a year-over-year LVP decline of approximately 4% for the second half of 2020 and approximately 19% for the full year 2020, which are both improvements from July 2020. However, we continue to monitor the situation as the number of new COVID-19 cases in Europe and the United States seem to be on the rise, which may impact the LVP and our customer forecasts in the near-term.

As our OEM customers recovered to more normal, or higher than normal in certain countries, we have returned to higher production levels as well. The health and safety of our associates continues to be our first priority, and we are taking the necessary actions to protect our associates, safeguard our operations and meet our customers' needs while managing through these unprecedented circumstances.

As noted in our 2020 Outlook, in response to the pandemic, the Company continues to extend its market adjustment initiatives (MAIs) to further mitigate the impact of the pandemic on its cash flow and operating results. The actions taken by the Company

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to mitigate the impact, include reducing its annual RD&E, net by more than $100 million and other expenses with the intention of reducing the Company's operating loss and conserving cash in 2020 so as to enter 2021 in a stable cash position. Veoneer estimates the negative organic sales impact from the lower customer demand to be approximately $30 million for the third quarter and approximately $250 million through the first nine months of 2020.

In 2020, the most important driver for Veoneer’s business is new customer and technology launches. For the top 15 launches we see no cancellations of projects; however, approximately half of such launches have been postponed by up to one quarter while the rest remain on track, or actually even slightly ahead of schedule. The exact volumes and consumer take rates are hard to predict at this point in time.

2020 Outlook

The sharp production rebound in the third quarter of 2020 is expected to sequentially improve further during the fourth quarter. Based on current customer call-offs and forecasts, Veoneer expects to return to organic sales growth during the fourth quarter and to outperform the LVP for the second half of 2020. The Company expects this organic growth to accelerate into 2021.

Veoneer remains on track with its implementation of additional MAIs with the underlying aim to offset the negative effects from lower sales and the impact on cash flow. Veoneer expects RD&E, net in full year 2020 to improve by more than $100 million as compared to 2019, on a comparable basis, and the operating loss to improve in full year 2020 as compared to 2019, on a comparable basis.

Capital expenditures are expected to be less than $125 million for full year 2020. As a result of a better than expected third quarter, the Company's current outlook is for cash flow before financing activities to be better than $(170) million for the second half of 2020, however the COVID-19 pandemic continues to create a challenging and uncertain environment.

Trends, Uncertainties and Opportunities

Trend toward Collaborative Driving

The environment around us continues to be rapidly changing and we currently see a shift across the automotive and autotech industries. The industry developments during 2019 have further strengthened the trend toward advanced driver support - Collaborative Driving - and away from fully autonomous cars for the consumer based vehicle mass market.

New technologies, creating new levels of interaction and driver support are starting to revolutionize driving, but we also see the driver being actively involved for many years to come. While the industry refers to “Level 2+” or even "Level 2++" Veoneer calls this Collaborative Driving, and includes any SAE level of automation. At the same time there is a growing realization that the introduction of truly self-driving cars will likely take longer and be more expensive than previously anticipated. This fundamental insight opens up new opportunities for companies, including Veoneer, but it also requires adjusting the priorities of resources. As such, we believe that the market will stay mainly focused on Level 1-Level 2+ autonomous driving solutions for the next decade however the recent developments of the COVID-19 pandemic, during the first half of 2020, and perhaps ongoing impact, could affect the evolution of ADAS, Collaborative Driving and AD for consumer purchased light vehicles.

Global Regulatory and Test Rating Developments

Europe continues to take a proactive role in promoting or requiring Active Safety technologies. The European New Car Assessment Program (“NCAP”) continuously updates its test rating program to include more active safety technologies to help the European Union reach its target of cutting road fatalities by 50% by 2030, as compared to 2020.

One June 26, 2020, the UNECE’s World Forum for Harmonization of Vehicle Regulations, announced the first binding international regulation on “level 3” vehicle automation. The new regulation marks an important step towards the wider deployment of automated vehicles to help realize a vision of safer, more sustainable mobility for all. Starting in January 2021 the regulation provides guidelines on the Automated Lane Keep System ("ALKS") feature, requires driver availability recognition systems, and a "black box" data storage system for AD. It also outlines requirements for emergency and minimal risk maneuvers and driver transition demand as well as cyber-security and software update protocols.

In May 2020 Euro NCAP announced that is was postponing the roll-out of upcoming road map updates by one year (from 2022 to 2023 and from 2024 to 2025). This should help our industry to overcome the situation with respect to the COVID-19 pandemic, but it should not change the overall trend towards introduction of new roadmap requirements, which are just delayed by one year. We anticipate strong global sensor adoption rate increases (forward, side and rear) due to the European NCAP's push for crash avoidance, increased adoption rates due to growing demand around ADAS software features, volume growth due

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to redundant sensing concepts needed for higher levels of autonomy, potential opportunities in relation to compliance with cyber-security and software updates and step-by-step increased demand for connectivity components as a result.

On May 17, 2018, the European Commission proposed a new mandate, as part of the European General Safety Regulation ("GSR") road-map through 2028, to make certain Active Safety features compulsory in light vehicles by 2022. During March of 2019 the EU mandate was adopted as initially proposed by the European Commission. We believe that adoption of the mandate will significantly expand demand for our Active Safety products. Indeed, with respect to sensors and ADAS software features, our order intake since the adoption of the mandate seems to reflect the anticipated increase in demand. However, during 2019 we have seen OEM delays in the sourcing of these technologies as customers reconsider how they want to architect and design, in a scalable way to include these new standard technologies. In addition, we believe that the mandate and the European GSR generally will influence other market regulators as they evaluate their respective vehicle test rating programs and safety legislation.

In China, the Ministry of Industry and Information Technology issued the Key Working Points of Intelligent Connected Vehicle Standardization for 2018 to promote and facilitate the development of the intelligent connected vehicles industry, and advance the development of fundamental standards and those that are in urgent demand. The guideline has pointed out that more than 30 key standards will be defined by 2020 to fund the systems for ADAS and low-level autonomous driving, and a system of over 100 standards will be set up by 2025 for higher level autonomous driving. During the third quarter of 2018, the Chinese government commenced testing of new vehicles according to the new China New Car Assessment Program where active safety features like Autonomous Emergency Braking ("AEB") are required to achieve the maximum safety rating.

On October 4, 2018, the U.S. Department of Transportation ("DoT") issued new voluntary guidelines on automated driving systems ("ADS") under its “Preparing for the Future of Transportation: Automated Vehicles 3.0” initiative, building on its “Vision for Safety 2.0” from September 2017, which prioritized aligning federal guidance around twelve safety design elements of interest to the auto industry. This initiative should have a positive impact on the adoption of ADAS and HAD on the road towards Autonomous Vehicles ("AV"). On April 2, 2020 the U.S DoT closed the comment period for the “Automated Vehicles 4.0” which seeks to ensure a consistent U.S. Government approach to AV technologies, and to detail the authorities, research, and investments being made across the United States so that the United States can continue to lead AV technology research, development, and integration.

In 2018 the UN Economic Commission for Europe created a new Working Party to deal with regulations for Automated/Autonomous and Connected Vehicles. In addition to the EU and Japan, which have both started to work closely together to develop ADAS regulations, in the last three years, the U.S. and China have both indicated a willingness to be active in several working groups towards harmonization of future regulations for ADAS and AV. This would create a common umbrella for countries which follow type-approval rules (EU, Japan, Australia) and countries which are outside of type-approval system, e.g., under self-certification regimes (U.S., Korea) or specific national rules (China).

Key future potential regulations are expected for (i) safety critical ADAS-features (e.g. AEB); (ii) Highway AV-features (Physical Tests + Real World Test Drive + Audit); (iii) Cyber-security and Software updates; and (iv) Connected Vehicles. On one hand, the agreement on minimal common base requirements for the industry will take a longer time and therefore may postpone introduction of regulations. On the other hand, the harmonization with base requirements would help the industry while a more active position from China may help to pull forward some safety critical ADAS technologies which are not yet considered as relevant for regulation in EU and Japan (e.g. Blind Spot or Night Vision).

Market Overview

Millions (except where specified) IHS as of October 16, 2020	Light Vehicle Production by Region - 2020
	China		Japan		Rest of Asia		Americas		Europe		Other		Total
Third Quarter 2020	6.0		2.0		2.4		4.3		4.3		0.4		19.5
Change vs. 2019	9	%	(12)	%	(17)	%	(4)	%	(8)	%	(12)	%	(4)	%

For the third quarter of 2020, global light vehicle production (according to IHS) declined by approximately 4% mainly due to lower production output in most vehicle producing countries except China where the LVP increased 9%. At the beginning of the quarter the global global LVP was expected to decline by approximately 12%. Major vehicle producing geographies include Europe (8)% and Japan (12), while South Korea and North America are essentially flat as compared to 2019 for the third quarter.

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Millions (except where specified) IHS as of October 16, 2020	Light Vehicle Production by Region - 2020
	China		Japan		Rest of Asia		Americas		Europe		Other		Total
Full Year 2020	21.3		7.6		9.1		14.2		16.3		1.6		70.1
Change vs. 2019	(9)	%	(16)	%	(26)	%	(23)	%	(23)	%	(17)	%	(19)	%

For the full year of 2020, global light vehicle production (according to IHS) is expected to decline by approximately 19%, due the anticipated full year effects of the COVID-19 pandemic. At the beginning of the quarter global LVP was expected to decline by approximately 22%. All major vehicle producing geographies are expected to be impacted by the pandemic including: China (9)%, Europe (23)%, South Korea (13)%, North America (21)% and Japan (16)%. The global LVP of approximately 70 million is the lowest level since 2010 of 72 million.

The expected decline of approximately 16 million light vehicles in 2020 as compared to 2019 is the highest single year light vehicle decline on record, and is the third consecutive annual decline in light vehicle production from 2017 when a record 92 million light vehicles were produced.

Results of Operations

Three Months Ended September 30, 2020 as compared to Three Months Ended September 30, 2019

The following analysis illustrates Veoneer’s overall and by segment performance for the three months ended September 30, 2020 and 2019 along with components of change as compared to the prior year.

Net Sales by Product

The following tables illustrate Veoneer’s consolidated net sales by product for the three months ended September 30, 2020 and 2019 along with components of change as compared to the prior year.

Net Sales	Three Months Ended September 30								Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020		2019		US GAAP Reported Change				Currency				Divestiture				Organic1
	$		$		$		%		$		%		$		%		$		%
Restraint Control Systems	188		193		(5)		(3)		4		2		—		—		(9)		(5)
Active Safety	170		178		(8)		(5)		8		4		—		—		(16)		(9)
Brake Systems	13		91		(78)		(85)		1		1		(77)		(85)		(2)		(7)
Total	$	371	$	462	$	(91)	(20)	%	$	13	3	%	$	(77)	(17)	%	$	(27)	(7)	%

¹ Non-U.S. GAAP measure reconciliation for Organic Sales

Net Sales - Net sales for the quarter declined by 20% to $371 million as compared to 2019. Organic sales¹ declined by 7% as compared to the 4% decline in LVP for the quarter. The remainder of the decline was the VNBS-Asia divestiture of 17% while the net currency effect was favorable by 3%. During the quarter, organic sales developed slightly better than our expectations entering the quarter.

Sequentially, from the second quarter in 2020, net sales more than doubled from $184 million primarily due to the sharp recovery in North America and Europe. The negative impact of COVID-19 on organic sales is estimated to be approximately $30 million during the third quarter.

Restraint Control Systems - Net sales for the quarter of $188 million decreased by 3% as compared to 2019. The organic sales decline of 5% was primarily due to lower LVP in Europe and North America.

Active Safety - Net sales for the quarter of $170 million decreased by 5% as compared to 2019. This decline was primarily driven by the organic sales decline of 9%. This slight under-performance versus the LVP was driven by launch delays with certain customer models in North America, Europe, China and Japan, as mentioned in previous quarters.

The COVID-19 impact on lower underlying LVP in our major markets for our Active Safety products more than offset the strong underlying demand for mono, stereo and thermal camera systems and ADAS ECUs on several customer models.

Brake Systems - Net sales for the quarter of $13 million decreased by 85% or $78 million as compared to 2019. The VNBS-Asia divestiture accounted for $77 million of the decline year-over-year.

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Electronics Segment	Three Months Ended September 30												Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020				2019				US GAAP Reported Change				Currency				Organic1
	$		%		$		%		$		%		$		%		$		%
Net Sales	$	358			$	371			$	(13)	(4)	%	$	11	3	%	$	(24)	(7)	%
Operating Loss / Margin	$	(80)	(22.2)	%	$	(90)	(24.3)	%	$	10
Segment EBITDA1 / Margin	$	(53)	(14.9)	%	$	(69)	(18.5)	%	$	16
Associates	7,329				7,616				(287)

¹ Non-U.S. GAAP measure reconciliation for Organic Sales and Segment EBITDA

Net Sales - Net sales for the Electronics segment decreased by $13 million to $358 million for the quarter as compared to 2019. This sales decline was mainly due to the organic sales¹ decline in Restraint Control Systems and Active Safety of $9 million and $16 million, respectively, which was partially offset by the positive net currency translation effects of $11 million.

Operating Loss - Operating loss for the Electronics segment of $80 million for the quarter decreased by $10 million as compared to 2019. This decrease is mainly due to the RD&E, net underlying improvement related to lower gross costs and higher engineering reimbursements, which more than offset the costs related to the Zenuity software team, which was previously reported in the equity method loss.

EBITDA¹ - EBITDA loss for the Electronics segment decreased by $16 million to negative $53 million for the quarter as compared to 2019. This change is mainly due to the operating loss improvement for the segment while depreciation and amortization decreased by $6 million.

Associates - Associates, net in the Electronics segment decreased by 287, net to 7,329 as compared to 2019, mainly due to a net reduction in engineering of more than 200 associates, even after the addition of approximately 220 Zenuity associates. Direct labor and temporary associates declined by approximately 140 and 180, respectively reflecting the volume decline as compared to 2019.

Deliveries - Deliveries during the quarter were 2.7 million units for Restraint Controls Systems and 2.0 million units for Active Safety.

Brake Systems Segment	Three Months Ended September 30												Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020				2019				US GAAP Reported Change				Currency				Divestiture				Organic1
	$		%		$		%		$		%		$		%		$		%		$		%
Net Sales	$	9			$	91			$	(82)	(89)	%	$	1	1	%	$	(77)	(85)	%	$	(6)	(32)	%
Operating Loss / Margin	$	(3)	(35.2)	%	$	(17)	(18.6)	%	$	14
Segment EBITDA1 / Margin	$	(4)	(33.5)	%	$	(8)	(9.3)	%	$	4
Associates	—				1,467				(1,467)

¹ Non-U.S. GAAP measure reconciliation for Organic Sales and Segment EBITDA

Net Sales - Net sales for the Brake Systems segment decreased by $82 million to $9 million for the quarter as compared to 2019. The sales decrease was mainly attributable to the VNBS-Asia divestiture of $77 million.

Operating Loss - Operating loss for the Brake Systems segment for the quarter decreased by $14 million to $3 million as compared to 2019. This change was mainly due to the VNBS-Asia divestiture, where the loss in 2019 was $10 million for the quarter and lower volumes in the remaining legacy Honda Brake Systems business.

EBITDA¹ - EBITDA loss for Brake Systems segment decreased by $4 million to negative $4 million for the quarter as compared to 2019. This change was mainly due to the net effect of the divestitures.

Associates - Associates, net in the Brake Systems segment decreased by 1,467 as compared to 2019, due to the divestitures of VNBS-Asia and VBS-US operations.

Deliveries - Deliveries during the quarter were 0.03 million units for the Brake Systems segment.

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Corporate and Other	Three Months Ended September 30
(Dollars in millions, except where specified)	2020				2019				US GAAP Reported Change
	$		%		$		%		$		%
Net Sales	$	4			$	—			$	4
Operating Loss / Margin	$	(20)	—	%	$	(15)	—	%	$	(5)
EBITDA1 / Margin	$	(20)	—	%	$	(15)	—	%	$	(5)
Associates	104				45				59

¹ Non-U.S. GAAP measure reconciliation for EBITDA

Net Sales - Net Sales of $4 million for the third quarter reflects the legacy Honda Brake Systems business after the VBS-US divestiture.

Associates - Associates, net increased by 59 to 104 for the quarter as compared to 2019 due to the associates now included in Corporate and Other related to supporting the legacy Honda Brake Systems business.

Operating Loss and EBITDA¹ - Operating and EBITDA loss of $20 million increased by $5 million and $5 million, respectively, mainly due to associate related costs in the quarter as compared to 2019. The Brake Systems loss after the VBS-US divestiture was approximately $1 million.

Veoneer Performance

Income Statement	Three Months Ended September 30
(Dollars in millions, except per share data)	2020				2019
	$		%		$		%		Change
Net sales	$	371			$	462			$	(91)
Cost of sales	(317)		(85.4)	%	(389)		(84.2)	%	72
Gross profit	$	54	14.6	%	$	73	15.8	%	$	(19)
Selling, general & administrative expenses	(43)		(11.5)	%	(45)		(9.8)	%	2
Research, development & engineering expenses, net	(124)		(33.4)	%	(144)		(31.3)	%	20
Amortization of intangibles	(1)		(0.4)	%	(6)		(1.2)	%	5
Other income, net	11		2.9	%	—		0.0	%	11
Operating loss	$	(103)	(27.8)	%	$	(122)	(26.5)	%	$	19
Loss on divestiture and assets impairment charge, net	(24)		(6.4)	%	—		0.0	%	(24)
Loss from equity method investments	(1)		(0.3)	%	(16)		(3.4)	%	15
Interest income	1		0.4	%	7		1.4	%	(6)
Interest expense	(5)		(1.4)	%	(5)		(1.0)	%	—
Other non-operating items, net	—		0.0	%	—		0.1	%	—
Loss before income taxes	$	(132)	(35.6)	%	$	(136)	(29.4)	%	$	4
Income tax benefit (expense)	—		0.1	%	(3)		(0.6)	%	3
Net loss1	$	(132)	(35.5)	%	$	(139)	(30.0)	%	$	7
Less: Net loss attributable to non-controlling interest	—		0.0	%	(6)		1.2	%	6
Net loss attributable to controlling interest	$	(132)	(35.5)	%	$	(133)	(28.8)	%	$	1
Net loss per share – basic2	$(1.18)				$(1.20)				$0.02
Weighted average number of shares outstanding 2	111.59				111.40				0.19

¹ Including Corporate and other sales.

² Basic number of shares in millions used to compute net loss per share. Participating share awards without right to receive dividend equivalents are (under the two-class method) excluded from EPS calculation.

Gross Profit - Gross profit for the quarter of $54 million was $19 million lower as compared to 2019, where the lower LVP was the main contributor causing the negative organic sales impact. In addition, the Brake Systems divestitures impact was a decrease $11 million while the net currency effects were $3 million favorable.

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Operating Loss - Operating loss for the quarter of $103 million decreased by $19 million as compared to 2019, despite the decline in organic sales. The Brake Systems divestitures benefit was $14 million while net currency effects were $2 million unfavorable for the quarter.

RD&E, net of $124 million for the quarter decreased $20 million as compared to 2019, including a $10 million increase related to Zenuity software associates. The underlying improvement of $30 million was due to lower gross costs and higher engineering reimbursements, including the Brake Systems divestitures benefit of $17 million.

SG&A expense of $43 million for the quarter decreased $2 million as compared to 2019, due to lower consultancy and associate related costs. The Brake Systems divestitures benefit was $6 million.

Other income and amortization of intangibles combined improved $16 million for the quarter as compared to 2019 mainly due to lower amortization of intangibles, including a $5 million and a $10 million recovery related to an IP license sold to Volvo.

Net Loss - Net loss for the quarter of $132 million improved by $7 million as compared to 2019, primarily due to the operating loss improvement and the $15 million decrease in the equity method investment loss related to the Zenuity JV split, which were partially offset by the $24 million non-cash impairment charge related to the Zenuity JV split.

Interest expense and income, net for the quarter was $6 million higher as compared to 2019, due to interest expense related to the convertible debt.

Income tax expense for the third quarter was $3 million lower as compared to 2019, mainly due to lower underlying tax expense on operations.

The non-controlling interest was $6 million higher for the quarter as compared to 2019 due to the VNBS-Asia divestiture in February 2020.

Loss per Share - Loss per share of $1.18 improved by $0.02 for the quarter as compared to 2019. The improvement was mainly due to the combined operating loss and equity method investment effect of $0.30 per share. This improvement was partially offset by a non-cash impairment charge related to the Zenuity JV split of $(0.22) per share.

Nine Months Ended September 30, 2020 as compared to Nine Months Ended September 30, 2019

The following analysis illustrates Veoneer’s overall and by segment performance for the nine months ended September 30, 2020 and 2019 along with components of change as compared to the prior year.

Net Sales by Product

The following tables illustrate Veoneer’s consolidated net sales by product for the nine months ended September 30, 2020 and 2019 along with components of change as compared to the prior year.

Net Sales	Nine Months Ended September 30								Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020		2019		US GAAP Reported Change				Currency				Divestiture				Organic1
	$		$		$		%		$		%		$		%		$		%
Restraint Control Systems	450		617		(167)		(27)		(5)		(1)		—		—		(162)		(26)
Active Safety	411		554		(143)		(26)		—		—		—		—		(143)		(26)
Brake Systems	57		275		(218)		(80)		1		—		(205)		(75)		(14)		(30)
Total	$	918	$	1,446	$	(528)	(37)	%	$	(4)	—	%	$	(205)	(14)	%	$	(319)	(26)	%

¹ Non-U.S. GAAP measure reconciliation for Organic Sales

Net Sales - Net sales for the first nine months declined by 37% to $918 million as compared to 2019. The organic sales¹ declined by 26%, as compared to the 24% reduction in LVP for the same period. The remainder of the decline was mainly due to the VNBS-Asia divestiture of 14%. Net currency translation effects are $4 million unfavorable.

During the first nine months, excluding Brake Systems, the organic sales declined in North America 36%, Europe 22% and Asia 20%, primarily due to the negative impact of the COVID-19 pandemic. These negative effects mostly impacted North America and Europe from mid-March through May and Asia from February through mid-April.

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Restraint Control Systems - Net sales for the first nine months of $450 million decreased by 27% as compared to 2019. The 26% organic sales decline was mostly in North America and Europe related to the LVP.

Active Safety - Net sales for the first nine months decreased by 26% to $411 million as compared to 2019. This decline was driven by the organic sales decline of 26%. This performance versus the LVP was positively impacted by our strong product content on premium brands in Europe, where we have a relatively higher CPV than in other markets.

Strong demand for mono, stereo and thermal camera systems and ADAS ECUs on several models drove an increase in organic sales. This growth was more than offset by the negative volume effect from the product mix shift from our 24Ghz to 77Ghz radar technology, the phase-out of mono-vision programs with BMW, and lower underlying LVP.

Brake Systems - Net sales for the first nine months decreased by 80% to $57 million as compared to 2019. The VNBS-Asia divestiture was 75% or $205 million while the organic sales decline was 30% or $14 million.

Electronics Segment	Nine Months Ended September 30												Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020				2019				US GAAP Reported Change				Currency				Organic1
	$		%		$		%		$		%		$		%		$		%
Net Sales	$	861			$	1,171			$	(310)	(26)	%	$	(5)	0	%	$	(305)	(26)	%
Operating Loss / Margin	$	(202)	(23.5)	%	$	(281)	(24.0)	%	$	79
Segment EBITDA1 / Margin	$	(132)	(15.3)	%	$	(220)	(18.8)	%	$	88
Associates	7,329				7,616				(287)

¹ Non-U.S. GAAP measure reconciliation for Organic Sales and Segment EBITDA

Net Sales - Net sales for the Electronics segment decreased by $310 million to $861 million for the first nine months as compared to 2019. This sales decline was mainly due to the organic sales¹ decline in Active Safety and Restraint Control Systems of $143 million and $162 million, respectively, along with the currency translation effects of $5 million.

Operating Loss - Operating loss for the Electronics segment of $202 million for the first nine months decreased by $79 million as compared to 2019. This improvement was primarily due to the higher than normal engineering reimbursements, lower RD&E gross, including the costs related to the Zenuity software team, which was previously reported in the equity method loss, and the recovery from Nissin Kogyo. All of these helped to mitigate the negative LVP impact from the COVID-19 pandemic, and volume and product mix effects causing the lower organic sales for the segment.

EBITDA¹ - EBITDA loss for Electronics segment decreased by $88 million to negative $132 million for the first nine months as compared to 2019. This change is mainly due to the decrease in operating loss for the segment while depreciation and amortization increased by $9 million mainly due to previous investments for growth.

Associates - Associates, net in the Electronics segment increased by 624 net to 7,329 as compared to the previous quarter, mainly due to the additional Zenuity software associates of approximately 220. Also, the production recovery from COVID-19 in the second quarter caused an increase in direct labor associates of approximately 300 while temporary associates increased by approximately 225.

Deliveries - Deliveries during the first nine months for Restraint Controls Systems and Active Safety were 8.7 and 4.7 million units, respectively.

Brake Systems Segment	Nine Months Ended September 30												Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020				2019				US GAAP Reported Change				Currency				Divestiture				Organic1
	$		%		$		%		$		%		$		%		$		%		$		%
Net Sales	$	53			$	275			$	(222)	(81)	%	$	1	0	%	$	(205)	(75)	%	$	(18)	(38)	%
Operating Loss / Margin	$	(37)	(70.0)	%	$	(54)	(19.6)	%	$	17
Segment EBITDA1 / Margin	$	(35)	(67.0)	%	$	(26)	(9.3)	%	$	(9)
Associates	—				1,467				(1,467)

¹ Non-U.S. GAAP measure reconciliation for Organic Sales and Segment EBITDA

Net Sales - Net sales for the Brake Systems segment decreased by $222 million to $53 million for the first nine months as compared to 2019. The sales decrease was mainly attributable to the VNBS-Asia divestiture of $205 million.

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Operating Loss - Operating loss for the Brake Systems segment for the first nine months decreased by $17 million to $37 million as compared to 2019. This change was mainly due to the divestiture of VNBS-Asia where the loss was $20 million during the first nine months in 2019.

EBITDA¹ - EBITDA loss for the Brake Systems segment increased by $9 million to negative $35 million for the first nine months as compared to 2019. This change was mainly due to the net effect of the VNBS-Asia divestiture.

Associates - Approximately 300 associates were included in the VBS-US divestiture as compared to the previous quarter.

Deliveries - Deliveries during the first nine months were 0.2 million units for the Brake Systems.

Corporate and Other	Nine Months Ended September 30
(Dollars in millions, except where specified)	2020				2019				US GAAP Reported Change
	$		%		$		%		$		%
Net Sales	$	4			$	—			$	4
Operating Loss / Margin	$	(51)	—	%	$	(53)	—	%	$	2
EBITDA1 / Margin	$	(50)	—	%	$	(52)	—	%	$	2
Associates	104				45				59

¹ Non-U.S. GAAP measure reconciliation for EBITDA

Sales - Net Sales for the first nine months of $4 million reflects the legacy Honda Brake Systems business after the VBS-US divestiture.

Associates - Associates, net increased by 64 to 104 from the previous quarter due to the associates now included in Corporate and Other related to supporting the legacy Honda Brake Systems business.

Operating Loss and EBITDA1 - Operating and EBITDA loss for Corporate and other for the first nine months each decreased by $2 million as compared to 2019. The improvement is mainly due to lower consultancy costs. The Brake Systems loss after the VBS-US divestiture was approximately $1 million.

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Veoneer Performance

Income Statement	Nine Months Ended September 30
(Dollars in millions, except per share data)	2020				2019
	$		%		$		%		Change
Net sales	$	918			$	1,446			$	(528)
Cost of sales	(808)		(88.0)	%	$	(1,211)	(83.7)	%	403
Gross profit	$	110	12.0	%	$235		16.3	%	$	(125)
Selling, general & administrative expenses	(124)		(13.5)	%	(148)		(10.2)	%	24
Research, development & engineering expenses, net	(299)		(32.6)	%	(459)		(31.8)	%	160
Amortization of intangibles	(4)		(0.5)	%	(17)		(1.2)	%	13
Other income, net	27		3.1	%	1		0.1	%	26
Operating loss	$	(290)	(31.6)	%	$	(388)	(26.8)	%	$	98
Loss on divestiture and assets impairment charge, net	(91)		(9.9)	%	—		0.0	%	(91)
Loss from equity method investments	(39)		(4.2)	%	(50)		(3.5)	%	11
Interest income	8		0.9	%	14		1.0	%	(6)
Interest expense	(15)		(1.6)	%	(7)		(0.5)	%	(8)
Other non-operating items, net	—		(0.1)	%	1		0.1	%	(1)
Loss before income taxes	$	(427)	(46.6)	%	$	(430)	(29.7)	%	$	3
Income tax benefit (expense)	(26)		(2.8)	%	1		0.1	%	(27)
Net loss1	$	(453)	(49.4)	%	$	(429)	(29.7)	%	$	(24)
Less: Net Income (loss) attributable to non-controlling interest	1		(0.2)	%	(26)		1.8	%	27
Net loss attributable to controlling interest	$	(454)	(49.5)	%	$	(403)	(27.9)	%	$	(51)
Net loss per share – basic2	$	(4.07)			$	(4.10)			$	0.03
Weighted average number of shares outstanding 2	111.55				98.32				13.23

¹ Including Corporate and other sales. ² Basic number of shares in millions used to compute net loss per share. Participating share awards without right to receive dividend equivalents are (under the two-class method) excluded from EPS calculation.

Gross Profit - Gross profit for the first nine months of $110 million was $125 million lower as compared to 2019, where the main contributors were the negative LVP, and volume and product mix effects, that caused the lower organic sales. The Brake Systems divestitures impact was $(30) million and net currency effects were $1 million favorable.

RD&E, net for the first nine months of $299 million decreased by $160 million as compared to 2019, due to $80 million higher than normal engineering reimbursements and lower gross costs. The Brake Systems divestitures benefit was $29 million while additional Zenuity associates partially offset these benefits by $10 million.

SG&A expense for the first nine months of $124 million decreased $24 million as compared to 2019, due to lower consultancy, IT and associate related costs. The Brake Systems divestitures benefit was $12 million.

Other income and amortization of intangibles combined improved $39 million for the first nine months as compared to 2019 mainly due to lower amortization of intangibles, including $10 million related to the VNBS-Asia divestiture, $20 million recovery from Nissin Kogyo and a $10 million recovery related to an IP license sold to Volvo.

Operating Loss - Operating loss for the first nine months of $290 million improved by $98 million as compared to 2019, despite the drop in organic sales. The Brake Systems divestitures benefit was $16 million while the positive net currency effects was $3 million.

Interest expense and income, net for the first nine months was $14 million higher as compared to 2019, due to interest expense related to the convertible debt of $12 million. Other non-operating items, net increased $1 million due to an investment loss in 2020.

Income tax expense of $26 million for the first nine months was $27 million higher as compared to 2019. This change is mainly due to $21 million tax expense on the VNBS-Asia divestiture, and the $7 million benefit on the convertible debt in 2019, which was partially offset by a $3 million lower underlying tax expense.

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Non-controlling interest for the first nine months was $27 million unfavorable as compared to 2019 due to the divestiture of the Brake Systems business.

Net Loss - Net loss for the first nine months of $453 million increased $24 million as compared to 2019. The $(91) million net effect of the divestiture gain on VNBS-Asia and impairments of VBS-US and the Zenuity JV split were more than offset by the combined operating loss and equity method investment improvement of $109 million.

Loss per Share - Loss per share of $4.07 for the first nine months improved by $0.03 as compared to 2019. The lower operating loss and equity method investments $0.98 per share was partially offset by the combined effects of non-cash items from the VNBS-Asia divestiture gain, VBS-US impairment and Zenuity impairment of $(0.82) per share. The share count increase in 2019 reduced the loss by $0.70 per share.

Non-U.S. GAAP Financial Measures

Non-U.S. GAAP financial measures are reconciled throughout this report.

In this report we refer to organic sales or changes in organic sales growth, a non-U.S. GAAP financial measure that we, investors and analysts use to analyze the Company's sales trends and performance. We believe that this measure assists investors and management in analyzing trends in the Company's business because the Company generates approximately 68% of its sales in currencies other than in U.S. dollars (its reporting currency) and currency rates have been and can be rather volatile. Organic sales and organic sales growth represent the increase or decrease in the overall U.S. dollar net sales and percentage change on a comparable basis thereby excluding any structural impacts. This facilitates separate discussions of the impact of acquisitions and divestitures and exchange rates on the Company’s performance. The tables in this report present the $ reconciliation of the changes in the total U.S. GAAP net sales to changes in organic sales growth.

The Company uses in this report EBITDA, a non-U.S. GAAP financial measure, which represents the Company’s net income excluding interest expense, income taxes, depreciation and amortization and loss from equity method investment. The Company also uses Segment EBITDA, a non-U.S. GAAP financial measure, which represents the Company’s EBITDA which has been further adjusted on a segment basis to exclude certain corporate and other items. We believe that EBITDA and Segment EBITDA are useful measures for management, analysts and investors to evaluate operating performance on a consolidated and reportable segment basis, because it assists in comparing our performance on a consistent basis. The tables below provide reconciliations of net income (loss) to EBITDA and Segment EBITDA.

The Company uses in this report net working capital, a non-U.S. GAAP financial measure, which is defined as current assets (excluding cash and cash equivalents) minus current liabilities excluding short-term debt and net assets and liabilities held for sale. The Company also uses in this report cash flow before financing activities, a non-U.S. GAAP financial measure, which is defined as net cash used in operating activities plus net cash used in investing activities. Management uses these measures to improve its ability to assess operating performance at a point in time as well as the trends over time. The tables below provide a reconciliation of current assets and liabilities to net working capital and cash flow before financing activities.

Investors should not consider these non-U.S. GAAP measures as substitutes, but rather as additions, to financial reporting measures prepared in accordance with U.S. GAAP. These measures, as defined, may not be comparable to similarly titled measures used by other companies.

Forward-looking non-U.S. GAAP financial measures used in this report are provided on a non-U.S. GAAP basis. Veoneer has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as foreign currency exchange rates and future investing activities, cannot be reasonably predicted or determined. As a result, such reconciliations are not available without unreasonable efforts and Veoneer is unable to determine the probable significance of the unavailable information.

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Reconciliations of U.S. GAAP to Non-U.S. GAAP Financial Measures

Net Loss to EBITDA	Three Months Ended September 30				Nine Months Ended September 30				Last 12 Months		Full Year 2019
Dollars in millions	2020		2019		2020		2019
Net Loss	$	(132)	$	(139)	$	(453)	$	(429)	$	(546)	$	(522)
Loss on divestiture and assets impairment charge, net	24		—		91		—		91		—
Depreciation and amortization	26		30		72		90		97		115
Loss from equity method investment	1		16		39		50		59		70
Interest and other non-operating items, net	4		(2)		8		(8)		7		(9)
Income tax expense (benefit)	—		3		26		(1)		28		1
EBITDA	$	(77)	$	(92)	$	(217)	$	(298)	$	(264)	$	(345)

Segment EBITDA to EBITDA	Three Months Ended September 30				Nine Months Ended September 30				Last 12 Months		Full Year 2019
Dollars in millions	2020		2019		2020		2019
Electronics	$	(53)	$	(69)	$	(132)	$	(220)	$	(154)	$	(242)
Brake Systems	(4)		(8)		(35)		(26)		(41)		(32)
Segment EBITDA	$	(57)	$	(77)	$	(167)	$	(246)	$	(195)	$	(274)
Corporate and other	(20)		(15)		(50)		(52)		(69)		(71)
EBITDA	$	(77)	$	(92)	$	(217)	$	(298)	$	(264)	$	(345)

Working Capital to Net Working Capital	September 30, 2020		September 30, 2019		June 30, 2020		June 30, 2019		December 31, 2019		December 31, 2018
Dollars in millions
Total current assets	$	1,273	$	1,602	$	1,260	$	1,758	$	1,649	$	1,543
less Total current liabilities	547		613		429		572		591		636
Working Capital	$	726	$	989	$	831	$	1,185	$	1,058	$	907
less Cash and cash equivalents	(846)		(1,062)		(851)		(1,204)		(859)		(864)
less Short-term debt	3		21		20		20		3		—
less Net of Assets and Liabilities held for sale	—		—		(11)		—		(199)		—
Net Working Capital	$	(117)	$	(52)	$	(11)	$	1	$	3	$	42

Cash Flow before Financing Activities	Three Months Ended September 30				Nine Months Ended September 30				Last 12 Months		Full Year 2019
Dollars in millions	2020		2019		2020		2019
Net cash provided by (used in) Operating Activities	$	1	$	(61)	$	(115)	$	(221)	$	(219)	$	(325)
Plus Net cash provided by (used in) Investing Activities	5		(79)		104		(198)		37		(265)
Cash flow before Financing Activities	$	6	$	(140)	$	(11)	$	(419)	$	(182)	$	(590)

Liquidity and Capital Resources

Liquidity

As of September 30, 2020, the Company had cash and cash equivalents of $846 million.

The Company's primary source of liquidity is its existing cash balance of $846 million, which will primarily be used for ongoing working capital requirements and capital expenditures. The Company believes that its existing cash resources will be sufficient to support its current operations for at least the next twelve months.

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The Company has no material obligations other than short-term obligations related to operations, inventory, services, tooling, and property, plant and equipment purchased in the ordinary course of business.

Autotech - On June 30, 2017, Veoneer committed to make a $15 million investment in Autotech Fund I, L.P. pursuant to a limited partnership agreement, and, as a limited partner, will periodically make capital contributions toward this total commitment amount. As of June 30, 2020, Veoneer contributed a total of $12 million to the fund. The initial term of the fund is set to expire on December 31, 2025. This fund focuses broadly on the automotive industry and complements the Company’s innovation strategy, particularly in the areas of active safety and autonomous driving. Under the limited partnership agreement, the general partner has the sole and exclusive right to manage, control, and conduct the affairs of the partnership.

Zenuity - On April 2, 2020, Veoneer and Volvo Cars announced a preliminary agreement to separate the Zenuity JV, allowing each company to focus on their strategic priorities. On July 1, 2020, the Company finalized the split of Zenuity. As part of the transaction the Company paid approximately $37 million to Zenuity for 200 software engineers and two business units located in Germany and the US. Veoneer acquired the right to use Zenuity's intellectual property for a total consideration approximately $114 million payable in ten annual installment payments, with the first payment due on July 1, 2021. In addition, during the third quarter of 2020, the Company received dividend of $35 million in cash from Zenuity.

Capital Raise - On May 28, 2019, Veoneer closed its concurrent registered public offerings of common stock and convertible senior notes. The offerings, which were oversubscribed by approximately three times, resulted in gross proceeds of $627 million, consisting of $420 million from the common stock offering and $207 million from the convertible notes offering. 24 million shares of common stock were issued in the common stock offering.

VNBS - On October 30, 2019, Veoneer signed definitive agreements to sell its 51% ownership in Veoneer Nissin Brake Japan ("VNBJ") and Veoneer Nissin Brake China ("VNBZ"), the entities that comprised VNBS at the time of such agreements, referred to herein as “VNBS-Asia”, to its joint venture partner Nissin-Kogyo Co., Ltd., and Honda Motor Co., Ltd. The aggregate purchase price was $176 million. The divestiture was completed on February 3, 2020 under the definitive agreements, and the VNBS joint venture was terminated.

VBS - On August 10, 2020, Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF. The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement.

Cash Flows

Selected Cash flow items	Nine Months Ended September 30
(Dollars in millions, except where specified)	2020		2019
Net working capital 1	$	(117)	$	(52)
Net cash used in operating activities	$	(115)	$	(221)
Capital expenditures	$	(70)	$	(168)
Equity method investments	$	10	$	(32)
Net cash provided by (used in) investing activities	$	104	$	(198)
Cash flow before financing activities 1	$	(11)	$	(419)
Net cash provided by (used in) financing activities	$	(8)	$	634

¹ Non-U.S. GAAP measure, see reconciliation above

Net Working Capital¹ - The $120 million positive change in net working capital for the first nine months was due to $30 million in timing effects from year-end, underlying receivable improvements during 2020 and $50 million in timing effects that are expected to reverse next quarter.

Days receivables outstanding, outstanding receivables relative to average daily sales was 51 days for September 30, 2020, as compared to 56 days at September 30, 2019. This decrease is mainly due a reduction of past dues with customer aged receivables. Days inventory outstanding, outstanding inventory relative to average daily sales, remained flat at 31 days as compared to September 30, 2019. Both of these results reflect the Company's continued strong working capital management.

Net cash used in operating activities - Net cash used in operating activities of $115 million during the first nine months was $106 million favorable as compared to 2019. The improvement was primarily driven by the working capital improvement and the lower operating loss.

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Capital Expenditures - Capital expenditures of $70 million for the first nine months decreased by $98 million as compared to 2019 mainly due to lower investments in VBS-US, facility expansions, and engineering related IT. The Brake System divestitures benefit was $48 million.

Net cash proceeds from investing activities - Net cash proceeds from investing activities of $104 million for the first nine months was $302 million higher as compared to 2019. This was due to lower capital expenditures and investments in Zenuity and divestiture proceeds.

Cash flow before financing activities1 - Cash flow before financing activities of $(11) million for the first nine months was $408 million better as compared to 2019 mainly due to improved net working capital, lower capital expenditures and divestiture proceeds.

Number of Associates

		September 30, 2020	June 30, 2020	March 31, 2020	December 31, 2019	September 30, 2019
TOTAL		7,433	7,095	7,571	8,874	9,127
Whereof:	Direct Manufacturing	1,370	1,130	1,326	2,002	2,116
	RD&E	4,454	4,404	4,590	4,907	5,086
	Temporary	1,258	1,031	1,166	1,396	1,630

Associates, net increased by 338 to 7,433 during the quarter as compared to 7,095 in the previous quarter. Approximately 220 of the increase was related to the Zenuity JV split.

The RD&E increase of 50 associates included approximately 210 software engineers which more than offset an underlying decline of approximately 160 engineers. Direct manufacturing associates increased by 240 from the previous quarter, as did temporary associates by 227, reflecting the sharp increase in production volumes in the third quarter from the previous quarter.

Associates, net decreased by 1,694 to 7,433 during the quarter from 9,127 as compared to the third quarter in 2019. The Brake Systems divestitures effect on the decline was approximately 1,400 associates.

The underlying Veoneer decrease of 519 associates (excluding the effect of divestitures), as compared to the same quarter in 2019, was mainly due to reductions in direct manufacturing and RD&E of 106 and 208, respectively, while temporary associates declined by 155. The year-over-year reductions are primarily a result of our MAIs program, engineering efficiency improvements and slightly lower organic sales.

Significant Legal Matters

For discussion of legal matters we are involved in, see Note 14 "Contingent Liabilities", to the condensed consolidated financial statements included herein.

Off-Balance Sheet Arrangements and Other Matters

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial position, results of operations or cash flows.

Contractual Obligations and Commitments

There have been no significant changes to the contractual obligations and commitments disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Significant Accounting Policies and Critical Accounting Estimates

See Note 2 “Summary of Significant Accounting Policies” to the accompanying condensed consolidated financial statements included herein.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2020, there have been no material changes to the information related to quantitative and qualitative disclosures about market risk that was provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in this Quarterly Report on Form 10-Q was (a) reported within the time periods specified by SEC rules and regulations, and (b) communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding any required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Various claims, litigation and proceedings are pending or threatened against the Company or its subsidiaries, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters.

For a description of our material legal proceedings, see Note 14 Contingent Liabilities – Legal Proceedings to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Other than as set forth below, there have been no material changes in the risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors below and also those discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial condition or future results. The risks described below and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Our business and financial condition may be materially and adversely affected by the ongoing novel coronavirus (COVID-19) pandemic.

The impact of the COVID-19 pandemic, including widespread illness, market downturns, restrictions on business and individual activities, changes in consumer behavior, and uncertainty regarding the future course of the pandemic, has created significant volatility in the global economy and led to a steep drop in economic activity. While we have taken numerous steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful. The COVID-19 pandemic has significantly disrupted, and may continue to disrupt, the automotive industry, light vehicle production (“LVP”) and automotive sales in markets around the world. Such disruptions include the manufacturing, delivery and overall supply chain of automobile manufacturers and suppliers. Global LVP has decreased significantly since early 2020 and during the second quarter some vehicle manufacturers temporarily ceased manufacturing operations in some countries and regions, including the United States and Europe. As a result, we have experienced, and may continue to experience, declines in the production and distribution of our products and the loss of sales to our customers. As production resumes, production volumes have been and may continue to be volatile and our suppliers may not be able to ramp up sufficiently to deliver components to meet our customer requests.

If the global economic effects caused by the pandemic continue or increase, overall customer demand may continue to decline which would have a material and adverse effect on our business, results of operations and financial condition.

Given the high level of research and development ("R&D") spend that is required to develop and launch our products, a sustained decline in LVP or vehicle sales may delay the return on our investment in R&D and a return on the resources expended to ensure timely and quality launches, which could have a material adverse effect on our financial condition and results of operations. A prolonged downturn in regional and global economic conditions or LVP would likely result in us experiencing a significantly negative cash flow.

In addition, if the COVID-19 pandemic continues or worsens and a significant portion of our workforce, our suppliers’ workforce, or our customers’ workforce are affected, either directly or due to new or extended government closures or otherwise, associated work stoppages or facility closures would halt or further delay production.

The full impact of the COVID-19 pandemic on our financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the outbreak, its impact on our customers and suppliers, how quickly, and to what extent normal economic and operating conditions, and the demand for our products can resume and whether the pandemic leads to recessionary conditions in any of our key markets that may continue to impact customer demand and the financial instability or operating viability of our suppliers and customers. Accordingly, the ultimate impact of the COVID-19 pandemic on our financial condition and results of operations cannot be determined at this time. Despite the uncertainty of the COVID-19 situation, we expect our full year 2020 results of operations to be adversely affected.

In addition to the risks specifically described above, the impact of COVID-19 is likely to implicate and exacerbate other risks disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, including, but

42

not limited to, our program launches, demand or market acceptance for our products, disruptions in our supply or delivery chain, shifting customer preferences, our employees and cyber-security threats.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K (filing date July 2, 2018).
3.2	Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K (filing date July 2, 2018).
4.1	General Terms and Conditions for Swedish Depository Receipts in Veoneer, Inc., incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 10 (filing date June 4, 2018).
4.2	Indenture, dated May 28, 2019, between Veoneer, Inc. and U.S. Bank National Association, as trustee, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (filing date May 29, 2019).
4.3	Form of 4.00% Convertible Senior Note due 2024 (included in Exhibit 4.2), incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K (filing date May 29, 2019).
10.1	Transaction Framework Agreement between Veoneer Sweden AB, Veoneer AB, Veoneer US, Inc., Volvo Car Corporation AB ZTWO Company AB and Zenuity AB, dated July 1, 2020.
10.2	Joint Venture Agreement between ZTWO Company AB and Veoneer Sweden AB regarding Zenuity AB, dated July 1, 2020.
10.3*+	Employment Agreement, dated August 1, 2020, by and between Veoneer, Inc. and Robert Bisciotti.
10.4*+	Employment Agreement, dated August 1, 2020, by and between Veoneer, Inc. and Seven (Xi) Zhang.
31.1*	Certification of the Chief Executive Officer of Veoneer, Inc. pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of the Chief Financial Officer of Veoneer, Inc. pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of the Chief Executive Officer of Veoneer, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the Chief Financial Officer of Veoneer, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, formatted Inline XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Statements of Operations (Unaudited); (ii) the Condensed Consolidated Statements of Comprehensive Loss (Unaudited); (iii) the Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Changes in Equity (Unaudited); (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to unaudited condensed consolidated financial statements.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith.
+	Management contract or compensatory plan.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 23, 2020

VEONEER, INC.

(Registrant)

By:	/s/ Mats Backman
	Mats Backman
	Chief Financial Officer
	(Duly Authorized Officer and Principal Financial Officer)

45

EX-10.1

Exhibit 10.1

Transaction Framework Agreement

between

Veoneer Sweden AB,

Veoneer AB,

Veoneer US, Inc.,

Volvo Car Corporation AB,

ZTWO Company AB

and

Zenuity AB

In relation to

Zenuity Group

1 July 2020

1

Table of Contents
1.    Definitions	2
2.    The Transaction	10
2.1    Transactional steps	10
2.1.2    Structuring	10
2.1.3    Asset transfers	10
2.1.4    Share transfers	10
2.1.5    Intellectual property licenses	11
2.1.6    ZeVu agreements	11
2.1.7    Transitional services	11
2.1.8    Amsterdam Data Cluster	12
2.1.9    Post-Closing relationship between the Owners	12
3.    Transaction principles	12
3.1    General principles	12
3.2    Assets, liabilities and contracts	13
3.3    Parent Guarantees	13
3.4    Unidentified Assets	14
3.5    Wrong Pocket Assets	17
3.6    Residual Assets	18
3.7    Intellectual Property	18
3.8    Premises	19
3.9    Liability	20
3.10    Valuation; Post-Closing Adjustments	20
4.    Closing	21
4.1    Closing Date	20
4.2    Closing obligations	20
4.3    Terminated Agreements	23
5.    Post-Closing obligations	23
5.1    Non-Solicitation	23
5.2    Preserved Information	24
5.3    Beyonav earn-out	25
6.    Miscellaneous	25
6.1    Further assurance	25
6.2    Notices	26
6.3    Fees and expenses	28
6.4    Assignment	28
6.5    No waiver	28
6.6    Entire agreement	28
6.7    Schedules incorporated	28
6.8    Amendments	28
6.9    Survival of rights, duties and obligations	28
6.10    Provisions severable	28

6.11    Confidentiality and publicity	29
6.12    Governing law and arbitration	29

List of Schedules

Schedule 1.12	Carve-Out Assets
Schedule 1.17	Cooperation and Cost Sharing Agreement
Schedule 1.23	Employee Allocation
Schedule 1.27	New JVA
Schedule 1.31	Residual Assets
Schedule 1.33	Share Contribution Documentation
Schedule 1.42	Transaction Documents
Schedule 1.53	VCC Background IP License Agreement
Schedule 1.57	VCC Data License Agreement
Schedule 1.58	VCC Engineering Services Agreement
Schedule 1.61	VCC Share Purchase Agreement
Schedule 1.62	VCC Zenuity Foreground IP License Agreement
Schedule 1.66	VNE Background IP License Agreement
Schedule 1.70	VNE Data License Agreement
Schedule 1.71	VNE Engineering Services Agreement
Schedule 1.73	VNE Share Purchase Agreement DE
Schedule 1.74	VNE Share Purchase Agreement US
Schedule 1.75	VNE Transitional Services Agreement
Schedule 1.76	VNE Zenuity Foreground IP License Agreement
Schedule 1.83	Z1 Asset Transfer Agreement
Schedule 1.88	Z2 Asset Transfer Agreement
Schedule 1.95	Zenuity Transitional Services Agreement
Schedule 1.97	ZeVu Acknowledgement Agreement
Schedule 1.98	ZeVu License Agreement
Schedule 3.10(a)	Valuation

This transaction framework agreement (the "Agreement") is entered into on the date hereof between:

(a)Veoneer Sweden AB, a Swedish limited liability company, reg. no. 559131-0841, having its registered office at Wallentinsvägen 22, 447 37, Vårgårda, Sweden("VNE");

(b)Veoneer AB, a Swedish limited liability company, reg. no. 559131-0858, having its registered office at Box 13089, 103 02 Stockholm, Sweden ("VAB")

(c)Veoneer US, Inc., with a registered office at 26545 American Drive, Southfield, MI 48034, a corporation incorporated under the laws of the State of Delaware, United States ("VUS")

(d)Volvo Car Corporation, a Swedish limited liability company, reg. no. 556074-3089, having its registered office atAvd. 50090 HB3S, 405 31, Göteborg, Sweden ("VCC"); and

(e)ZTWO Company AB, a Swedish limited liability company, reg. no. 559228-9358, having its registered office at Lindholmspiren 2, 41756 Gothenburg, Sweden ("Z2Co")

(f)Zenuity AB, a Swedish limited liability company, reg. no. 559073-6871, having its registered office at Lindholmspiren 2, 417 56, Göteborg, Sweden ("Zenuity").

VNE and VCC are hereinafter jointly referred to as the "Owners" and individually as an "Owner", and VNE, VAB, VUS, VCC, Z2Co and Zenuity are hereinafter jointly referred to as the "Parties" and individually a "Party".

Background

A.VCC and its affiliates are world-wide developers and manufacturers of passenger cars and are engaged in the development, manufacturing, marketing and sales of such cars and solutions related thereto, including solutions within the active safety area.

B.VNE and its affiliates are world-wide leading developers and producers of automotive technology, including sensors, control units, software and systems for restraint control, advanced driver assistance systems and collaborative and automated driving.

C.Zenuity and its affiliates are leading developers and producers of automotive technology and software with respect to advanced driver assistance systems and autonomous drive for the automotive sector.

D.Each of VCC and VNE owns 50 percent of the shares in Zenuity. Zenuity owns all shares in the Subsidiaries (as defined below).

E.The Owners have entered into a term sheet dated 18 May 2020 under which they have declared a common intention to separate and divide the assets, contracts, employees and liabilities of Zenuity and the Subsidiaries between themselves to achieve the separation structure. Ultimately, Zenuity will remain as a holding company with the purpose of managing the Zenuity Owned IP and to wind down the other activities of Zenuity, in accordance with this Agreement and the other Transaction Documents.

F.The Parties are entering into this Agreement to detail and commit themselves to the Transaction (as defined below) and the steps required to complete it.

1.Definitions

The following terms, used in this Agreement, have the following meanings and the singular form (where appropriate) shall include the plural form and vice versa:

1.1	AD	shall mean automated driving systems.
1.2	ADAS	shall mean advanced driver assistance systems.
1.3	Agreement	shall mean this transaction framework agreement and all schedules attached hereto.
1.4	Alleged Unidentified Asset	shall have the meaning set out in Section 3.4(a).
1.5	Alleged Wrong Pocket Asset	shall have the meaning set out in Section 3.5(a).
1.6	Amsterdam Data Cluster	shall mean the data storage and computing services provided under the master services agreements entered into between Zenuity and Dell Products on 18 July 2017.
1.7	Applicable Law	shall mean any law, regulation, judgment or other legally binding requirement or rule of any governmental authority in any jurisdiction applicable from time to time to any Person.
1.8	Asset Transfer	shall mean the asset transfer contemplated under any Asset Transfer Agreement.
1.9	Asset Transfer Agreement	shall mean any of the Z1 Asset Transfer Agreement and/or the Z2 Asset Transfer Agreement.
1.10	Business	shall mean the business carried out by the Zenuity Group as at the Closing Date.
1.11	Business Day	shall mean a day (other than a Saturday, Sunday or public holiday) on which banks are generally open for business in Swedenandthe United States, other than for internet banking and/or telephone services only.
1.12	Carve-Out Assets	shall mean an asset, liability or contract listed in Schedule 1.12, which has been transferred from a Subsidiary to Zenuity or another Subsidiary between 31 May 2020 and the Closing Date in preparation of the Transaction.
1.13	Closing	shall mean the completion of the Transaction by the Parties performing their obligations in accordance with Section 4.2.
1.14	Closing Balance Sheet	shall have the meaning set out in Section 3.10(c).
1.15	Closing Date	shall mean the date of this Agreement.

1.16	Confidential Information	shall for the purpose of this Agreement mean all information of any kind or nature (whether written, oral, electronic or in any other form), including, without limitation, the existence and terms of this Agreement, which a Party from time to time may receive or obtain as a result of entering into this Agreement only, or information or circumstances not covered by confidentiality or non-confidentiality pursuant to any Transaction Document, relating to any other Party (acknowledging that as several separate transactions are contemplated by this Agreement, each with different requirements with respect to confidentiality, that the respective confidentiality obligations shall be regulated separately and specifically in the respective Transaction Documents with respect to such Transaction Document).
1.17	Cooperation and Cost Sharing Agreement	shall mean the cooperation and cost sharing agreement related to the Amsterdam Data Cluster, to be entered into between VNE, Z2Co, Zenuity and VCC on the Closing Date, in the agreed form set out in Schedule 1.17.
1.18	Correct Unidentified Asset Owner	shall have the meaning set out in Section 3.4(c).
1.19	Correct Wrong Pocket Asset Owner	shall have the meaning set out in Section 3.5(c).
1.20	De Minimis	shall have the meaning set out in Section 3.4(e)(ii).
1.21	Disagreement Notice	shall have the meaning set out in Section 3.10(e).
1.22	Disputed Matters	shall have the meaning set out in Section 3.10(f).
1.23	Employee Allocation	shall mean the allocation of employees between VNE and Z2Co, as set out in Schedule 1.23.
1.24	Existing JVA	shall mean the joint venture agreement regarding Zenuity entered into on 18 April 2017 between VCC and Autoliv Development AB (substituted by VNE on 29 June 2018).
1.25	Incorrect Unidentified Asset Owner	shall have the meaning set out in Section 3.4(g)(ii).
1.26	Incorrect Wrong Pocket Asset Owner	shall have the meaning set out in Section 3.5(c).
1.27	New JVA	shall mean the new joint venture agreement, including all schedules attached thereto, regarding Zenuity to be entered into between VNE and Z2Co on the Closing Date, in the agreed form set out in Schedule 1.27.
1.28	Parent Guarantees	shall have the meaning set out in Section 3.3.
1.29	Party	shall have the meaning set out in the introductory paragraph.
1.30	Preserved Information	shall have the meaning set out in Section 5.2(a)(i).

1.31	Residual Assets	shall mean an asset, liability or contract listed in Schedule 1.31, which has been identified as remaining with Zenuity following Closing.
1.32	Review Period	shall have the meaning set out in Section 3.10(e).
1.33	Share Contribution Documentation	shall mean an unconditional contribution of all VCC's shares in Zenuity to Z2Co on the Closing Date, in the agreed form set out in Schedule 1.33.
1.34	Share Purchase Agreement	shall mean any of the VCC Share Purchase Agreement, VNE Share Purchase Agreement DE and/or the VNE Share Purchase Agreement US.
1.35	Share Transfer	shall mean the share transfer contemplated under any Share Purchase Agreement.
1.36	Signing Date	shall mean the date on which this Agreement is signed by both Parties.
1.37	Subsidiaries	shall mean all subsidiaries of Zenuity, being (i) Zenuity DE, (ii) Zenuity US, and (iii) Zenuity CN.
1.38	Surviving Sections	shall mean Sections 2.1.2(b) and 6.2 to 6.12.
1.39	Tax	shall mean all direct and indirect taxes, charges, fees, duties and other assessments imposed by any authority, whether determined by reference to income, profits and gains, social security fees and other assessments, including but not limited to any income tax, sales tax, property tax, value added tax, transfer tax and stamp duty, together with any costs, interest, penalties, surcharges or other additional amounts to such taxes.
1.40	Terminated Agreements	shall have the meaning set out in Section 4.3.
1.41	Transaction	shall have the meaning set out in Section 2.
1.42	Transaction Documents	shall mean the agreements listed in Schedule 1.42.
1.43	TSAs	shall have the meaning set out in Section 2.1.6.
1.44	Unidentified Asset	shall mean an asset, liability or contract of Zenuity Group, which has not been identified and listed in any of the schedules to the Asset Transfer Agreements or the Share Purchase Agreements (including any Unidentified Tax Liability), it being specified, for the avoidance of doubt, that any liability resulting from a contract or an employee shall not be considered an Unidentified Asset to the extent such contract or employee is listed in any of the schedules to the Asset Transfer Agreements or the Share Purchase Agreements.
1.45	Unidentified Asset Notification	shall have the meaning set out in Section 3.4(a).
1.46	Unidentified Asset Payment	shall have the meaning set out in Section 3.4(b)(ii).
1.47	Unidentified Tax Liability	shall mean any Tax liability of Zenuity Group, which has not been identified and listed in any of the schedules to the Asset Transfer Agreements or the Share Purchase Agreements.
1.48	VAB	shall have the meaning set out in the introductory paragraph.
1.49	Valuation	shall have the meaning set out in Section 3.10(a).
1.50	Valuation Items	shall have the meaning set out in Section 3.10(b).
1.51	VCC	shall have the meaning set out in the introductory paragraph.
1.52	VCC Background IP	shall mean the intellectual property licensed pursuant to the (i) VCC BILA, and (ii) VCC BPLA.
1.53	VCC Background IP License Agreement	shall mean the intellectual property license agreement, including all schedules attached hereto, regarding the licensing of VCC Background IP to VNE, to be entered into between VCC and VNE on the Closing Date, in the agreed form set out in Schedule 1.53.
1.54	VCC BIAA	shall mean the existing background intellectual property assignment agreement between VCC and Zenuity.
1.55	VCC BILA	shall mean the existing background intellectual property license agreement between VCC and Zenuity.
1.56	VCC BPLA	shall mean the existing background patent license agreement between VCC and Zenuity.
1.57	VCC Data License Agreement	shall mean the data license agreement, including all schedules attached thereto, regarding VCC's provision of certain proprietary data to VNE, to be entered into between VCC and VNE on the Closing Date, in the agreed form set out in Schedule 1.57.

1.58	VCC Engineering Services Agreement	shall mean the engineering services agreement, including all schedules attached thereto, regarding Z2Co's provision of engineering services to VNE, to be entered into between Z2Co and VNE on the Closing Date, in the agreed form set out in Schedule 1.58.
1.59	VCC Entities	shall mean together Z2Co and VCC, and a "VCC Entity" shall mean any of them.
1.60	VCC MCLA	shall mean the existing master commercialization license agreement between VCC and Zenuity.
1.61	VCC Share Purchase Agreement	shall mean the share purchase agreement, including all schedules attached thereto, regarding Z2Co's purchase of all shares in Zenuity CN, to be entered into between Z2Co and Zenuity on the Closing Date, in the agreed form set out in Schedule 1.61.
1.62	VCC Zenuity Foreground IP License Agreement	shall mean the intellectual property license agreement, including all schedules attached hereto, regarding the licensing of Zenuity Owned IP to Z2Co, to be entered into between Zenuity and Z2Co on the Closing Date, in the agreed form set out in Schedule 1.62.
1.63	VNE	shall have the meaning set out in the introductory paragraph.
1.64	VNE Entities	shall mean together VNE, VAB and VUS, and a "VNE Entity" shall mean any of them.
1.65	VNE Background IP	shall mean the intellectual property licensed pursuant to the (i) VNE BILA, and (ii) VNE BPLA.
1.66	VNE Background IP License Agreement	shall mean the intellectual property license agreement, including all schedules attached hereto, regarding the licensing of VNE Background IP to VCC, to be entered into between VNE and VCC on the Closing Date, in the agreed form set out in Schedule 1.66.
1.67	VNE BIAA	shall mean the existing background intellectual property assignment agreement between VNE and Zenuity.
1.68	VNE BILA	shall mean the existing background intellectual property license agreement between VNE and Zenuity.
1.69	VNE BPLA	shall mean the existing background patent license agreement between VNE and Zenuity.
1.70	VNE Data License Agreement	shall mean the data license agreement, including all schedules attached thereto, regarding VNE's provision of certain proprietary data to Z2Co, to be entered into between VNE and Z2Co on the Closing Date, in the agreed form set out in Schedule 1.70.
1.71	VNE Engineering Services Agreement	shall mean the engineering services agreement, including all schedules attached thereto, regarding VNE's provision of engineering services to Z2Co, to be entered into between VNEand Z2Co on the Closing Date, in the agreed form set out in Schedule 1.71.

1.72	VNE MCLA	shall mean the existing Master Commercialization License Agreement between VNE and Zenuity.
1.73	VNE Share Purchase Agreement DE	shall mean the share purchase agreement, including all schedules attached thereto, regarding VAB's purchase of all shares in Zenuity DE, to be entered into between VAB and Zenuity on the Closing Date, in the agreed form set out in Schedule 1.73.
1.74	VNE Share Purchase Agreement US	shall mean the share purchase agreement, including all schedules attached thereto, regarding VUS's purchase of all shares in Zenuity US, to be entered into between VUS and Zenuity on the Closing Date, in the agreed form set out in Schedule 1.74.
1.75	VNE Transitional Services Agreement	shall mean the transitional services agreement, including all schedules attached thereto, to be entered into between Z2Co and VNE on the Closing Date, in the agreed form set out in Schedule 1.75.
1.76	VNE Zenuity Foreground IP License Agreement	shall mean the intellectual property license agreement, including all schedules attached hereto, regarding the licensing of Zenuity Owned IP to VNE, to be entered into between Zenuity and VNE on the Closing Date, in the agreed form set out in Schedule 1.76.
1.77	VUS	shall have the meaning set out in the introductory paragraph.
1.78	Wrong Pocket Asset	shall mean an asset, liability or contract of the Zenuity Group, which has been listed as an asset, liability or contract, as applicable, in the schedules to the Asset Transfer Agreements or the Share Purchase Agreements but erroneously not been transferred to (i) VNE or Z2Co (as applicable) with respect to the Asset Transfer Agreements, or (ii) alongside the relevant Subsidiary with respect to the Share Purchase Agreements, and instead has either (a) remained with Zenuity, or (b) been transferred to another party, directly or indirectly, pursuant to the Asset Transfer Agreements or the Share Purchase Agreements (including any Wrong Pocket Tax Liability).
1.79	Wrong Pocket Asset Notification	shall have the meaning set out in Section 3.5(a).
1.80	Wrong Pocket Tax Liability	shall mean any Tax liability of the Zenuity Group, which has been listed as a liability in the schedules to the Asset Transfer Agreements or the Share Purchase Agreements but erroneously not been transferred to (i) VNE or Z2Co (as applicable) with respect to the Asset Transfer Agreements, or (ii) alongside the relevant Subsidiary with respect to the Share Purchase Agreements, and instead has either (a) remained with Zenuity, or (b) been transferred to another party, directly or indirectly, pursuant to the Asset Transfer Agreements or the Share Purchase Agreements.

1.81	Zenuity	shall have the meaning set out in the introductory paragraph.
1.82	Zenuity Owned IP	shall mean all (i) intellectual property assigned to Zenuity upon its incorporation under the Existing JVA (via the VNE BIAA and the VCC BIAA), and (ii) intellectual property created, invented, authored, developed, collected, acquired, or otherwise owned or controlled by Zenuity during, and in accordance with the terms of, the Existing JVA and up until the Effective Date.
1.83	Z1 Asset Transfer Agreement	shall mean the asset transfer agreement, including all schedules attached thereto, regarding the transfer of the Z1 Business to VNE, to be entered into between VNE and Zenuity on the Closing Date, in the agreed form set out in Schedule 1.83.
1.84	Z1 Business	shall mean the (i) assets, (ii) contracts and (iii) liabilities specifically listed in the Z1 Asset Transfer Agreement or the schedules thereto.
1.85	Z1 Employees	shall mean the individuals allocated to VNE pursuant to the Employee Allocation.
1.86	Z1 Supply Agreement	shall mean the supply agreement, including all schedules attached thereto, regarding deliveries of Z1 systems (hardware and software) from VNEto VCC, to be entered into between VNEand VCC on the Closing Date.
1.87	Z2Co	shall have the meaning set out in the introductory paragraph.
1.88	Z2 Asset Transfer Agreement	shall mean the asset transfer agreement regarding the Z2 Business, including all schedules attached thereto, to be entered into between Z2Co and Zenuity on the Closing Date, in the agreed form set out in Schedule 1.88.
1.89	Z2 Business	shall mean the (i) assets, (ii) contracts, (iii) liabilities and (iv) employees specifically listed in the Z2 Asset Transfer Agreement or the schedules thereto.
1.90	Z2 Employees	shall mean the individuals allocated to Z2Co pursuant to the Employee Allocation.
1.91	Zenuity CN	shall mean Zenuity Software Technology (Shanghai) Ltd., with a registered office at Room K1, 5 floor, No. 277 Huqingping road, Minhang District, Shanghai, China, a limited liability company incorporated under the laws of People's Republic of China.
1.92	Zenuity DE	shall mean Zenuity GmbH, with registered office at Theresienhöhe 30, c/o Blitzstart Holding AG, 80339 München, a limited liability company incorporated under the laws of Germany.
1.93	Zenuity US	shall mean Zenuity, Inc., with a registered office at 1209 Orange St., Wilmington, New Castle County, 19801 Delaware, a limited liability company incorporated under the laws of the State of Delaware, United States.

1.94	Zenuity Group	shall mean Zenuity and its Subsidiaries.
1.95	Zenuity Transitional Services Agreement	shall mean the transitional services agreement, including all schedules attached thereto, to be entered into between Z2Co and Zenuity on the Closing Date, in the agreed form set out in Schedule 1.95.
1.96	ZeVu	shall mean the ZeVu software tool.
1.97	ZeVu Acknowledgement Agreement	shall mean the acknowledgment agreement to be entered into between VCC and Zenuity in relation to ZeVu in the agreed form set out in Schedule 1.97.
1.98	ZeVu License Agreement	shall mean the license agreement, including all schedules attached hereto, regarding the licensing of ZeVu to VNE, to be entered into between VCC and VNE on the Closing Date, in the agreed form set out in Schedule 1.98.

2.The Transaction

2.1.1Transactional steps

(a)The Parties hereby agree that the division of the Zenuity Group shall be carried out on the terms and conditions set out in this Agreement and the Transaction Documents, through the transactional steps set out in Sections 2.1.2-2.1.9 (jointly the "Transaction").

(b)For the avoidance of doubt, the transactional steps set out in Sections 2.1.2-2.1.9 together constitute the Transaction, which shall be completed on the Closing Date.

2.1.2Structuring

(a)VCC shall contribute all of its shares in Zenuity to Z2Co, on the terms and conditions set out in the Share Contribution Documentation.

(b)VCC shall procure that Z2Co performs:

(i)all its Closing obligations under this Agreement, the Existing JVA and any of the Transaction Documents;

(ii)all its post-Closing payment obligations under Clause 3.10 of this Agreement; and

(iii)all its license fee payment obligations under the VCC Foreground IP License Agreement and its obligations pursuant to Section 3.7(d).

2.1.3    Asset transfers

The assets, contracts, employees and liabilities of the Zenuity Group shall be separated into two parts, the Z1 Business and the Z2 Business, which shall be transferred to the respective Owner as follows:

(a)VNE shall acquire the Z1 Business on the terms and conditions set out in the Z1 Asset Transfer Agreement; and

(b)Z2Co shall acquire the Z2 Business on the terms and conditions set out in the Z2 Asset Transfer Agreement.

2.1.4    Share transfers

The shares in the Subsidiaries shall be transferred to the Owners as follows:

(a)VAB shall acquire all shares in Zenuity DE from Zenuity on the terms and conditions set out in the VNE Share Purchase Agreement DE;

(b)VUS shall acquire all shares in Zenuity US from Zenuity on the terms and conditions set out in the VNE Share Purchase Agreement US;

(c)Z2Co shall acquire all shares in Zenuity CN from Zenuity on the terms and conditions set out in the VCC Share Purchase Agreement.

2.1.5    Intellectual property licenses

The existing intellectual property licensing agreements between the Parties shall be terminated and new intellectual property license agreements shall be entered into as follows:

(a)the existing VNE BILA, VNE BPLA, and VNE MCLA shall terminate in accordance with Section 4.3;

(b)the existing VCC BILA, VCC BPLA and VCC MCLA shall terminate in accordance with Section 4.3;

(c)Zenuity shall grant a co-exclusive license to the Zenuity Owned IP to VNE on the terms and conditions set out in the VNE Zenuity Foreground IP License Agreement;

(d)Zenuity shall grant a co-exclusive license to the Zenuity Owned IP to Z2Co on the terms and conditions set out in the VCC Zenuity Foreground IP License Agreement;

(e)VNE shall grant a direct license to the VNE Background IP to VCC on the terms and conditions set out in the VNE Background IP License Agreement;

(f)VCC shall grant a direct license to the VCC Background IP to VNE on the terms and conditions set out in the VCC Background IP License Agreement;

(g)VNE shall grant a license to certain proprietary VNE data to Z2Co on the terms and conditions set out in the VNE Data License Agreement; and

(h)VCC shall grant a license to certain proprietary VCC data to VNE on the terms and conditions set out in the VCC Data License Agreement.

2.1.6    ZeVu agreements

The following agreement shall be entered into in relation to ZeVu:

(a)VCC and Zenuity shall enter into the ZeVu Acknowledgment Agreement; and

(b)VCC shall grant a license to ZeVu to VNE on the terms and conditions set out in the ZeVu License Agreement.

2.1.7    Transitional services

For the purpose of facilitating an orderly separation and transition of the Z1 Business and the Z2 Business and to support the respective businesses during a build-up period, the following transitional services agreements (the "TSAs") shall be entered into as follows:

(a)Z2Co shall provide engineering services to VNE on the terms and conditions set out in the VCC Engineering Services Agreement;

(b)VNE shall provide engineering services to Z2Co on the terms and conditions set out in the VNE Engineering Services Agreement;

(c)Z2Co shall provide transitional services to VNE on the terms and conditions set out in the VNE Transitional Services Agreement; and

(d)Z2Co shall provide transitional services to Zenuity on the terms and conditions set out in the Zenuity Transitional Services Agreement.

2.1.8    Amsterdam Data Cluster

For the purpose of sharing the costs and set out the governance principles applying to the Amsterdam Data Cluster, the Cooperation and Cost Sharing Agreement will be entered into between VNE, Z2Co, Zenuity and VCC.

2.1.9    Post-Closing relationship between the Owners

(a)For the purpose of deliveries of Z1 systems (hardware and software) from VNE to VCC post Closing, VNEand VCC shall, at Closing, enter into a supply agreement on the terms and conditions set out in the Z1 Supply Agreement.

(b)The existing joint venture agreement regarding Zenuity between the Owners shall terminate according to Section 4.3 and VNE and Z2Co shall enter into, in the presence of Zenuity, a new joint venture agreement inter alia governing the Owners joint management of the Zenuity Owned IP, on the terms and conditions set out in the New JVA.

3.    Transaction principles

3.1    General principles

(a)The purpose of the Transaction is to separate and divide the assets, contracts, employees and liabilities of Zenuity and the Subsidiaries between the Owners based on the principles set out in this Section 3 and as detailed in the Transaction Documents.

(b)The general separation principle is to divide the Business into two parts:

(i)one initially engaging in ADAS business based on VNE’s smart cameras, to be transferred to VNE; and

(ii)one initially engaging primarily (considering small deliveries to Volvo Cars, e.g. for 519A and 519G (mostly in the VMC area)) in ADAS and AD solutions operating on a Nvidia-based core computer, to be transferred to Z2Co.

(c)The Parties shall procure that the Share Purchase Agreement DE is implemented in accordance with this Agreement and the principles applied to the other Share Purchase Agreements, even if the Share Purchase Agreement DE does not explicitly include references hereto. The Parties acknowledge that any deviations between the Share Purchase Agreement DE and the other Share Purchase Agreements have been made solely for the purpose of simplifying local law and notarization requirements and are not intended to have any other effect.

3.2    Assets, liabilities and contracts

(a)The Parties acknowledge and agree that only assets, liabilities (unless explicitly included in the relevant agreement or connected to contracts or employees), contracts and employees specifically listed in schedules to the Z1 Asset Transfer Agreement and Z2 Asset Transfer Agreement, respectively, shall be allocated and transferred to VNE and Z2Co. The Parties acknowledge and agree that the Share Transfer Agreements have been concluded on the same basis, and that any assets, liabilities or contracts which have erroneously transferred, or not transferred, alongside the relevant Subsidiary shall be addressed as Unidentified Assets, Wrong Pocket Assets or Residual Assets pursuant to Sections 3.4-3.6 and adjusted for.

(b)Zenuity hereby confirms that all assets, liabilities and contracts of the Zenuity Group have been identified and correctly reflected in the schedules to the Z1 Asset Transfer Agreement, Z2 Asset Transfer Agreement, VNE Share Purchase Agreement DE, VNE Share Purchase Agreement US and the VCC Share Purchase Agreement.

3.3    Parent Guarantees

(a)The Parties acknowledge and agree that the following parent guarantees are tied to contracts listed in the schedules to any Asset Transfer Agreements or Share Purchase Agreements (the "Parent Guarantees"):

(i)the parent guarantee from Autoliv Development AB and Volvo Car Corporation under the Gothenburg lease agreement to be transferred to Z2Co under the Z2 Asset Transfer Agreement;

(ii)the parent guarantee from Autoliv AB and Volvo Car Corporation under the Munich lease agreement remaining in Zenuity DE and hence to be transferred under the VNE Share Purchase Agreement DE;

(iii)the parent guarantee from Volvo Car Corporation and Veoneer Sweden AB under the HP master services agreement to be transferred to Z2Co under the Z2 Asset Transfer Agreement.

(iv)the parent guarantee from Volvo Car Corporation and Autoliv Aktiebolag (publ) under the Dell master services agreement remaining with Zenuity; and

(b)VNE agrees to indemnify and hold the VCC Entities harmless from:

(i)any post-Closing liability resulting from a Parent Guarantee given by a VCC Entity covering an agreement which is assigned to a VNE Entity in accordance with item (ii) above; or

(ii)any post-Closing liability resulting from the Parent Guarantee covering the agreement set out in paragraph (iv) above relating to any failure by VNE to pay for its portion of the costs according to the Cooperation and Cost Sharing Agreement. For the avoidance of doubt, VCC shall carry 100% of the parent company guarantee related to VCC's agreement with Dell (if any).

(c)VCC agrees to indemnify and hold the VNE Entities harmless from:

(i)any post-Closing liability resulting from a Parent Guarantee given by a VNE Entity or Autoliv Development AB, Autoliv AB, or Autoliv aktiebolag (publ) covering an agreement which is assigned to a VCC Entity in accordance with items (i) and (iii) above; or

(ii)any post-Closing liability resulting from the Parent Guarantee covering the agreement set out in paragraph (iv) above relating to any failure by Z2Co to pay for its portion of the costs according to the Cooperation and Cost Sharing Agreement.

(d)The Parties shall use their respective commercially reasonable efforts to release any guarantor not being related to, or a member of the company group of, the Party assuming the relevant agreement in accordance with the above.

(e)If a parent guarantee is discovered following Closing, such parent guarantee shall be taken over by the Party assuming the asset or contract to which the parent guarantee is tied. Sections 3.3 shall apply mutatis mutandis to such parent guarantee, provided that if such asset or contract is shared or shall remain with Zenuity, VNE and Z2Co shall by jointly liable on a 50:50 basis.

3.4    Unidentified Assets

(a)If any Party becomes aware that there are any Unidentified Assets, such Party shall notify the other Parties of the alleged Unidentified Asset (the “Alleged Unidentified Asset”) with a reasonable level of detail (the “Unidentified AssetNotification”). To be valid, the Unidentified Asset Notification shall be sent by any Party to the other before the expiry of: (i) a twelve (12)-month period following Closing for any Unidentified Asset which does not correspond to an Unidentified Tax Liability, and (ii) a thirty-six (36)-month period for any Unidentified Tax Liability.

(b)Upon receipt of an Unidentified Asset Notification, the Owners shall enter into good faith discussions in order to determine, within ten (10) Business Days of receipt of the Unidentified Asset Notification, whether the Alleged Unidentified Asset constitutes an Unidentified Asset, and if so agree in good faith:

(i)on the way that such Unidentified Asset shall be allocated; and

(ii)whether such Unidentified Asset would, if it had been identified as such immediately prior to Closing, have resulted in any adjustment to the purchase price under the Asset Transfer Agreements or Share Purchase Agreements (the amount of any adjusting payments required to put the Parties in the position that they would have been in if such Unidentified Asset would have been identified and valued immediately prior to Closing (the “Unidentified Asset Payment”)).

(c)If the Owners conclude that the Unidentified Asset should have been transferred to any of VNE, Z2Co or a Subsidiary, or remained with Zenuity (the “Correct Unidentified Asset Owner”), the said Unidentified Asset shall be transferred to such Correct Unidentified Asset Owner, and the relevant parties shall:

(i)execute all such deeds and documents as may be reasonably necessary for the purpose of transferring the Unidentified Asset free of any third-party rights to Correct Unidentified Asset Owner; and

(ii)do all such further acts and things and execute all such other documents as may be necessary to validly effect the transfer of the Unidentified Asset to the Correct Unidentified Asset Owner,

in each case, provided that, if any third-party consent, approval, authorization or waiver is required for the transfer, the process relating to non-transferable assets, non-assignable contracts and non-assumable liabilities as set out in Sections 3.2-3.3 of the Asset Transfer Agreements shall apply.

(d)All costs and expenses arising out of compliance with a transfer of the Unidentified Asset as set out in this section 3.4 shall be allocated to the parties as though such Unidentified Asset had been transferred to, or remained with, the Correct Unidentified Asset Owner at Closing.

(e)If the Owners:

(i)agree in writing that no Unidentified Asset Payment is required, no consideration shall be required to be paid for the transfer of the relevant Unidentified Asset pursuant to this section 3.4 (or, where a consideration is required by Applicable Law, the relevant party shall pay the amount of USD 1, which the parties agree and acknowledge shall serve as sufficient consideration for the transfer of the relevant Unidentified Asset pursuant to, and in accordance with, this section 3.4); or

(i)agree in writing:

(A)that an Unidentified Asset Payment is required; and

(B)on the amount of the relevant Unidentified Asset Payment,

then, any amount so payable by either party to another party shall be, as the case may be, aggregated and set-off against each other. Whichever of the parties is then left with a payment obligation shall make the applicable payment within five (5) Business Days following the date of

determination of the amount of the Unidentified Asset Payment, provided that if the payment obligation is less than USD 100,000 gross in aggregate for all payments under this Agreement (the “De Minimis”), the payment obligation shall be deemed to be zero (or USD 1 if a consideration is required by Applicable Law).

(f)If the Owners fail to agree on (i) the existence of an Unidentified Asset, (ii) the allocation of an Unidentified Asset and/or (iii) the amount (if any) of the Unidentified Asset Payment, the matter shall be subject to settlement by arbitration in accordance with section 6.12.

(g)In case an Unidentified Asset is recognized in accordance with the terms of this Section 3.4, the relevant parties shall be put in the position in which they should have been should the relevant Unidentified Asset have been correctly transferred to, or remained with, the Correct Unidentified Asset Owner since Closing. As a result:

(i)the Correct Unidentified Asset Owner shall indemnify the party having received the Unidentified Asset, or Zenuity, in case the Unidentified Asset has remained with Zenuity (the “Incorrect Unidentified Asset Owner”), of any losses suffered or incurred by such Incorrect Unidentified Asset Owner as a result of the Unidentified Asset having been transferred to it (as the case may be), and

(ii)the Incorrect Unidentified Asset Owner shall repay to the Correct Unidentified Asset Owner the amount corresponding to any revenue generated by the Unidentified Asset and received by Incorrect Unidentified Asset Owner since Closing (as the case may be);

in each case, subject for the said losses or revenue to correspond to an amount in excess of the De Minimis.

(h)Without prejudice to the other provisions of this Agreement, Zenuity agrees to, at any Party's request which can be given at any time between Closing and the date falling six (6) years after Closing, make available to such other Party copies of any records and documentation directly or indirectly related to the Z1 Business (for the VNE Entities) or Z2 Business (for Z2Co and VCC) which was not included in the Asset Transfers or the Share Transfers and which is reasonably required for the purpose of the operation of the Z1 Business (for the VNE Entities) or Z2 Business (for Z2Co and VCC) as conducted at the Effective Date. Such Party shall compensate Zenuity for any reasonable and documented out-of-pocket costs incurred in responding to any such request. Zenuity's obligations under this section 3.4 shall only apply to the extent it (i) is permitted under Applicable Law, (ii) it does not entail a breach of confidentiality undertakings in relation to third parties and (iii) Zenuity, in its reasonable opinion, determines that such information is not of such competitively sensitive nature that it cannot be disclosed to the requesting Party (provided, for (i)-(iii), that Zenuity in any event will use its reasonable best efforts to develop an alternative solution to provide the requesting Party with such portion of the information).

3.5    Wrong Pocket Assets

(a)If any Party becomes aware that there are any Wrong Pocket Asset, such Party shall notify the other Parties of the alleged Wrong Pocket Asset (the “Alleged Wrong Pocket Asset”) with a reasonable level of detail (the “Wrong Pocket Asset Notification”). To be valid, the Wrong Pocket Asset Notification shall be sent by any Party to the other before the expiry of: (i) a twelve (12)-month period following Closing for any Unidentified Asset which does not correspond to an Unidentified Tax Liability, and (ii) a thirty-six (36)-month period for any Unidentified Tax Liability.

(b)Upon receipt of a Wrong Pocket Asset Notification, the Owners shall enter into good faith discussions in order to determine, within ten (10) Business Days of receipt of the Wrong Pocket Asset Notification, whether the Alleged Wrong Pocket Asset constitutes a Wrong Pocket Asset, and if so agree in good faith on the way the Wrong Pocket Asset should have been allocated and, as the case may be, transferred.

(c)If the Owners conclude that a Wrong Pocket Asset which has:

(i)been transferred to VNE or alongside Zenuity DE or Zenuity US should have been transferred to Z2Co or alongside Zenuity CN; or

(ii)been transferred to Z2Co or alongside Zenuity CN should have been transferred to VNE or alongside Zenuity DE or Zenuity US;

(iii)remained with Zenuity should have been transferred to either Z2Co, VNE or alongside a Subsidiary

the said Wrong Pocket Asset shall be transferred by the party having received the Wrong Pocket Asset or Zenuity, in case the Wrong Pocket Asset has remained with Zenuity (the “Incorrect Wrong Pocket Asset Owner”) to the party which should have received it (the “Correct Wrong Pocket Asset Owner”), and the relevant parties shall:

(A)execute all such deeds and documents as may be reasonably necessary for the purpose of transferring the Wrong Pocket Asset free of any third-party rights to the Correct Wrong Pocket Asset Owner; and

(B)do all such further acts and things and execute all such other documents as may be necessary to validly effect the transfer of the Wrong Pocket Asset to the Correct Wrong Pocket Asset Owner,

in each case, provided that, if any third-party consent, approval, authorization or waiver is required for the transfer, the process relating to non-transferable assets, non-assignable contracts and non-assumable liabilities as set out in Sections 3.2-3.3 of the Asset Transfer Agreements shall apply.

(d)All costs and expenses arising out of compliance with a transfer of any Wrong Pocket Asset as set out in this section 3.5 shall be allocated to the parties as

though such Wrong Pocket Asset had been transferred at Closing in accordance with the terms of the relevant Asset Transfer Agreement or Share Purchase Agreement.

(e)Any transfer of Wrong Pocket Assets in accordance with this Section 3.5 shall be deemed a part of the relevant Asset Transfer or Share Transfer for all purposes and shall not give rise to any price adjustment.

(f)In case a Wrong Pocket Asset is recognized in accordance with the terms of this Section 3.5, the relevant parties shall be put in the position in which they should have been should the relevant Wrong Pocket Asset have been correctly transferred to, or remained with, the Correct Wrong Pocket Asset Owner since Closing. As a result:

(i)the Correct Wrong Pocket Asset Owner shall indemnify the Incorrect Wrong Pocket Owner of any losses suffered or incurred by such Incorrect Wrong Pocket Asset Owner as a result of the Wrong Pocket Asset having been transferred to, or remained with, it (as the case may be); and

(ii)the Incorrect Wrong Pocket Owner shall repay to the Correct Wrong Pocket Owner the amount corresponding to any revenue generated by the Wrong Pocket Asset and received by Incorrect Wrong Pocket Owner since Closing (as the case may be),

in each case, subject for the said losses or revenue to correspond to an amount in excess of the De Minimis.

3.6    Residual Assets

(a)If any Party becomes aware that any Residual Asset has been transferred to VNE, Z2Co or alongside any Subsidiary, the Parties agree that such Residual Asset shall be transferred to Zenuity applying Sections Wrong Pocket Assets mutatis mutandis.

(b)Zenuity shall indemnify, defend and hold harmless VNE, Z2Co and the Subsidiaries (as applicable) from, against and in respect of any losses suffered or incurred by VNE, Z2Co or the Subsidiaries (as applicable) resulting from any Residual Assets having been erroneously transferred to VNE, Z2Co or the Subsidiaries (as applicable).

3.7    Intellectual Property

(a)Zenuity shall grant co-exclusive licenses to the Zenuity Owned IP to VNE and Z2Co through the VNE/VCC Zenuity Foreground IP License Agreements, on a royalty free, sub-licensable (through multiple tiers), irrevocable (subject only to payment of the fees pursuant to the relevant Zenuity Foreground IP License Agreement), perpetual (at least for 40 years) basis to use the Zenuity Owned IP for any purposes.

(b)In consideration for the licenses granted through the VNE/VCC Zenuity Foreground IP License Agreements, VNE and Z2Co shall each pay a license fee to Zenuity, which shall be payable in yearly installments in arrears, with the first payment date being the one-year anniversary of the Closing Date, as further set out in the VNE/VCC Zenuity Foreground IP License Agreements.

(c)VNE, Z2Co and Zenuity shall each (in each case individually) have the right to make and/or demand (as applicable) a prepayment of all remaining scheduled license fee instalments in full by way of issuing a written prepayment notice to the other Parties at the same time.  Such prepayment notice may be given from and including 31 December 2020 with the effect that both VNE and Z2Co shall prepay all remaining scheduled license fee instalments in full within 5 Business Days of delivery of the prepayment notice.

(d)In the event that a prepayment notice has been issued pursuant to Section 3.7.1(c), each of VNE and Z2Co shall procure that, as soon as possible after receipt of the prepayment notice (i) the annual general meeting of the shareholders of Zenuity is held, (ii) the annual accounts of Zenuity are established and approved, and (iii) it is resolved to adopt resolutions to distribute an amount corresponding to the distributable profits of Zenuity, to each of Z2Co and VNE, on a 50:50 basis.

(e)The Parties agree that each of VNE and Z2Co shall have the right to set-off any dividend claim it may have against Zenuity following a resolution by Zenuity to pay dividend against any prepayment obligation for the license fee.

(f)The Parties acknowledge and agree that no Party shall, and each Party shall procure that no member of their respective groups shall, use the Zenuity brand or domain names outside the scope and following the transitional period set out in the VNE/VCC Zenuity Foreground IP License Agreement. The Parties have agreed that any webpages of Zenuity shall include a hyperlink to each of VNE and VCC's webpages as further agreed between the Parties. The Parties also agree that during a transitional period of six (6) months, the Parties may use Zenuity's email addresses.

3.8    Premises

The Parties acknowledge that the Zenuity Group's lease agreements shall be handled as follows:

(a)The US lease agreement shall remain in Zenuity US and be transferred under the VNE Share Purchase Agreement;

(b)The Munich lease agreement shall remain in Zenuity DE and be transferred under the VNE Share Purchase Agreement;

(c)The Gothenburg lease agreement shall be transferred to Z2Co under the Z2 Asset Transfer Agreement; and

(d)The China sub-lease agreement shall remain in Zenuity CN and be transferred under the VCC Share Purchase Agreement.

3.9    Liability

The Parties agree that following Closing, the Owners shall not bring (other than collection claims in the ordinary course of business) any claims on Zenuity in respect of Zenuity's lawful exploitation of Zenuity Owned IP and the VNE/VCC Background IP prior to Closing of the Transaction. However, and for the avoidance of doubt, the Owners do not waive their respective rights vis-à-vis each other, whether arising before or after Closing, or (ii) vis-à-vis Zenuity, in respect of actions and activities following Closing.

3.10    Valuation; Post-Closing Adjustments

(a)The Parties agree that all payments for assets, liabilities, contracts, shares and other items transferred under any of the Transaction Documents shall be based on such assets, liabilities, contracts, shares, and other items' valuation, as reflected in Schedule 3.10(a) (the "Valuation").

(b)The Parties acknowledge that the Valuation has been prepared based on balance sheets of the Zenuity Group as per 31 May 2020, and that the purchase prices paid pursuant to the Transaction Documents, in so far as they relate to balance sheet items that has been ascribed a value in the purchase price calculation (the "ValuationItems"), may not reflect the actual valuation per the Closing Date. As such, the Parties agree that the purchase prices paid under the Transaction Documents, in so far as they relate to the Valuation Items, shall be subject to post-Closing adjustments to address any changes on a line item basis between the balance sheets of 31 May 2020 and 30 June 2020, including as a result of any Carve-Out Assets.

(c)As soon as possible after Closing, and in any event no later than 10 Business Days after the Closing date, Zenuity shall prepare and deliver to the other Parties a draft 30 June 2020 balance sheet of the Zenuity Group drawn up in accordance with the same accounting principles and form set out in the Valuation (the "ClosingBalanceSheet"). Each line item shall be extracted from the Zenuity Group's ledger on a basis consistent with the way in which the Valuation was prepared.

(d)If, at Closing, any new accounts have been created in the Zenuity Group's ledger which were not included in the Valuation then such accounts shall be included in the Closing Balance Sheet on the basis that the corresponding line items in the Closing Balance Sheet are categorized consistently with accounts of a similar nature in the Valuation.

(e)Within 20 Business Days from the day on which the Parties receive the draft Closing Balance Sheet (the "Review Period"), a Party disagreeing with the draft Closing Balance Sheet shall notify the other Parties in writing. Such notice shall state the reasons for the disagreement in reasonable detail and specify the adjustments proposed to be made to the Closing Balance Sheet (the "Disagreement Notice"). If no Disagreement Notice is provided before the end of the Review Period, all Parties shall be deemed to have accepted the Closing Balance Sheet, which shall be final and binding on the Parties. The vacation

period (i.e. week 21 to week 32) shall not be considered Business Days for the determination of the Review Period.

(f)If a Party delivers a Disagreement Notice before the end of the Review Period, the Parties shall attempt in good faith to reach agreement in respect of the Closing Balance Sheet. If they are unable to do so within 20 Business Days from the day on which the other Parties received the Disagreement Notice, and if the aggregate amount of any matters that remain in dispute (the "Disputed Matters") is greater than the De Minimis, the matter shall be subject to settlement by arbitration in accordance with section 6.12.

(g)The net sum of any adjustments to the Valuation relating to the Valuation Items pursuant to this Section 3.10 shall be paid by the relevant Party(-ies), under the relevant Asset Transfer Agreement or Share Purchase Agreement, within 10 Business Days of the date on which the Parties (i) are deemed to have accepted the Closing Balance Sheet, or (ii) have finally resolved all disagreements relating to the Closing Balance Sheet, without any set-off, deduction or counterclaim. Such payments shall be made by the relevant Party under the relevant Asset Transfer Agreement or Share Purchase Agreement to a bank account to be designated by the receiving Party by notice to the paying Party no later than by close of business on the third Business Day prior to the final day for payment.

4.    Closing

4.1    Closing Date

Closing shall take place on the Closing Date.

4.2    Closing obligations

(a)On the Closing Date, the Parties shall have the following obligations:

(i)VCC shall deliver to VNE and Zenuity evidence that all VCC's shares in Zenuity have been contributed to Z2Co;

(ii)The Owners shall procure that Z2Co is entered as owner of VCC's shares in Zenuity in Zenuity's share register;

(iii)VNE and Zenuity shall enter into the Z1 Asset Transfer Agreement in the agreed form attached hereto and implement the closing steps therein, including payment of the purchase price thereunder;

(iv)Z2Co and Zenuity shall enter into the Z2 Asset Transfer Agreement in the agreed form attached hereto and implement the closing steps therein, including payment of the purchase price thereunder;

(v)VAB and Zenuity shall enter into the VNE Share Purchase Agreement DE in the agreed form attached hereto and implement the closing steps therein, including payment of the purchase price thereunder;

(vi)VUS and Zenuity shall enter into the VNE Share Purchase Agreement US in the agreed form attached hereto and implement the closing steps therein, including payment of the purchase price thereunder;

(vii)Z2Co shall enter into the VCC Share Purchase Agreement in the agreed form attached hereto and implement the closing steps therein, including payment of the purchase price thereunder;

(viii)VNE and VCC shall enter into the VNE Data License Agreement in the agreed form attached hereto;

(ix)VCC and VNE shall enter into the VCC Data License Agreement in the agreed form attached hereto;

(x)VNE and Zenuity shall enter into the VNE Zenuity Foreground IP License Agreement in the agreed form attached hereto;

(xi)Z2Co shall enter into the VCC Zenuity Foreground IP License Agreement in the agreed form attached hereto;

(xii)VNE and VCC shall enter into the VNE Background License Agreement in the agreed form attached hereto;

(xiii)VCC and VNE shall enter into the VCC Background License Agreement in the agreed form attached hereto;

(xiv)VCC and VNE shall enter into the ZeVu License Agreement in the agreed form attached hereto;

(xv)Zenuity and VCC shall enter into the ZeVu Acknowledgement Agreement in the agreed form attached hereto;

(xvi)Z2Co and VNE enter into the VCC Engineering Services Agreement in the agreed form attached hereto;

(xvii)VNE and Z2Co shall enter into the VNE Engineering Services Agreement in the agreed form attached hereto;

(xviii)Z2Co and VNE shall enter into the VNE Transitional Services Agreement in the agreed form attached hereto;

(xix)Z2Co and Zenuity shall enter into the Zenuity Transitional Services Agreement in the agreed form attached hereto;

(xx)VNE, Z2Co, Zenuity and VCC shall enter into the Cooperation and Cost Sharing Agreement in the agreed form attached hereto;

(xxi)VNE and VCC shall enter into the Z1 Supply Agreement; and

(xxii)VNE and Z2Co shall enter into the New JVA in the agreed form attached hereto.

(b)All steps taken in connection with the Closing shall be considered to occur simultaneously as part of a single transaction and in the proper sequence and each event shall require all other events to be completed in order for Closing to have occurred. If one of the steps in Section 4.2(a) has not occurred, Closing shall only be deemed to have taken place if all the Parties agree in writing that they accept that Closing takes place (without prejudice to all rights or remedies available, including the right to claim damages).

(c)In the event Closing has not taken place in accordance with Section 4.2(b) above, unless the Parties agree to set a new date for Closing, this Agreement shall be terminated with immediate effect, with no remaining liability on either Party other than for any breach of this Agreement prior to the date of termination.

4.3    Terminated Agreements

The Owners acknowledge and agree that (i) the Existing JVA, (ii) the VNE BILA, the VNE BPLA and the VNE MCLA, and (iii) the VCC BILA, the VCC BPLA and the VCC MCLA (together, the "Terminated Agreements") shall automatically terminate immediately following completion of Closing, save in the case where this Agreement would be terminated or void, in which case the Terminated Agreement shall be valid in accordance with their terms again. The Parties agree, subject to Closing occurring and the situations described in the previous sentence and anything to the contrary in this Agreement, that they have no outstanding claims on each other pursuant to the Terminated Agreements following such termination, provided that such termination shall be without prejudice to any prior breach of the Terminated Agreements.

5.    Post-Closing obligations

5.1    Non-Solicitation

(a)Without prejudice to the other undertakings set forth in other Transaction Documents, each of the VNE Entities undertakes, and shall procure that their Affiliates will, for a period of twelve (12) months following Closing, neither directly or indirectly solicit or approach with an offer of employment any of the Z2 Employees, otherwise than as expressly set out in the Transaction Documents.

(b)Each of the VCC Entities undertakes, and shall procure that their Affiliates will, for a period of twelve (12) months following Closing, neither directly or indirectly solicit or approach with an offer of employment any of the Z1 Employees, otherwise than as expressly set out in the Transaction Documents.

(c)The undertakings set out in paragraphs (a) and (b) of this Section 5.1 shall (i) not prevent any of the VNE Entities and their Affiliates and VCC Entities and their Affiliates from employing any such person who contacts such VNE Entities or VCC Entities on his or her own initiative, without any direct or indirect active solicitation by the considered VNE Entities or VCC Entities and (ii) not apply to recruitment advertisement published generally or a non-targeted campaign by a recruitment firm not specifically directed towards the employees referred to in such paragraphs.

(d)In the event of (i) a breach by a VNE Entity of its undertaking under this Section 5.1, VNE shall be liable to pay Z2Co liquidated damages of SEK 1,000,000 for each individual breach, and (ii) a breach by a VCC Entity of its undertaking under this Section 5.1, Z2Co shall be liable to pay VNE liquidated damages of SEK 1,000,000 for each individual breach.

(e)Z2Co's and VNE's right to liquidated damages pursuant to paragraph of this Section 5.1 shall be in addition to any other rights or remedies available to VNE and Z2Co respectively and, in particular, VNE and Z2Co respectively shall be entitled to damages in accordance with applicable law if and to the extent its actual loss exceeds the liquidated damages.

5.2    Preserved Information

(a)Each Party shall:

(i)preserve all documents, records, correspondence, accounts and other information in its possession in relation to the taxation, regulatory or financial information of the Z1Co Business and Z2Co Business (as applicable) up to Closing (the “Preserved Information”) for a period of six (6) years from Closing or such longer period as prescribed by Applicable Law;

(ii)allow each other Party and its financial, accounting, legal or other advisors access to the Preserved Information, including the right to make copies, for the purposes of the filing, reporting, audit, compliance requirements of such Party pursuant to Applicable Law, regulations or stock exchange rules as well as requirements under insurance arrangements and for the purposes of litigation and similar proceedings;

(iii)cooperate to prepare all filings and accounting input required under Applicable Law and relating to the Z1 Business and Z2 Business, as applicable, for the relevant periods up until the last day of the month in which Closing takes place and allow any applicable audit of such information by the other Party;

(iv)in each case, (i) provided that any access or disclosure shall be subject to the written request of the respective other Party (in which this Party shall present evidence that such access or disclosure is required by Applicable Law or regulation), (ii) provided that the foregoing shall not unreasonably interfere with the normal operations of any company involved, and (iii) to the extent permitted by Applicable Law, including any applicable competition laws.

(b)Zenuity shall, for a period of two months after Closing:

(i)preserve any and all third party data held by it, which has not been shared with VNE or Z2Co as per the Closing Date because it is subject to a confidentiality agreement with such third party and such third party has not yet consented to its transfer; and

(ii)endeavor to procure that all relevant third party data is transferred and released to VNE and Z2Co upon confirmation that the relevant third party consent has been obtained or waived, subject in all respects to the Information Barrier Protocol. For the avoidance of doubt, Zenuity shall not have any obligation to preserve for or disclose to VNE or Z2Co any third party data which would be in conflict with the Information Barrier Protocol.

5.3    Beyonav earn-out

(a)The Parties acknowledge that Zenuity and Schatzsoft (former Beyonav LLC) entered into an asset sale and purchase agreement on 2 February 2018 pursuant to which Schatzsoft is entitled to an earn-out payment on 31 December 2020 if a customer contract regarding purchase of services or products developed with, or including, the commercial know-how and/or the intellectual property rights acquired under the agreement with a total contract value of at least USD two (2) million has been executed. The potential earn-out is limited to USD 50,000.

(b)The Parties agree that If such contract has been completed during the year 2020 related solely (i) to Zenuity US and/or VNE, VNE shall pay the full earn-out amount to Schatzsoft, or (ii) to Z2Co and/or VCC, Z2Co shall pay the full earn-out amount to Schatzsoft. If such contract is related to Zenuity US or Veoneer and Z2Co or VCC jointly, VNE and Z2Co shall each pay 50% of such earn-out payment.

5.4    Distribution

The Parties shall procure that, as soon as possible after the Closing Date, an extraordinary general meeting of the shareholders of Zenuity is held at which resolutions shall be adopted to distribute the maximum amount of distributable profits of the JV Company legally and financially permitted to be distributed, to each of Z2Co and VNE, on a 50:50 basis.

6.    Miscellaneous

6.1    Further assurance

Each Party shall and, each Party shall procure that each member of their respective groups shall, from time to time, before and after Closing, at its own cost, do, perform, sign and execute all such acts, documents and things (or procure the doing, performance, signing or execution thereof) as another Party may from time to time reasonably require, in a form and in terms satisfactory to such other Party (acting reasonably), to give full effect to this Agreement and to secure that all Parties receive the full benefit of the rights and remedies conferred upon it in this Agreement.

6.2    Notices

All notices given or made under the Agreement shall be in writing in the English language and shall be deemed to have been duly given or made when delivered by courier or by e-mail (with the relevant document attached as a pdf) to the Party in question as follows:

If to VCC:

Attention: Pernilla Heidenvall, Head of Legal

Volvo Car Corporation

50091 Legal

Torslanda VAK HABVS

40531 Göteborg

Sweden

Email address:     legal@volvocars.com

With a copy (not serving as a notice) to:

Clifford Chance Europe LLP

1, rue d'Astorg

75008 Paris

France

If to VNE:

Attention: Lars Sjöbring, General Counsel

Veoneer AB

WTC, Klarabergsviadukten 70

Section C 6^th floor

11164 Stockholm

Sweden

Email address:     legal.affairs@veoneer.com

With a copy (not serving as a notice) to:

Roschier Advokatbyrå AB

P.O. Box 7358

SE-103 90 Stockholm

Sweden

If to Zenuity AB:

Notice sent to both:

Veoneer AB

Attention: Lars Sjöbring, General Counsel

WTC, Klarabergsviadukten 70  Section C 6th floor

11164 Stockholm

Sweden

Email address:  legal.affairs@veoneer.com

and:

Volvo Car Corporation

Attention: Pernilla Heidenvall, Head of Legal

50091 Legal  Torslanda VAK HABVS

40531 Göteborg

Sweden

Email address:  legal@volvocars.com

With copies (not serving as a notice) to both:

Roschier Advokatbyrå AB

P.O. Box 7358

SE-103 90 Stockholm

Sweden

and:

Clifford Chance Europe LLP

1, rue d'Astorg

75008 Paris

France

or to such other postal address or e-mail address of which such Party notifies the other Parties in accordance with this Section 6.2.

6.3    Fees and expenses

Each Party shall bear its own fees and expenses in connection with the preparation and implementation of the Transaction, including, but not limited to, all fees and expenses of investment bankers, advisors, representatives, counsels and accountants.

6.4    Assignment

No Party may, by operation of law or otherwise, assign, transfer or grant any security interest or other rights in or over any of its rights or obligations under this Agreement, without the prior written consent of the other Parties, other than as explicitly set out in this Agreement.

6.5    No waiver

Failure by a Party at any time or times to require performance of any provision of this Agreement shall not be construed as a waiver by such Party of (i) any succeeding breach of such provision, (ii) a breach of any other provision of the Agreement, or (iii) an amendment of any provision of the Agreement.

6.6    Entire agreement

This Agreement and the Transaction Documents represent the entire understanding and agreement between the Parties with respect to its subject matter and supersede all prior understandings and agreements with respect to such subject matter, including the term sheet entered into between the Owners dated 18 May 2020 relating to the Transaction.

6.7    Schedules incorporated

Each Schedule to which reference is made herein and which is attached hereto shall be deemed incorporated in this Agreement by such reference.

6.8    Amendments

No amendment to this Agreement shall be effective unless made in writing and signed by a duly authorized representative of each Party.

6.9    Survival of rights, duties and obligations

Termination of this Agreement for any cause shall not release a Party from any liability which at the time of termination has already accrued to another Party or which thereafter may accrue in respect of any act or omission prior to such termination.

6.10    Provisions severable

If any part of this Agreement is held to be invalid or unenforceable, the validity and enforceability of the remainder of this Agreement shall not be affected; however, the Parties shall attempt, through negotiations in good faith, to replace any part of this Agreement so held to be invalid or unenforceable in order to give effect to the commercial intentions of the Parties when signing this Agreement. The failure of the Parties to reach an agreement on a replacement provision shall not affect the validity of the remaining part of this Agreement.

6.11    Confidentiality and publicity

(a)Subject to Section 6.11(b), each Party undertakes not to disclose, in whole or in part, any Confidential Information.

(b)Section 6.11(a) shall not prohibit disclosure if and to the extent:

(i)required to do so by law or by any court of competent jurisdiction, the rules and regulations of any stock exchange or in any lawful and compelling enquiry by any governmental, official or regulatory body;

(ii)the Confidential Information is or becomes publicly available (other than by breach of this Agreement);

(iii)the other Parties have given its prior written consent to such disclosure (such consent not to be unreasonably withheld or delayed);

(iv)such disclosure is to its professional advisers who are bound to such Party by a duty of confidence similar to that set out in this Agreement.

(c)If a Party is required under any of the circumstances referred to in Section 6.11(b)(i) to disclose any Confidential Information, the disclosing Party shall, to the extent legally permissible, use its reasonable endeavors to consult with the other Parties prior to any such disclosure.

(d)All press releases and other public relations activities of the Parties with regard to the contents of this Agreement shall be mutually approved by the Parties in advance, such approval not to be unreasonably withheld or delayed.

6.12     Governing law and arbitration

(a)This Agreement is governed by the substantive laws of Sweden, without regard to its conflicts of law rules and principles. In using English terms and concepts in the Agreement, the Parties have not intended to incorporate any legal standards other than those that would result from a translation of such terms and concepts into Swedishand/or an interpretation of such terms and concepts under Swedishlaw.

(b)Any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the “SCC”). The Parties agree that any dispute, controversy or claim arising out of or in connection with this Agreement and the Transaction Documents shall be determined together in a single arbitration proceeding if requested by any party thereto.

(c)The seat of arbitration shall be Gothenburg, Sweden. The language to be used in the arbitral proceedings shall be English.

(d)The arbitral tribunal shall be composed of three arbitrators.

(e)The Parties undertake to ensure that all arbitration proceedings conducted in accordance with this Agreement shall be kept confidential, unless otherwise is required by law or by any court of competent jurisdiction or the rules and regulations of any stock exchange. This undertaking shall cover, inter alia, all information disclosed during the course of the arbitration proceedings, as well as any decision or award made or declared by the arbitral tribunal.

[Signature pages follow]

_____________________

VEONEER SWEDEN AB

/s/ Daniel Åhlström/s/ Christine Rankin

Name: Daniel Åhlström    Name: Christine Rankin

VEONEER AB

/s/ Mikael Landberg/s/ Christine Rankin

Name: Mikael Landberg    Name: Christine Rankin

VEONEER US, INC.:

/s/ Eric Swanson

Name: Eric Swanson    

VOLVO CAR CORPORATION

/s/ Carla De Geyseleer/s/ Maria Hemberg

Name: Carla De Geyseleer    Name: Maria Hemberg

ZTWO COMPANY AB

/s/ Pär Arvidsson/s/ Pernilla Heidenvall

Name: Pär Arvidsson    Name: Pernilla Heidenvall

ZENUITY AB

/s/ Henrik Green/s/ Nishant Batra

Name: Henrik Green    Name: Nishant Batra

EX-10.2

Exhibit 10.2

JOINT VENTURE AGREEMENT

dated 1 July 2020

ZTWO Company AB

and

VEONEER SWEDEN AB

(as the Shareholders)

in the presence of

ZENUITY AB

regarding

ZENUITY AB

Table of Contents

1.    DEFINITIONS AND CONSTRUCTION	2
2.    PURPOSE OF THE JV COMPANY	7
3.    THE BUSINESS OF THE JV COMPANY	8
4.    FINANCING OF THE JV COMPANY	10
5.    MANAGEMENT OF THE JV COMPANY	10
6.    ALLOCATION OF FUNDS AVAILABLE FOR DISTRIBUTION	16
7.    DISPOSAL OF SHARES; ASSIGNMENT	17
8.    REDEMPTION	18
9.    VALUATION	19
10.    CONFIDENTIALITY	20
11.    TERM AND TERMINATION	21
12.    DISSOLUTION OF THE SHAREHOLDERS' CO-OPERATION	22
13.    NOTICES	22
14. RELATION TO THE ARTICLES OF ASSOCIATION AND THE COMPANIES ACT	23
15.    GENERAL PROVISIONS	24
16.    GOVERNING LAW AND DISPUTE RESOLUTION	25

Exhibits:

Exhibit A:	Articles of Association on the Effective Date
Exhibit B:	List of certain Intellectual Property Rights created, invented, authored, developed, collected, acquired, or otherwise owned or controlled by the JV Company during, and in accordance with the terms of, the Former JVA and up until the Effective Date
Exhibit C:	VNE Zenuity Foreground IP License Agreement
Exhibit D:	Z2Co Zenuity Foreground IP License Agreement
Exhibit 5.3.3:	Instructions and Rules of procedure for the Board as at the Effective Date

    1(28)

This JOINT VENTURE AGREEMENT is dated 1 July 2020 and made between:

(1)ZTWO Company AB,a Swedish limited liability company, reg. no. 559228-9358, having its registered office at Lindholmspiren 2, 417 56 Gothenburg, Sweden (“Z2Co”); and

(2)VEONEER SWEDEN AB, a Swedish limited liability company, reg. no. 559131-0841, having its registered office at Wallentinsvägen 22, 447 37, Vårgårda, Sweden (“VNE”).

Z2Co and VNE are hereinafter jointly referred to as the “Shareholders” and individually as a “Shareholder”.

In the presence of:

(3)Zenuity AB, a Swedish limited liability company, reg. no. 559073-6871, having its registered office at Lindholmspiren 2, 417 56 Gothenburg, Sweden (the “JV Company”)

Background

A.Volvo Car Corporation, a Swedish limited liability company, reg. no. 556074-3089, having its registered office at Assar Gabrielssons Väg, 418 78 Gothenburg, Sweden (“Volvo Cars”) and its Affiliates (as defined below) are worldwide developers and manufacturers of passenger cars and are engaged in the development, manufacturing, marketing and sales of such cars and solutions related thereto.

B.VNE and its Affiliates (as defined below) are worldwide leading developers and producers of systems and equipment for personal safety in motor vehicles, including electronics, such as electronic control units, sensors for safety systems and solutions within the active safety area.

C.Volvo Cars and Autoliv Development AB, to which VNE was substituted on 29 June 2018, have set up a cooperation between them with a common strategic rationale to pool resources to develop advanced driver assistance systems (“ADAS”) and highly automated driving systems (“HAD”) functionality to the automotive market and to commercialize such technology through VNE acting as an exclusive sales channel to third parties. Accordingly, they entered into a number of related agreements, including: (i) on 20 December 2016, into an investment agreement, and (ii) then, on 18 April 2017, into a joint venture agreement and certain ancillary agreements, to form the 50/50 owned JV Company (the “FormerJVA”) and into several license agreements with the JV Company, to grant a license to the JV Company with respect to their Background Intellectual Property Rights (as defined in such agreements).

D.Further to a strategic review of the JV Company’s activities conducted by VNE and Volvo Cars, they decided to split the business of the JV Company and its Subsidiaries (the “JV Group”), as existing at the Effective Date, into two parts:

(i)one initially engaging in ADAS business based on VNE’s smart cameras, owned 100% (directly or indirectly) by VNE or a wholly-owned subsidiary of VNE; and

(ii)one initially engaging primarily (considering small deliveries to Volvo Cars, e.g. for 519A and 519G (mostly in the VMC area)) in ADAS and AD solutions operating on a Nvidia-based core computer, owned 100% (directly or indirectly) by Volvo Cars or a wholly-owned subsidiary of Volvo Cars;

    2(28)

(the “Separation”).

E.On the Effective Date, the Shareholders and the JV Company have, amongst others, entered into several agreements, including the transaction framework agreement (the “Transaction Framework Agreement”), and terminated the Former JVA and the Former License Agreements, to complete the Separation of the JV Group (the “Transaction”).

F.On the Effective Date, as part of the Transaction, Volvo Cars has contributed all its Shares to Z2Co and, as a result, the share capital of the JV Company is allocated as set out in Clause 2.8.

G.In the context of the Transaction, the Shareholders have agreed to enter into this Agreement to govern their relationship and respective rights and obligations with respect to the JV Company, in replacement of the Former JVA.

1.DEFINITIONS AND CONSTRUCTION

1.1     Unless otherwise expressly required by the context, the following capitalized terms shall have the following meanings:

“Accounting Principles” means (i) Swedish GAAP in respect of the JV Company (and in case of any new subsidiary of the JV Company incorporated in Sweden); and (ii) for the purposes of the JV Company reporting to the Shareholders; (a) IFRS (Z2Co) and (b) US GAAP (VNE), respectively.

“ADAS” is defined in Recital C.

“Affiliate” means with respect to a Shareholder: any legal entity that Controls, is Controlled by, or under common Control with, the Shareholder (except JV Company); in each case only for so long as such Control exists. For the avoidance of doubt, no third parties are considered as Affiliates hereunder.

“Agreement” means this Joint Venture Agreement, including all exhibits, amendments and supplements to it and its exhibits made or prepared in accordance with the provisions hereof, as the same may be amended from time to time in accordance with its terms.

“Articles of Association” means the JV Company’s articles of association, as amended from time to time, including on the Effective Date, as attached as Exhibit A.

“Autoliv Background IP Assignment Agreement” means the Intellectual Property Rights assignment agreement entered into between the JV Company and Autoliv (and subsequently VNE), dated 18 April 2017.

“Board” means the JV Company’s board of directors.

“Business” shall have the meaning set forth in Clause 2.2.

“Business Day” means a day (other than a Saturday, Sunday or public holiday) on which banks are generally open for business in Swedenandthe United States, other than for internet banking and/or telephone services only.

“Chairman” means the chairman of the Board.

    3(28)

“Companies Act” means the Swedish Companies Act (Sw. Aktiebolagslagen (2005:551)), in force from time to time.

“Confidential Information” means all information of any kind or nature (whether written, oral, electronic or in any other form), including, without limitation, the contents of this Agreement, any financial information, trade secrets, customer lists or other information, which a Shareholder from time to time may receive or obtain as a result of entering into or performing its obligations pursuant to this Agreement, relating to the other Shareholder, its Affiliates or the JV Company.

“Control” means the possession, directly or indirectly, of 50% or more of the voting rights or other equity interests of any other person; or the power to appoint the majority of the members of the board of directors of any other person, or the power to cause the direction of management of any other person; or otherwise the actual control of any other person through the ownership, by contract, trustee or otherwise.

“Controller” shall have the meaning set forth in Clause 5.3.1.

“Cooperation and Cost Sharing Agreement” shall have the meaning set forth in Clause 3.2.2(f).

“Deadlock Matter” shall have the meaning set forth in Clause 5.8.1.

“Deadlock Notice” shall have the meaning set forth in Clause 5.8.1.

“Default Notice” shall have the meaning set forth in Clause 8.1.1.

“Defaulting Shareholder” shall have the meaning set forth in Clause 8.1.1.

“EffectiveDate” means the date hereof.

“Escalation Committee” shall have the meaning set forth in Clause 5.8.2.

“FormerJVA” shall have the meaning set forth in Recital C.

“Former License Agreements” means the former (i) VNE background intellectual property license agreement, (ii) VNE background patent license agreement, (iii) VNE master commercialization license agreement, (iv) VCC background intellectual property license agreement, (v) VCC background patent license agreement, (vi) VCC master commercialization license agreement.

“HAD” is defined in Recital C.

“IFRS” means the principles, rules, policies, practices, procedures and methods for Swedish companies applying the International Financial Reporting Standards, and as further specified in Volvo Cars’ Financial Manual (as amended from time to time).

“Insolvency Notice” shall have the meaning set forth in Clause 8.2.1.

“Insolvent Shareholder” shall have the meaning set forth in Clause 8.2.1.

“Intellectual Property Rights“ means any and all company names, business names, copyrights (including rights in computer software), semiconductor topography rights,

    4(28)

domain names, know-how, patents and utility models (and any continuation, continuation-in-part, divisional, re-examined or reissued patent, foreign counterpart or renewal or extension relating thereto), rights in databases, designs and inventions, trademarks, trade names, trade secrets and all other intellectual and industrial property rights of a corresponding or similar nature, which may presently or in the future exist anywhere in the world, whether registered or not, and registered includes any applications for registration and renewals, as well as any licenses of any of the foregoing.

“IP Action” means any decision affecting the validity, enforceability, or scope of any of the JV Intellectual Property Rights which may involve a capital expenditure by JV Company, including (without limitation) decisions relating to: filing foreign counterpart applications; making maintenance, annuity and renewal payments; filing continuation, request for continued examinations, or divisional applications; filing registration applications; making priority filings; filing statements of use, extensions of time, express abandonments, disclaimers and the like; participating in, defending, or initiating an opposition or other administrative proceedings; and initiating any enforcement proceedings.

“IP Action Owner” shall have the meaning set forth in Clause 5.4.5.

“JV Company” shall have the meaning set forth in the preamble thereof.

“JV Intellectual Property Rights” means any and all:

(i)Intellectual Property Rights assigned to the JV Company upon its incorporation under the Former JVA (via the Autoliv Background IP Assignment Agreement and the Volvo Cars Background IP Assignment Agreement);

(ii)Intellectual Property Rights created, invented, authored, developed, collected, acquired, or otherwise owned or controlled by the JV Company during, and in accordance with the terms of, the Former JVA and up until the Effective Date, including (without limitation) those listed in Exhibit B; and

(iii)New IP.

“JV Group” is defined in Recital D.

“Manager” shall have the meaning set forth in Clause 5.3.1.

“Mandatory Deadlock Matter” shall have the meaning set forth in Clause 5.8.2.

“New Direct License Agreements” or “NDLAs” means the VNE Zenuity Foreground IP License Agreement and the Z2Co Zenuity Foreground IP License Agreement.

“New IP” means any and all Intellectual Property Rights that: (i) are first applied for or created on or after the Effective Date from any IP Action taken hereunder; or (ii) issue from any of the JV Intellectual Property Rights existing before the Effective Date through no action of the Shareholders hereunder; (i)-(ii) all during the term of this Agreement.

“Non-Owner” shall have the meaning set forth in Clause 5.4.5.

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“Non-Transferable Assets” shall have the meaning set forth in Clause 2.2(b).

“Person” means an individual or a corporation, partnership, association, trust or any other entity or organization, including any government, governmental agency and other public body.

“Redeeming Shareholder” shall have the meaning set forth in Clause 8.2.1.

“Requesting Shareholder” shall have the meaning set forth in Clause 8.1.1.

“ResidualAssets” shall have the meaning set forth in Clause 2.2(b).

“SCC” means the Stockholm Chamber of Commerce.

“Separation” is defined in Recital D.

“Share” means a share issued in the capital of the JV Company irrespective of class and any other instrument convertible into or exchangeable for such share and any other right to subscribe for such share.

“Shareholder” shall have the meaning set forth in the preamble hereof.

“Subsidiaries” means (i) Zenuity GmbH, with registered office at Theresienhöhe 30, c/o Blitzstart Holding AG, 80339 München, a limited liability company incorporated under the laws of Germany; (ii) Zenuity, Inc., with a registered office at 1209 Orange St., Wilmington, New Castle County, 19801 Delaware, a limited liability company incorporated under the laws of the State of Delaware, United States; and (iii) Zenuity Software Technology (Shanghai) Ltd., with a registered office at Room K1, 5 floor, No. 277 Huqingping road, Minhang District, Shanghai, China, a limited liability company incorporated under the laws of People's Republic of China.

“Swedish GAAP” means the Swedish generally accepted accounting principles, rules, policies, practices, procedures and methods for companies applying K3.

“Transaction” is defined in Recital E.

“Transaction Documents” means the agreements entered into to effectuate the Transaction.

“Transaction Framework Agreement” is defined in Recital E.

“Transitional Services Agreement” shall have the meaning set forth in Clause 3.2.2(f).

“Transfer” means any transaction, including any undertaking to transact, with or without consideration, whether voluntary or court-ordered or by way of law, which might alter, now or in the future, directly or indirectly, the share ownership of and/or the voting rights in the JV Company, by way of a transfer (sale, loan, contribution, donation, partition, exchange, auction or any other means), exercise, conversion of the Shares, or by any other means, of the ownership of Shares, or of any rights over Shares (including any voting, economic or dividend rights), including, but not limited to, transfers as a result of death, gratuities, partial contributions of assets, mergers, de-mergers or any combination of these methods of transfer of ownership) as well as any grant of option, collateral, pledge,

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security interest or encumbrance or creation of any third party right over the Shares; with the use of any derived form of “Transfer” to be interpreted accordingly.

“Transfer Agreements” shall have the meaning set forth in Clause 3.2.2.

“Unidentified Assets” shall mean assets, liabilities or contracts of the JV Company (and/or the Subsidiaries) which was not listed in schedules to any of the Transfer Agreements.

“US GAAP” means the generally accepted accounting principles, rules, policies, practices, procedures and methods adopted by the U.S. Security and Exchange Commission, and as further specified in VNE's Financial Manual (as amended from time to time).

“VAB” shall have the meaning set forth in Clause 3.2.2(c).

“VCC Share Purchase Agreement” shall have the meaning set forth in Clause 3.2.2(e).

“VNE” shall have the meaning set forth in the preamble hereof.

“VNE Share Purchase Agreement DE” shall have the meaning set forth in Clause 3.2.2(c).

“VNE Share Purchase Agreement US” shall have the meaning set forth in Clause 3.2.2(d).

“VNE Zenuity Foreground IP License Agreement” means the license agreement entered into on the Effective Date between the JV Company and VNE, to grant a license to the latter with respect to the JV Intellectual Property Rights, as attached as Exhibit C.

“Volvo Cars Background IP Assignment Agreement” means the Intellectual Property Rights assignment agreement entered into between the JV Company and Volvo Cars, dated 18 April 2017.

“VUS” shall have the meaning set forth in Clause 3.2.2(d).

“Z1 Asset Transfer Agreement” shall have the meaning set forth in Clause 3.2.2(a)

“Z2 Asset Transfer Agreement” shall have the meaning set forth in Clause 3.2.2(b).

“Z2Co” shall have the meaning set forth in the preamble hereof.

“Z2Co Zenuity Foreground IP License Agreement” means the license agreement entered into on the Effective Date between the JV Company and Z2Co, to grant a license to the latter with respect to the JV Intellectual Property Rights, as attached as Exhibit D.

“ZeVu License Agreement” shall have the meaning set forth in Clause 3.2.2(h).

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1.2In this Agreement, words importing the singular shall include the plural and vice versa, words of any gender shall also import the other gender and words importing persons shall include legal entities and vice versa.

1.3Clauses and headings are for ease of reference only and are not to be used as an aid in the interpretation of this Agreement.

1.4Unless otherwise set out in this Agreement, references to Clauses are to Clauses of this Agreement and references to exhibits and schedules are to exhibits and schedules to this Agreement.

1.5Unless a contrary indication appears, any reference in this Agreement to:

(i)any agreement or instrument is a reference to that agreement or instrument as amended, supplemented, extended or restated;

(ii)“including”, “in particular, “for instance” and the like shall be construed without limitation;

(iii)a reference to “law” and/or “regulation” includes any law, regulation, judgement or other legally binding requirement or rule of any governmental authority in any jurisdiction applicable to either of the Shareholders and/or any of the JV Group companies (whichever relevant); and

(iv)a provision of law or regulation is a reference to that provision as amended, supplemented or re-enacted.

2.PURPOSE OF THE JV COMPANY

2.1.Prior to the Effective Date, the JV Company had been jointly owned and operated by VNE and Volvo Cars since its formation, for the purpose of jointly developing and commercializing ADAS and HAD software technologies, including the ownership and licensing of Intellectual Property Rights related thereto.

2.2.As from the Effective Date, the JV Company’s purpose shall be limited to:

(a)owning, managing, maintaining, protecting, prosecuting, enforcing and registering the JV Intellectual Property Rights for the benefit of the Shareholders, all in accordance with the terms and conditions of this Agreement and the NDLAs;

(b)owning, managing, maintaining, liquidating or disposing as applicable (i) any residual assets, liabilities or contracts not included in the scope of the transfers pursuant to the Transfer Agreements and not subsequently transferred to either VNE or Z2Co as Unidentified Assets (the "ResidualAssets"), and (ii) any assets, liabilities and contracts held in trust on behalf of VNE or Z2Co (the "Non-TransferableAssets") in accordance with the process relating to non-transferable assets, non-assumable liabilities and non-assignable contracts set out in the relevant Transfer Agreement(s); and

(c)managing, maintaining and ensuring the performance of the (i) Transitional Services Agreement, (ii) the Cooperation and Cost Sharing Agreement, and (iii)

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the ZeVu License Agreement, as the case may be ((a)-(c) above jointly, the “Business”).

Save with the prior consent of both Shareholders, the JV Company shall not operate any business or activities whatsoever outside the Business.

2.3.The Shareholders agree that the terms of this Agreement replace the ones of the Former JVA, which has fully terminated on the Effective Date, provided that such termination shall be without prejudice to any prior breach of the Former JVA.

2.4.The Shareholders agree that the name of the JV Company shall remain “Zenuity AB”.

2.5.The official language of the JV Company shall be English.

2.6.The JV Company shall have its registered office and its principal office in Gothenburg, Sweden.

2.7.The Articles of Association shall provide for a fixed share capital and a fixed number of Shares (and not an interval), and the absolute numbers with respect thereto shall not change unless in accordance with this Agreement.

2.8.The JV Company shall have an issued and fully paid share capital of SEK 500,000, divided into 500,000 Shares, which shall be owned by the Shareholders as follows:

Shareholder	No. of shares	Shareholding and votes (%)
VNE	250,000	50
Z2Co	250,000	50

2.9.Unless otherwise agreed by both Shareholders, or as an effect of the provisions herein, the allocation of Shares and votes in the JV Company (both in absolute numbers and in per cent) shall remain unchanged during the term of this Agreement.

2.10.If the Shareholders agree to increase the share capital of the JV Company, each Shareholder shall have the right to exercise its pre-emption right to subscribe for new Shares or securities convertible into, or giving right to, Shares (as applicable) pro rata to its, at the time, existing shareholding in the JV Company.

3.THE BUSINESS OF THE JV COMPANY

3.1General

3.1.1The activities of the JV Company shall be to act as an intellectual property holding company by engaging in any activities that are necessary, beneficial, or incidental to the Business, or that otherwise may be necessary or appropriate to

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protect or further develop the JV Intellectual Property Rights in accordance with the terms and conditions of this Agreement.

3.1.2The JV Company shall maintain all certifications, approvals and licenses necessary or required for the Business.

3.1.3The Business shall be conducted on sound commercial basis in accordance with the principles set forth in this Agreement and as directed by the Board, and shall comply with all applicable laws, regulations and rules.

3.1.4As of the Effective Date, the JV Company has entered into the NDLAs with respect to the JV Intellectual Property Rights. Save with the prior written consent of both Shareholders and unless otherwise expressly set forth in this Agreement, the JV Company will not sell, assign, encumber, charge, transfer, further license, grant any immunities (including, without limitation, covenants not to sue, non-asserts or the like) in respect of, or otherwise transact, any of the JV Intellectual Property Rights.

3.2.General

3.1.All arrangements between a Shareholder (or an Affiliate of a Shareholder) and the JV Company shall be transparent, and all agreements, other arrangements and business between the JV Company and a Shareholder (or an Affiliate of a Shareholder) shall when entered into be made on customary commercial terms and on arm’s length basis. The Shareholders agree that the NDLAs, the Transitional Services Agreement, the Cooperation and Cost Sharing Agreement and the ZeVu License Agreement are entered into on such terms.

3.2.On this day, the JV Company has in addition to the Transaction Framework Agreement and the NDLAs entered into the following agreements with one or both of the Shareholders (or any Affiliate thereof) with ongoing obligations for the JV Company:

(a)An asset transfer agreement with VNE regarding the transfer of certain assets, liabilities and contracts from the JV Company to VNE (the "Z1 Asset Transfer Agreement");

(b)An asset transfer agreement with Z2Co regarding the transfer of certain assets, liabilities and contracts from the JV Company to Z2Co (the "Z2 Asset Transfer Agreement");

(c)A share purchase agreement with Veoneer AB, a Swedish limited liability company, reg. no. 559131-0858, having its registered office at Box 13089, 103 08 Stockholm, Sweden, a VNE Affiliate ("VAB") regarding the transfer of all shares in Zenuity GmbH to VAB (the "VNE Share Purchase Agreement DE");

(d)A share purchase agreement with Veoneer US, Inc., with a resgistered office at 26545 American Drive, Southfield, MI 48034, a corporation incorporated under the laws of the State of Delaware, United States, a VNE Affiliate ("VUS") regarding the transfer of all shares in Zenuity Inc. to VUS (the "VNE Share Purchase Agreement US"); and

(e)A share purchase agreement with Z2Co regarding the transfer of all shares in Zenuity Software Technology (Shanghai) to Z2Co (the "VCC Share Purchase Agreement").

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In addition to the above, the JV Company has entered into the following agreements with one or both of the Shareholders, amongst others, with ongoing obligations for the JV Company:

(f)Transitional service agreement(s) with each of VNE and/or Z2Coin order to facilitate an orderly Separation (the "Transitional Services Agreement");

(g)A cooperation and cost sharing agreement with each of VNE, Z2Co and Volvo cars relating to parties governance and cost sharing arrangements relating to the Dell Amsterdam data cluster (the "Cooperation and Cost Sharing Agreement");

(h)A license agreement with VNE to grant a license to VNE with respect to the ZeVu software tool (the "ZeVu License Agreement"); and

(i)An acknowledgment agreement with Volvo Cars to clarify the Intellectual Property Rights ownership of the ZeVu software tool (the "ZeVu Acknowledgement Agreement").

The agreements listed in Clauses 3.2.2(a)-(e) shall be jointly referred to as the "Transfer Agreements", and individually a "TransferAgreement".

3.3.The JV Company may, from time to time and subject to the prior unanimous consent of the Board, resolving pursuant to the provisions of Clause 5.2.11, enter into agreements with any of or both Shareholders (or Affiliates of any or both Shareholders) in relation to services to be provided to the JV Company.

3.4.The Board shall, on a Shareholder’s request, evaluate any agreement that the JV Company has entered into with a Shareholder (or an Affiliate of a Shareholder) except for the NDLAs or any other agreement entered into in connection with the Transaction, in order to verify that such agreement is in accordance with Clause 3.2.1 and that it meets the agreed quality standards and service levels. If the Board is not able to agree unanimously on such matter, the Shareholders agree that such matter shall be deemed a Deadlock Matter and be resolved according to the provisions in Clause 5.8.

3.5.The Shareholders agree that, to the extent required, appropriate information barrier protocols shall be established for the purpose of safeguarding any information sensitive from a competition law perspective and that a Shareholder and a Board member may otherwise receive.

3.3.Insurances

The JV Company shall subscribe for and maintain adequate general, product, professional and third-party liability insurances, as well as customary directors’ and officers’ insurances in line with industry standard.

4.FINANCING OF THE JV COMPANY

4.1.The Shareholders will monitor funding needs and consider additional capital injections on a case-by-case basis as the needs arise.

4.2.The Shareholders agree to timely provide any funding necessary for the JV Company to conduct the Business and to, as and if required (taking into account funding obligations under the relevant Transfer Agreements) perform any obligations under the Transfer

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Agreements. If a Non-Transferable Asset is held on trust for the benefit of a Shareholder, such Shareholder shall provide all funding necessary to maintain and perform the obligations relating to the relevant Non-Transferable Asset. Any funding shall be made by way of an unconditional shareholder’s contribution by the relevant Shareholder(s) (i.e. without a repayment obligation for the JV Company and without increase of the share capital or the number of shares in the JV Company).

4.3.The JV Company shall primarily be financed by way of its equity and by way of capital contributions by the Shareholders.

4.FINANCING OF THE JV COMPANY

5.MANAGEMENT OF THE JV COMPANY

5.1.General

The management of the JV Company shall, through the Board and the Shareholders’ general meeting, be based on unanimity between the Shareholders and among the directors of the Board.

5.2.The Board

5.2.1.The management of the Business shall be the responsibility of the Board, within the limits set forth in this Agreement.

5.2.2.The Board shall consist of four directors, of which each Shareholder shall be entitled to nominate two. The Shareholders undertake to vote in favor of appointing the directors nominated by the other Shareholder.

5.2.3.The right to nominate a director conferred on a Shareholder under this Clause 5.2 shall include the right for that Shareholder to request the removal at any time from such office such person nominated by that Shareholder as a director. In the event of such removal, the relevant Shareholder shall have the right to nominate a new director. After consulting the other Shareholder, the Shareholder nominating a new director shall inform the Board, which in its turn shall call a Shareholders’ meeting to elect the new director and the Shareholders shall vote in accordance with such nomination.

5.2.4.The Chairman shall be elected by the Board at the board meeting held immediately after the annual general meeting of Shareholders or (when otherwise required, for instance, if the Chairman resigns his or her post) at some other board meeting during the period up until the end of the following annual general meeting of Shareholders. The chairmanship shall rotate between the Shareholders every second year. The Shareholders agree that a director of the Board nominated by VNE shall be the Chairman appointed at the Effective Date and shall be replaced by a Z2Co appointed chairman at the first board meeting held following the second anniversary of the Effective Date. The Chairman shall not have a casting vote.

5.2.5.The Secretary of the Board shall be appointed by the Board.

5.2.6.The members of the Board shall serve for a term beginning upon their election and ending at the end of the next annual general meeting of Shareholders. For the avoidance of doubt, the Shareholders acknowledge that the directors may be re-elected. The directors shall not

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be entitled to receive any remuneration from the JV Company for their work performed in their capacity as directors of the JV Company.

5.2.7.The Board will not constitute a quorum at any Board meeting without the presence of two directors, of which one has been appointed by Z2Co and one by VNE. If the required quorum is not present at a Board meeting, the Chairman shall, by not less than five Business Days’ prior written notice to each director, reconvene the meeting.

5.2.8.The Chairman shall ensure that board meetings are held whenever necessary. The Board shall be convened two times per year or more often upon request by a director.

5.2.9.Meetings of the Board shall normally be convened by at least five Business Days written notice, provided, however, that a shorter notice period may be applied if, in the Chairman’s reasonable opinion, an issue of material importance promptly needs to be resolved on by the Board. Such notice shall be in English and shall state the time, place and agenda of the meeting and shall be sent to each director by registered mail or email to the address or e-mail address of each director, which shall have been informed in writing by each director to the Chairman.

5.2.10.The Board shall, on an annual basis, resolve on written rules of procedure for the Board (including any distribution of work or responsibility by and among the directors). The rules of procedure for the Board as at the Effective Date are set out in Exhibit 5.3.3.

5.2.11.Each of the Shareholders is responsible for, and shall take all steps within its power to ensure, the compliance by the directors with the terms and conditions of this Agreement, and no Shareholder shall omit to perform (or omit to procure the performance of) any of its respective obligations provided for in this Agreement. Where to give effect to all or any of the provisions herein, each of the Shareholders shall be responsible for, and shall take all steps within its power to ensure that, the directors take such steps within their powers as are necessary to give effect thereto.

5.3.The Manager and the Controller

5.3.1.The Board shall appoint a manager, who shall be an experienced intellectual property professional responsible for the day-to-day management of the JV Company Intellectual Property Rights, including with respect to managing, maintaining, liquidating or disposing of the Residual Assets and the Non-Transferable Assets and the performance by the JV Company of its obligations under (i) the Transitional Services Agreement(s), (ii) the Cooperation and Cost Sharing Agreement, and (iii) the ZeVu License Agreement, as the case may be (the “Manager”), and an experienced finance professional who shall be responsible for overseeing the financial activities of the JV Company (the “Controller”). The Shareholders acknowledge that the Manager and the Controller have not been identified and appointed as at the Effective Date, and agree that the services to be performed by the Manager and the Controller pursuant to this Agreement, pending such appointments, shall be performed by Z2Co in accordance with the instructions set out in Clause 5.3.3, on an at cost basis. The Shareholders shall seek to appoint the Manager within three (3) months of the Effective Date and the Controller as soon as practicable following closing of the accounts for financial year 2020. The Board shall also be

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responsible for the appointment of additional personnel of the JV Company, to the extent deemed appropriate by the Board.

5.3.2.The Manager and the Controller shall be employed by, or consultants to, the JV Company on customary terms and conditions.

5.3.3.As at the Effective Date, the authority and responsibility of the Manager and the Controller, including a financial reporting scheme, are set out in in Exhibit 5.3.3. Unless there is a conflicts of interest matter (i.e. where the JV Company’s interest may be contrary to one of the Shareholders), the Board and the Shareholders shall not interfere with the day-to-day management within the scope of the delegation of authority (as set out in Exhibit 5.3.3).

5.3.4.The Manager shall procure that the Board is provided with written reports in respect of the JV Company and the Business. The reports shall be in English, if not otherwise agreed between the Shareholders, and shall be provided by the Manager to the Board on a semi-annual basis. The Manager shall also procure that the following information is provided to the Board:

(a)quarterly financial reports of the JV Company, on both IFRS and US GAAP basis, in accordance with the instructions set out in Exhibits 5.3.3 (which may be amended from time to time by the Board);

(b)such other information on the financial condition, business and operations of the JV Company as the Shareholders may reasonably require (and cannot obtain by itself), without undue delay;

(a)material claims and litigation relating to the JV Company, without undue delay;

(b)breach of an agreement by a counterparty to a material agreement of the JV Company, without delay; and

(c)any agreements entered into between the JV Company and a Shareholder.

in each case, to the extent such information is not already presented and delivered in writing at a board meeting in the JV Company.

5.4.IP Committee and JV Intellectual Property Rights Governance

5.4.1.An IP committee, comprising one representative of each of the Shareholders, shall be established to oversee and direct the Manager of the JV Company regarding the JV Intellectual Property Rights (the “IP Committee”).

5.4.2.The IP Committee shall be responsible for any decision to be made with respect to IP Actions, which can only be resolved by the Board or implemented by the Manager with the prior consent of the IP Committee. Notwithstanding any other provisions of this Agreement, the Manager and/or the Board shall advise and seek the prior consent of the IP Committee with respect to any IP Actions before resolving on or implementing any action in relation thereto.

5.4.3.The members of the IP Committee shall act in good faith and on a reasonable basis, to determine the appropriate IP Actions within twenty Business Days of a decision request by

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the Manager or the Board. All decisions of the IP Committee shall be by unanimous consent and be binding upon the Shareholders, the Board and the Manager.

5.4.4.All IP Actions taken by the Manager where there is unanimous consent of the IP Committee shall be equally funded by the Shareholders (i.e., 50:50), the Shareholders will also equally share any liability, damages or compensation arising therefrom, and the JV Company shall exclusively own any and all New IP resulting therefrom.

5.4.5.In the event there is not unanimous consent of the IP Committee such that one Shareholder wants to take an affirmative action with respect to an IP Action (the “IP Action Owner”) and the other Shareholder declines to participate (the “Non-Owner”), the following shall apply:

a.The IP Action Owner may elect to unilaterally take the IP Action by: (i) instructing the Manager to do so; (ii) bearing 100% of such costs and any liabilities resulting therefrom; and (iii) keeping for itself 100% of any damages or compensation arising therefrom; all free of any interference by the Non-Owner;

b.The IP Action Owner shall exclusively own, and is hereby assigned, any New IP that may result from any IP Action undertaken by it; provided, however, that in case requested by the Non-Owner, the IP Action Owner shall agree to and grant to the Non-Owner, which Non-Owner shall agree to and accept, an irrevocable, perpetual (at least forty years), worldwide, fully-paid-up, non-exclusive, royalty-free, non-transferable and non-sublicensable license under the IP Action Owner’s New IP to make (but not have made), use, sell, offer for sale, import, transmit, display, and otherwise exploit, transfer, or dispose of any product, service, method, or process;

c.Each Shareholder and the JV Company agrees to at the IP Action Owner's cost perform all acts that the IP Action Owner may reasonably request to assist in obtaining the full benefits, enjoyment, rights, title, and interest throughout the world, in its New IP. Such acts shall include, without limitation, execution of documents, assistance in the prosecution of patents, copyrights, trademarks, and protection of trade secrets. Except as otherwise expressly set forth in this Clause 5.4, the Shareholders shall each bear their own expenses under this Clause 5.4.

d.In the event that a Shareholder is unable to secure the signature of the other Shareholder or the JV Company, any of its personnel, or its other legal representative, to any lawful document required to apply for or enforce any rights in its New IP, for whatever reason, each of such other Shareholder and the JV Company hereby grants and shall grant such Shareholder the right to appoint an independent, third-party attorney as agent and attorney-in-fact on behalf of such other Shareholder or the JV Company, upon at least ten Business Days’ notice to such other Shareholder and the JV Company, and solely to apply for or enforce rights in its New IP with the same legal force and effect as if executed by such other Shareholder or the JV Company, its personnel, or its other legal representative.

5.5.General Meetings

5.5.1.Annual general meetings of the shareholders in the JV Company shall be held as required by applicable law. Extraordinary general meetings of the shareholders shall be held to the extent required by this Agreement or applicable law. General meetings of the shareholders in the JV Company shall be convened upon resolution by the Board or at the request of a Shareholder. Notices to convene a general meeting of the shareholders in the JV Company

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shall be given in English and in accordance with the Articles of Association, unless otherwise agreed by both Shareholders.

5.5.2.In advance to the annual general meeting of the shareholders in the JV Company, all matters required to be dealt with at the annual general meeting of the shareholders in the JV Company according to the Companies Act and the Articles of Association, shall be included in the agenda for such meeting. Otherwise, the agenda of any general meeting of the shareholders in the JV Company shall be defined by the Board.

5.5.3.Decisions by the general meeting of the shareholders in the JV Company for the passing of any resolution that have been included in the agenda for such meeting, or which is required to be dealt with at a general meeting of the shareholders in the JV Company according to the Companies Act or the Articles of Association, shall be adopted by unanimous consent between the Shareholders present or represented to such meeting, unless otherwise set out in this Agreement.

5.5.4.Each Shareholder undertakes to exercise its voting rights at a general meeting of the shareholders in the JV Company, by itself or through a representative, in the manner required for the provisions of this Agreement to be effected. Each Shareholder further undertakes to vote (by itself or through a representative) for election of the directors nominated for appointment under this Agreement, and, at the request of the Shareholder who nominated the director, for removal and possible replacement of a director appointed under this Agreement.

5.6.Auditor

A general meeting of the shareholders in the JV Company shall elect an auditor of the JV Company. The auditor of the JV Company shall be a well-reputed international auditing firm not serving as an auditor for either Shareholder (or employing the auditor serving as an auditor for either Shareholder).

5.7.Decision making

A decision shall, in the event of a Board meeting in the JV Company, require: (i) a unanimous approval of all the directors of the Board appointed by a Shareholder participating in the board meeting, taking into account the quorum requirement set forth in Clause 5.2.7 or, to the extent such matter falls outside the competence of the Board and within the competence of the general meeting of the shareholders in the JV Company pursuant to applicable law or this Agreement, (ii) a unanimous approval of the representatives of both Shareholders given at the general meeting of the shareholders in the JV Company.

5.8.Deadlock procedure

5.8.1.In the event that the Board or the relevant general meeting of Shareholders is unable to pass a resolution within fifteen Business Days of such matter first being considered and put for a decision by the Board or the general meeting of Shareholders (as the case may be), then a Shareholder may serve a notice (the “Deadlock Notice”) to the other Shareholder with the consequence that such matter is considered a deadlock matter (a “Deadlock Matter”).

5.8.2.Upon receipt of a Deadlock Notice, the Shareholders shall refer the Deadlock Matter to a committee (the “Escalation Committee”), which shall consist of the General Counsel (or

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Chief Legal Officer) of each of Controlling parent company of the respective Shareholders at the time, for consultation and negotiations in good faith with a view to resolve such Deadlock Matter. The consultation and negotiations shall always take into consideration the reasonable best interest of the JV Company as well as each Shareholder’s interests. The negotiations shall commence as soon as reasonably possible, and in any event within ten Business Days after the receipt of the Deadlock Notice. If the Escalation Committee has not been able to resolve the Deadlock Matter within thirty Business Days following receipt of the Deadlock Notice, the Deadlock Matter shall be struck from the agenda of the relevant board meeting or the general meeting of Shareholders (as applicable) and any proposal made in respect of the Deadlock Matter shall not proceed unless the issue has to be resolved upon according to mandatory applicable law or contractual obligations of the JV Company in relation to a third party or otherwise would jeopardize the existence of the JV Company (a “Mandatory Deadlock Matter”).

5.8.3.In case of a deadlock situation in accordance with this Clause 5.8, the Shareholders undertake to ensure that, during a reasonable time period, the JV Company continues to operate towards the Shareholders and third parties (including employees) so that (i) the Mandatory Deadlock Matter situation does not have a material and adverse effect on the JV Company, and (ii) the JV Company honors its obligations in all material respects.

5.8.4.The provisions set out in Clause 12 (Dissolution of the Shareholders’ co-operation) shall apply in the event of a Mandatory Deadlock Matter, but subject to Clause 5.8.3.

5.9.Authority to sign

5.9.1.The authority to sign on behalf of the JV Company shall be vested in the Board in its entirety and in two directors jointly, of which one shall be appointed by Z2Co and one by VNE.

5.9.2.The Manager shall be authorized to sign for the JV Company: (i) as regards the day-to-day management of the JV Intellectual Property Rights; (ii) in accordance with the written instructions given to the Manager by the IP Committee in respect of IP Actions; (iii) or otherwise in accordance with the terms of this Agreement.

5.10.Accounts and reporting

5.1.The JV Company shall maintain complete and accurate records and accounting books prepared and maintained in accordance with the Accounting Principles and as directed by the Board.

5.2.The JV Company shall prepare and distribute to the Shareholders monthly and annual financial statements of the JV Company. The financial statements shall be based on the Accounting Principles and shall be in such form as set out in Exhibit 5.3.3(b), or as is otherwise determined by the Board or as may be reasonably requested by a Shareholder. The annual financial statements of the JV Company shall be distributed to the Shareholders within the end of the first quarter during the subsequent financial year and

    17(28)

the quarterly accounts shall be distributed to the Shareholders at the latest within ten Business Days from the end of the relevant quarter.

5.11.Access to information

5.11.1.Each Shareholder shall, to the extent legally permissible, have reasonable access to the accounts, books, contracts, properties, records and other documents of, or relating to, the JV Company and the conduct of the Business as may reasonably be requested by such Shareholder.

5.11.2.Each Shareholder undertakes to inform the directors and members of the IP Committee nominated by such Shareholder of their obligation of confidentiality under this Agreement and applicable law with respect to any and all information provided to them concerning the JV Company.

6.    ALLOCATION OF FUNDS AVAILABLE FOR DISTRIBUTION

6.1.The Shareholders acknowledge and agree that distribution of profits of the JV Company (if any and subject to the provisions of applicable laws in respect of distribution of profits) may only be made if, following the distribution of profits, (i) there will be cash and/or cash equivalents available in the JV Company to the extent reasonably required from time to time to conduct the Business and, (ii) provided that such distribution would not contravene sound business principles for a company active in the field of business in which the JV Company operates (giving due consideration to the financing needs of the JV Company, its liquidity or financial position).

6.2.Any distribution of the profits of the JV Company shall be made to the Shareholders in proportion to their respective shareholding in the JV Company at the time of the distribution.

7.DISPOSAL OF SHARES; ASSIGNMENT

7.1.During the term of this Agreement (including any subsequent terms), neither Shareholder may Transfer this Agreement or any of such Shareholder’s rights or obligations created hereunder, by operation of law or otherwise, without the priorwritten consent of the other Shareholder hereto, which consent shall not be unreasonably withheld.

7.2.The Shareholders agree that no Shareholder shall have any right to enter into an agreement with a third party to the effect that such third party, directly or indirectly, obtains a Share or its profit or an economical benefit related to the JV Company through the Shareholder. Each Shareholder confirms that it holds, on the date of this Agreement, and will continue to hold, its Shares on its own behalf and that it does not, and will not, act as an agent, front or other intermediary on behalf of a third party.

7.3.The Shareholders agree that only a Person who validly is a party to an NDLA may own a Share or become party to this Agreement. Neither Shareholder may assign or otherwise transfer its NDLA to any Person without also transferring and assigning its Shares and this Agreement to the same Person and vice versa, meaning that the same Person must always hold and be party to each of (i) the NDLA, (ii) the Shares, and (iii) this Agreement at the same time. In the event that (a) this Agreement or the Shares have been transferred to a Person that cannot validly be party to an NDLA, or (b) a Person who is a party to the

    18(28)

NDLA ceases to be a Person that can validly be a party to the NDLA under its terms, such Person shall immediately transfer and assign the NDLA, the Shares and this Agreement to a Person that can validly be party to the NDLA pursuant to its terms.

7.4.Notwithstanding any of the foregoing, but subject to Clause 7.3, each Shareholder may, without the prior written consent of the other Shareholder, assign this Agreement to (i) an Affiliate, or (ii) any other unaffiliated third-party Person, provided that such Affiliate or Person can validly be party to the NDLA pursuant to its terms (a “Free Transfer”).

7.5.Notwithstanding any of the foregoing, but subject to Clause 7.3, each Shareholder may Transfer this Agreement in connection with (i) a sale of all or substantially all of its business and assets, to which this Agreement pertains, (ii) a merger with an unaffiliated third-party Person, or (iii) a corporate reorganization, to the acquirer of such businesses and assets (an “M&A Transaction”), without the prior written consent of the other Shareholder, provided that such assignee or successor can hold the NDLA pursuant to its terms and agrees in writing to be duly bound and to comply fully with this Agreement as a Shareholder hereto.

7.6.In case of a Free Transfer:

(i)VNE (in case of a Free Transfer by VNE) and Z2Co (in case of a Free Transfer by Z2Co) shall also (a) assign its NDLA, and (b) transfer its Shares to such Affiliate or Person; and

(ii)each Shareholder undertakes to waive its pre-emptive or any other right that it may have under the Articles of Association.

7.7.In case of an M&A Transaction:

(i)VNE (in case of an M&A Transaction by VNE) and Z2Co (in case of an M&A Transaction by Z2Co) shall also (a) assign its NDLA, and (b) transfer its Shares to such new assignee or successor entity; and

(ii)each Shareholder undertakes to waive its pre-emptive or any other right that it may have under the Articles of Association.

7.8.In case of a Free Transfer or an M&A Transaction, the Shareholders agree that the JV Company shall ensure that any Transfer of Shares is recorded only after verifying that the provisions of this Agreement have been fully complied with.

7.9.Subject to the foregoing, all of the terms, conditions and provisions of this Agreement shall be binding upon and shall inure to the benefit of the successors and permitted assigns of the respective Shareholder.

8.REDEMPTION

8.1.Material Breach

8.1.1.Where a Shareholder has committed a material breach of this Agreement (the “Defaulting Shareholder”) and the breach is not remedied within twenty Business Days after receipt by the Defaulting Shareholder of a notice of such breach (a “Default Notice”) from any

    19(28)

other Shareholder (the “Requesting Shareholder”), the Requesting Shareholder shall have the right to require redemption of the Shares held by the Defaulting Shareholder.

8.1.2.The Requesting Shareholder may exercise its right pursuant to Clause 8.1.1 by giving written notice thereof to the Defaulting Shareholder, no later than three months after receipt by the Defaulting Shareholder of the Default Notice. After such three-month period, the Requesting Shareholder shall be deemed to have waived its right to redemption of any Shares in respect of the breach set out in the Default Notice.

8.1.3.Unless both Shareholders agree otherwise, the redemption price under this Clause 8.1 shall be 80% of the value of the Defaulting Shareholder’s Shares, established at a separate valuation in accordance with Clause 9 below, whereby the value shall be established as of the day of the Default Notice. The redemption price shall be paid in cash within fifteen Business Days from the day of final establishment of the value of the Shares and the Defaulting Shareholder undertakes to do such things and to execute such documents as shall be necessary or as the Requesting Shareholder may reasonably request to give effect to the Transfer.

8.1.4.Redemption under this Clause 8.1 does not exclude other remedies as a result of the breach of contract, but in calculating the damages, if any, the discounted redemption price paid for the Defaulting Shareholder’s Shares pursuant to Clause 8.1.3 shall be taken into account.

8.1.5.By way of illustration and without limitation, a “material breach” will in particular be deemed constituted for the purpose of this Clause 8.1 in the event that a Shareholder fails to: (i) fund its share of any IP Action taken with the consent of the IP Committee (including any liability, damages or compensation arising therefrom) in accordance with Clause 5.4.4, or (ii) assign its NDLA to the relevant Affiliate (in case of a Free Transfer) or new successor entity (in case of an M&A Transaction) in accordance with the terms of Clauses 7.6 and 7.7.

8.2    Insolvency

8.2.1.If, during the term of this Agreement, a Shareholder is declared bankrupt, enters into composition arrangements with its creditors, suspends its payments or otherwise is found to be unable to pay its debts or to be insolvent (the “Insolvent Shareholder”), the Insolvent Shareholder shall immediately upon the insolvency event give written notice (the “Insolvency Notice”) to the other Shareholders. If the Insolvent Shareholder is a Shareholder, the other Shareholder (the “Redeeming Shareholder”) shall have the right to purchase the Shares from the Insolvent Shareholder, its bankruptcy estate or other holder of rights.

8.2.2.Not later than three months after receipt by the Redeeming Shareholder of the Insolvency Notice, the Redeeming Shareholder must inform the Insolvent Shareholder, its bankruptcy estate or other holder of rights in writing, whether or not it wishes to purchase the Insolvent Shareholder’s Shares. If a notice to that effect has not been given within the stipulated period of time, the Redeeming Shareholder shall be deemed to have refrained from its right to request redemption of the Shares.

8.2.3.Unless both Shareholders agree otherwise, the redemption price under this Clause 8.1.5 shall be 100% of the value of the Insolvent Shareholder’s Shares, established at a separate valuation in accordance with Clause 9 below, whereby the value of such Shares shall be established as of the day when the Redeeming Shareholder applied for redemption of Shares. The redemption price for the Shares shall be paid in cash fifteen Business Days

    20(28)

from the day of final establishment of the value of the Shares and the Insolvent Shareholder undertakes to do such things and to execute such documents as shall be necessary or as the Redeeming Shareholder may reasonably request to give effect to the Transfer.

9.    VALUATION

9.1.If the value of a Share is to be assessed under a provision in this Agreement, and the Shareholders cannot agree on the value, the value shall be established by two experts jointly who, at the time of such appointment, are each partners and/or directors at a well-reputed international auditing firm with intellectual property valuation experience (provided that a Shareholder may not choose a partner or director from an auditing firm which is the auditor for such Shareholder or any of its Affiliates). One valuation expert shall be appointed by VNE and one such expert shall be appointed by Z2Co within ten Business Days calculated from when the matter requiring valuation of Shares arose.

9.2.The experts shall provide their valuation of the JV Company to the Shareholders, not later than eight weeks from the time when both experts have been appointed. If the experts fail to agree and provide their joint valuation within such time frame, each expert shall prepare an independent valuation of the JV Company, including a final report where the principles used for the relevant expert’s valuation are described. The value of the JV Company shall then be assessed as the average value of the two valuations.

9.3.The valuation in Clause 9.2 above shall be made with the view to establish the JV Company’s fair market value. The obtained value shall be distributed on all Shares, whereby the value of one Share shall be deemed to correspond to the Share’s portion of the JV Company’s capital. In establishing the market value, the experts shall have access to the same information about the JV Company as the Shareholders and the Board. The Shareholders undertake to see to it that the experts obtain such information. In doing this, they shall use their best efforts to ensure that the most recent information available will constitute the basis of valuation.

9.4.The Shareholders undertake, on the one hand, to accept each expert’s valuations and, on the other hand, not to institute arbitral or other legal proceedings in respect of such expert valuation, unless an error with significant effect on the valuation as a whole can be established.

9.5.Should a Shareholder choose not to appoint an independent expert according to Clause 9.1 within the time frame set out in said Clause, the valuation of the Shares made by the expert chosen by the other Shareholder alone shall be accepted by both Shareholders as the applicable value of the Shares for the purposes of this Agreement. In such event, the valuation of the expert chosen by the other Shareholder shall be provided within six weeks after the appointment of such expert.

9.6.The experts’ fees, expenses and costs shall be borne by the JV Company.

10.    CONFIDENTIALITY

10.1.Each Shareholder undertakes not to, without the prior written approval of the other Shareholder, use Confidential Information, except for with regard to the existence of the Shareholders’ relationship under this Agreement or for the purpose of fulfilling any obligation or exercising any right that it has hereunder, and not to publish (including the issue of a public announcement) or otherwise disclose Confidential Information, in whole

    21(28)

or in part. Each Shareholder shall use reasonable efforts to procure that its and its Affiliates’ respective directors, officers, employees, consultants, agents and other representatives will likewise maintain strict confidence and secrecy in respect of such information and shall, when appropriate, enter into separate confidentiality agreements with said persons. For the avoidance of doubt, each Shareholder shall bear full responsibility for such Shareholder’s and such Shareholder’s Affiliates’ respective directors, officers, employees, consultants, agents and other representatives.

10.2.Notwithstanding the provisions of Clause 10.1, a Shareholder shall not be prevented from disclosing Confidential Information which:

(a)is required to be disclosed pursuant to the requirements of a governmental authority, judicial order or stock exchange regulations, provided however that if a Shareholder becomes aware of the possibility that it may be compelled by such requirements to disclose Confidential Information, such Shareholder shall immediately give the other Shareholder notice of this fact and consult and co-operate with the other Shareholder as to whether and if so what action should be taken to resist the same;

(b)is or becomes publicly available in writing otherwise than through a Shareholder’s breach of its obligations pursuant to this Agreement;

(c)was lawfully in a Shareholder’s possession prior to such disclosure or acquired through a Shareholder’s own independent research and which was not acquired from the JV Company or the other Shareholder unless acquired without an obligation of confidentiality, as evidenced by written records or other reasonable evidence by the Shareholder claiming of having it in possession or acquired through own independent research save for if it has been transferred/contributed to the JV Company; or

(d)is received without confidentiality restrictions from a third party which is not bound by a confidentiality obligation towards the other Shareholder.

10.3.The confidentiality undertaking in this Clause 10 shall apply during the term of this Agreement and for a period of five years after the expiry of this Agreement in respect of each Shareholder.

10.4.The Shareholders acknowledge that it is of material importance to them, and for the entering into of this Agreement, that the above confidentiality undertaking has been agreed and is observed.

10.5.The Shareholders agree that each Shareholder shall have a right to regular information updates from the JV Company reasonably necessary in order to carry out such Shareholder’s activities under the respective NDLAs.

11.    TERM AND TERMINATION

11.1.This Agreement shall enter into force when it has been duly signed by all Shareholders and will be valid for an initial period up to and including the twentieth anniversary of the date of this Agreement. Unless a Shareholder serves to the other Shareholder a notice of termination at the latest three years before such date, this Agreement will be automatically prolonged for consecutive ten-year periods with a right for each Shareholder to terminate

    22(28)

the Agreement with three years’ notice prior to the end of each such period. A notice of termination shall be made in writing.

11.2.When a Shareholder is no longer a shareholder in the JV Company as a consequence of such Shareholder’s Transfer of its Shares in the JV Company in compliance with the provisions of this Agreement (for the avoidance of doubt, including a redemption of the Shares in accordance with Clause 8), this Agreement will automatically terminate in respect of that Shareholder as from the day when such Shareholder’s Shares in the JV Company are Transferred, save for Clauses 10 and 16, which shall continue in force.

11.3.The termination of this Agreement in relation to a Shareholder will not release such Shareholder from liability for any breach of this Agreement committed before the termination of this Agreement, and neither from obligations under this Agreement applicable to such Shareholder post termination of the Agreement.

12.    DISSOLUTION OF THE SHAREHOLDERS’ CO-OPERATION

12.1.A dissolution of the JV Company shall be conducted in accordance with applicable law, and by a pro rata distribution of the JV Company’s assets, rights, liabilities and obligations between the Shareholders.

12.2.The Shareholders agree that in case of a dissolution under this Clause 12, the JV Intellectual Property Rights, other than any New IP which is exclusively owned by its respective IP Action Owner, shall be jointly owned by both Shareholders in equal and undivided shares with the same restrictions applying to open source as set out in the NDLAs, without any obligation to account to each other. In the course of the dissolution, the JV Company shall assign to the Shareholders all of its rights and interest in such JV Intellectual Property Rights to give effect to this Clause 12.2, with the exception of rights on the ZENUITY trademark and domain names, which neither Shareholder shall be assigned and have any rights in relation to unless otherwise agreed between the Shareholders, provided that, at the request of VNE, or Z2Co in the event that VNE has not issued any request for assignment in connection with the dissolution, the JV Company shall assign the ZENUITY trademark to the relevant Shareholder, at such Shareholder's sole cost and expense, to prevent any third-party from registering or using the ZENUITY trademark and domain names. For the avoidance of doubt, no Shareholder shall be entitled to use or license the ZENUITY trademark or domain names in any way following such assumption. The JV Company shall clone and provide to each Shareholder any physical media and records pertaining to such JV Intellectual Property Rights (e.g. source code, comments, specifications, compilation scripts and the like etc.). The Shareholders shall in course of the dissolution of the JV Company enter into good faith negotiations regarding the maintenance and defense of such JV Intellectual Property Rights consistent with Clause 5.4.

12.3.If the Shareholders cannot agree on whom to appoint as liquidator, the liquidator shall, at the request of either Shareholder, be appointed by the SCC.

13.    NOTICES

13.1.All notices given or made under the Agreement shall be in writing in the English language and shall be deemed to have been duly given or made when delivered to the recipient (i) by courier, or (ii) by e-mail, with the relevant document attached as a pdf, provided that,

    23(28)

on the same Business Day, the sender also sends to the recipient a copy of the notice by courier, in each case as follows:

If to VNE:

If to VNE:

Attention: Lars Sjöbring, General Counsel

Veoneer AB

WTC, Klarabergsviadukten 70

Section C 6th floor

11164 Stockholm

Sweden

Email address:     legal.affairs@veoneer.com

With a copy (not serving as a notice) to:

Roschier Advokatbyrå AB

P.O. Box 7358

SE-103 90 Stockholm

Sweden

If to Z2Co:

Attention: Pernilla Heidenvall, Head of Legal

Volvo Car Corporation

50091 Legal

Torslanda VAK HABVS

40531 Göteborg

Sweden

Email address:     legal@volvocars.com

With a copy (not serving as a notice) to:

Clifford Chance Europe LLP

1, rue d'Astorg

75008 Paris

France

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13.2.Any change of address shall be notified to the other Shareholder in the manner prescribed in this Clause 13.

14.    RELATION TO THE ARTICLES OF ASSOCIATION AND THE COMPANIES ACT

14.1.As between the Shareholders, it is expressly acknowledged and agreed that the provisions of this Agreement shall have priority and apply over and above the Companies Act and the Articles of Association.

14.2.The Shareholders shall whenever necessary exercise all voting and other rights and powers available to them to procure the necessary amendment or alteration to the Articles of Association, to the extent necessary to permit the JV Company and its affairs to be carried out as provided in this Agreement.

14.3.The Shareholders shall not be entitled to request that this Agreement shall not be applied, in whole or in part, due to non-compliance with the provisions of the Articles of Association or the Companies Act.

14.4.In order to secure the Shareholders' adherence to the transfer provisions of this Agreement, the Articles of Association contain a pre-emption section under which each Shareholder is entitled to acquire the other Shareholder's Shares for quota value when such are transferred. The Shareholders hereby waives the right to enforce any pre-emptive rights under the Articles of Association if Shares are transferred in accordance with this Agreement.

15.    GENERAL PROVISIONS

15.1.If any provision of this Agreement is deemed invalid or unenforceable in accordance with its terms, such invalidity or unenforceability shall in no event affect the applicability of other provisions hereunder, which other provisions shall remain in full force and effect, provided however that the Shareholders shall agree on necessary amendments to this Agreement as to validly achieve, to the greatest extent possible, the same commercial effect as had such provision been deemed valid and enforceable.

15.2.Except for as expressly set out in this Agreement, a Shareholder’s failure to exercise a right under this Agreement or to call attention to certain circumstances under this Agreement, shall not mean that the Shareholder has waived its rights in this respect, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.

15.3.This Agreement embodies all the terms and conditions agreed upon between the Shareholders as to the subject matter of this Agreement and supersedes and cancels in all respects all previous agreements and undertakings, if any, between the Shareholders hereto with respect to the subject matter hereof, whether such be written or oral.

15.4.To be valid between the Shareholders, any supplements and amendments to this Agreement shall be made in writing and signed by both Shareholders, and it shall be clearly stated that these are amendments or supplements to this Agreement.

15.5.This Agreement and the rights and obligations set forth herein shall be binding upon and inure to the benefit of the Shareholders and their respective legal successors. This

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Agreement or any of the rights or obligations hereunder shall not be assignable (by operation of law or otherwise) by any Shareholder in whole or in part without the prior written consent of the other Shareholders, except if otherwise is set out in this Agreement.

15.6.Each Shareholder shall bear all of its own costs and expenses incurred in connection with the preparation for and completion of this Agreement, including, without limitation, all costs and expenses of its advisors, agents, brokers, counsel and representatives.

15.7.The Shareholders do not intend to be and nor shall they be deemed to be treated as a general partnership or limited partnership, nor shall any of the provisions of this Agreement for any purpose be, or be deemed to constitute, a partnership or agency between the Shareholders.

15.8.For the avoidance of doubt, it is expressly set forth that this Agreement applies in respect of all of the Shareholders’ present and future Shares in the JV Company.

16.    GOVERNING LAW AND DISPUTE RESOLUTION

16.1.Disputes

16.1.1.Any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the “SCC”). The Shareholders agree that any dispute, controversy or claim arising out of or in connection with this Agreement and the Transaction Documents shall be determined together in a single arbitration proceeding if requested by any party thereto.

16.1.2.The seat of arbitration shall be Gothenburg, Sweden. The language to be used in the arbitral proceedings shall be English.

16.1.3.The arbitral tribunal shall be composed of three arbitrators.

16.1.4.The Shareholders undertake to ensure that all arbitration proceedings conducted in accordance with this Agreement are kept confidential, unless otherwise required by law, or under relevant stock market regulations, or for the purpose of securing the Shareholder's own interests against the other Shareholder in relation to a dispute. This undertaking shall cover, inter alia, all information disclosed during the course of such proceedings, as well as any decision or award made or declared by the arbitral tribunal.

16.2.Governing Law

This Agreement is governed by the substantive laws of Sweden, without regard to its conflicts of law rules and principles. In using English terms and concepts in the Agreement, the Shareholders have not intended to incorporate any legal standards other than those that would result from a translation of such terms and concepts into Swedishand/or an interpretation of such terms and concepts under Swedishlaw.

[Signature pages follows]

________________________

ZTWO COMPANY AB

/s/ Pär Arvidsson/s/ Pernilla Heidenvall

Name: Pär Arvidsson    Name: Pernilla Heidenvall

VEONEER SWEDEN AB

/s/ Christine Rankin/s/ Daniel Åhlström

Name: Christine Rankin    Name: Daniel Åhlström

ZENUITY AB

/s/ Henrik Green/s/ Nishant Batra

Name: Henrik Green    Name: Nishant Batra

EX-10.3

Exhibit 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on August 1, 2020 by and between Veoneer Inc., a Delaware corporation (the “Company”), and Robert Bisciotti (Born on December 3, 1962) (the “Executive”), to be effective as of the Effective Date, as defined in Section 1. References herein to the “Company” shall, as applicable, be deemed to include the Company’s affiliates.

BACKGROUND

The Company desires to engage the Executive as the Executive Vice President, Business Unit North America of the Company from and after the Effective Date, in accordance with the terms of this Agreement. The Executive is willing to serve as such in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Effective Date The effective date of this Agreement (the “Effective Date”) shall be August 1, 2020, or such other date to which the parties agree.

2.Employment. The Executive is hereby employed on the Effective Date as the Executive Vice President, Business Unit North America of the Company. In this capacity, the Executive shall have the duties, responsibilities and authority commensurate with such position as shall be assigned to him by the Chief Executive Officer of the Company (the “Chief Executive Officer”). The principal workplace for the Executive shall be Detroit, USA.

3.Employment Period. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company from the Effective Date and thereafter unless and until terminated by the Company or the Executive (the “Employment Period”); provided, however, that (i) the Company must give the Executive written notice of termination of the Executive’s employment not less than six (6) calendar months prior to such date of termination, and (ii) the Executive must give the Company written notice of termination of his employment not less than six (6) calendar months prior to such date of termination; provided, further, however, that in the event of a termination by the Company for Cause pursuant to Section 10(b) hereof, the 6-month notice requirement provided in clause (i) of the foregoing provision shall not apply and the Executive’s termination of employment shall be effective immediately. Notwithstanding the foregoing, the Executive’s employment shall automatically terminate on the earlier occurrence of the end of notice period or the last day of the month preceding the Executive’s 65th birthday (“Retirement”).

4.Extent of Service. During the Employment Period, the Executive shall use his best efforts to promote the interests of the Company and those of any parent, subsidiary and associated company of the Company, and shall devote his full time and attention during normal business hours to the business and affairs of the Company and any parent, subsidiary and

associated company. In addition, the Executive shall devote as much time outside normal business hours to the performance of his duties as may in the interests of the Company be reasonably necessary; provided, however, thatthe Executive shall not receive any remuneration in addition to that set out in Section 5 hereof in respect of his work during such time. During the Employment Period, the Executive shall not, without the consent of the Chief Executive Officer, directly or indirectly, either alone or jointly with or as a director, manager, agent or servant of any other person, firm or company, be engaged, concerned or interested in any business in a manner that would conflict with the Executive’s duties under this Section 4 (including holding any shares, loan, stock or any other ownership interest in any competitor of the Company), provided thatnothing in this Section 4 shall preclude the Executive from holding shares, loan, stock or any other ownership interest in an entity other than a competitor of the Company as an investment.

5.Compensation and Benefits.

(a)Base Salary. During the Employment Period, the Executive shall receive a gross salary at the rate of USD 388,260 per year (“Base Salary”), less normal withholdings, payable in equal bi-weekly or other installments as are or become customary under the Company’s payroll practices for its employees from time to time. The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall review the Executive’s Base Salary annually during the Employment Period. Any adjustments to the Executive’s annual base salary shall become the Executive’s Base Salary for purposes of this Agreement.

(b)Bonus. During the Employment Period, the Executive shall be eligible to participate in the Company’s bonus plan for executive officers, if any, pursuant to which he will have an opportunity to receive an annual bonus based upon the achievement of performance goals established from year to year by the Compensation Committee (such bonus earned at the stated “target” level of achievement being referred to herein as the “Target Bonus”). Until otherwise changed by the Compensation Committee, the Executive’s Target Bonus shall be forty-five percent (45%) of his Base Salary.

(c)Equity Incentive Compensation. During the Employment Period, the Executive shall be eligible for equity grants under the Veoneer, Inc. 2018 Stock Incentive Plan (the “Veoneer Plan”), or any successor plan or plans, having such terms and conditions as awards to other peer executives of the Company, as determined by the Compensation Committee in its sole discretion, unless the Executive consents to a different type of award or different terms of such award than are applicable to other peer executives of the Company. Nothing herein requires the Compensation Committee to grant the Executive equity awards or other long-term incentive awards in any year.

(d)Automobile. The Company shall provide the Executive with a company car or, if consistent with local policies where the Executive is based, a car allowance. If a company car is provided, the Executive and his immediate family may also use the company car for personal purposes and the Company shall bear all petrol, maintenance and repair costs, as well as insurance costs and vehicle tax related to the Company car. If a car allowance is

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provided, the Company shall also bear all petrol, maintenance and repair cost. but no other costs for the automobile in addition to the allowance. Whether a company car or a car allowance is provided, the Executive shall be liable for the payment of tax on the car allowance or on the taxable benefit resulting from the right to use the company car for personal purposes.

(e)Expenses. The Executive shall be entitled to receive payment or reimbursement for all reasonable traveling, hotel and other expenses incurred by him in the performance of his duties under this Agreement, in accordance with the policies, practices and procedures of the Company as in effect from time to time. The Executive shall provide the Company with receipts, vouchers or other evidence of actual payment of the expenses to be reimbursed, as requested by the Company.

(f)Conditions of Employment. Normal conditions of employment as issued by the Company apply to the receipt of benefits under this Section 5.

6.Vacation. The Executive shall be entitled to yearly vacation amounting to 25 days.

7.Pension and benefits. During the Employment Period, the Executive shall be eligible to participate in any non-qualified deferred compensation plan and/or qualified retirement plan of the Company (collectively, the “U.S. Savings Plans”) and any additional welfare benefit plans, practices, policies and programs provided by the Company, if any, to the extent available to similarly-situated employees in the United States and subject to eligibility requirements and terms and conditions of each such plan; provided, however, that nothing herein shall limit the ability of the Company to amend, modify or terminate any such benefit plans, policies or programs at any time and from time to time. Employee remains eligible for vested benefits in accordance with existing retiree benefits in accordance with those established policies, plans and procedures.

8.Business or Trade Information. The Executive shall not during or after the termination of his employment hereunder disclose to any person, firm of company whatsoever or use for his own purpose or for any purposes other than those of the Company any information relating to the Company (including any parent, subsidiary or associated company of the Company) or its business or trade secrets of which he has or shall hereafter become possessed. These restrictions shall cease to apply to any information which may come into the public domain (other than by breach of the provisions hereof). In the event that the Executive does not comply with this Section 8, the Company shall be entitled to damages equal to six (6) times the average monthly Base Salary that the Executive received during the preceding twelve (12) months, if the Executive continues to be employed, or during the last twelve (12) months prior to his Date of Termination, if the Executive’s employment has terminated; provided, however, that nothing in this Section 8 shall preclude the Company from pursuing arbitration in accordance with Section 16 herein and seeking additional damages from the Executive in the event that the Company is able to demonstrate to the arbitrators that the value of the damages incurred by the Company due to the Executive’s violation of this Section 8 exceed the aggregate value of the damages paid by the Executive to the Company pursuant to the foregoing provision.

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9.Company Property. The Executive shall upon the termination of his employment hereunder for whatever reason immediately deliver to the Company all designs, specifications, correspondence and other documents, papers, the car provided hereunder and all other property belonging to the Company or any of its affiliated companies or which may have been prepared by him or have come into his possession in the course of his employment.

10.Termination of Employment.

(a)Death; Retirement. The Executive’s employment shall terminate automatically upon his death or Retirement.

(b)Termination by the Company. The Company may terminate the Executive’s employment during the Employment Period with or without Cause. “Cause” for termination by the Company of the Executive’s employment shall mean (i) willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Company (the “Board”), which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Chief Executive Officer and the Executive Vice President of Human Resources of the Company establish to the Board by clear and convincing evidence that Cause exists, subject to Section 10(f) hereof.

(c)Termination by the Executive. The Executive may terminate his employment during the Employment Period with Good Reason or without Good Reason. “Good Reason” shall mean the occurrence, without the Executive’s express written consent, of any of the following “Good Reason Events”:

(i)the assignment to the Executive of any duties inconsistent with the Executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect on the Effective Date other than any such alteration primarily attributable to the fact that the Company may no longer be a public company;

(ii)a reduction by the Company in the Executive’s annual base salary as in effect on the Effective Date or as the same may be increased from time to time;

(iii)the relocation of the Executive’s principal place of employment to location more than 45 kilometers from the Executive’s principal place of employment on the Effective Date or the Company’s requiring the Executive to be based anywhere other than such

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principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(iv)the failure by the Company to pay to the Executive any portion of the Executive’s current compensation within seven (7) days of the date such compensation is due;

(v)the failure by the Company to continue in effect any compensation plan in which the Executive participates on the Effective Date which is material to the Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed on the Effective Date; or

(vi)the failure by any successor to the business of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

A termination by the Executive shall not constitute termination for Good Reason unless the Executive shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 90 days after the initial occurrence of such event), and there shall have passed a reasonable time (not less than 30 days) within which the Company may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Executive. The Executive’s termination for Good Reason must occur within a period of 160 days after the occurrence of an event of Good Reason. The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. Good Reason shall not include the Executive’s death.

(d)Notice of Termination. Any termination by the Company or the Executive of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) specifies the termination date. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the

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Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. The failure by the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder.

(e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated other than by reason of death or Retirement, the end of the notice period specified in Section 3 hereof (if applicable), or (ii) if the Executive’s employment is terminated by reason of death, the Date of Termination shall be the date of death of the Executive, or (iii) if the Executive’s employment is terminated by reason of Retirement, the Date of Termination shall be the date of Retirement.

(f) Dispute Concerning Termination. Any disputes regarding the termination of the Executive’s employment shall be settled in accordance with Section 16 hereof (including, without limitation, the provisions regarding costs and expenses related to arbitration). If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 10(f)), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of the arbitrators (which is not appealable or with respect to which the time for appeal there from has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

(g) Compensation During Dispute. If the Date of Termination is extended in accordance with Section 10(f) hereof, the Company shall continue to provide the Executive with the compensation and benefits specified in Section 5 hereof until the Date of Termination, as determined in accordance with Section 10(f) hereof. Amounts paid under this Section 10(g) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement; provided, however, that in the event that the arbitration results in a determination that the Executive is not entitled to the severance payments set forth in Section 11(a) hereof, then the Executive shall be obligated to promptly repay to the Company the compensation received by the Executive during the extended period pursuant to this Section 10(g).

11.Obligations of the Company Upon Termination of Employment.

(a)Termination by the Company Other Than for Cause; Termination by the Executive for Good Reason. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, or the Executive shall terminate employment for Good Reason, then the Executive shall be subject to the covenants set forth in Section 13 herein, and only if within forty-five (45) days after the Date of Termination the Executive shall have executed a separation agreement containing a full general release of claims and covenant not to

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sue, in the form provided by the Company, and such separation agreement shall not have been revoked within such time period, within sixty (60) days after the Date of Termination (or such later date as may be required pursuant to Section 20(c) herein), the Company shall pay to the Executive a lump sum severance payment, in cash, equal to one and a half times (1.5x) the Executive’s Base Salary as in effect immediately prior to the Date of Termination.

(b)Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive or the Executive’s legal representatives under this Agreement, other than such death benefits he or they would otherwise be entitled to receive under any plan, program, policy or practice or contract or agreement of the Company or its affiliated companies.

(c)Retirement. If the Executive’s employment is terminated in connection with his Retirement during the Employment Period, this Agreement shall terminate without further obligations to the Executive; provided, however, that the Executive shall nonetheless be subject to the covenants set forth in Section 13 herein.

(d)Cause; Voluntary Resignation. If the Executive’s employment is terminated by the Company for Cause during the Employment Period, or the Executive voluntarily resigns his employment without Good Reason, this Agreement shall terminate without further obligations to the Executive; provided, however, that the Executive shall nonetheless be subject to the covenants set forth in Section 13 herein.

12.Non-Duplication of Benefits. Notwithstanding anything to contrary in this Agreement, the aggregate of any amounts payable to the Executive by the Company pursuant to Section 5 (including any compensation and benefits paid pursuant to such section during any applicable termination notice period pursuant to Section 3), Section 10(g) or Section 11 herein shall be offset and reduced to the extent necessary by any other compensation or benefits of the same or similar type, including those payable under local laws of any relevant jurisdiction, so that such other compensation or benefits, if any, do not augment the aggregate of any amounts payable to the Executive by the Company pursuant to Section 5 (including any compensation and benefits paid pursuant to such section during any applicable termination notice period pursuant to Section 3), Section 10(g) or Section 11 herein. It is intended that this Agreement not duplicate compensation or benefits the Executive is entitled to under country “redundancy” laws, the Company’s severance policy, if any, any related or similar policies, or any other contracts, agreements or arrangements between the Executive and the Company.

13.Non-Competition Covenant; Payment for Non-Competition Covenant.

(a)During the twelve (12) months immediately following the termination of his employment with the Company for any reason, the Executive shall not (i) accept employment with a competitor of the Company in a capacity in which such competitor can make use of the confidential information relating to the Company that the Executive has obtained in his employment with the Company, (ii) engage as a partner or owner in such competitor of the Company, nor (iii) act as an advisor to such competitor (the “Non-Competition Covenant”).

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(b)If the Executive does not comply with the Non-Competition Covenant when applicable, then (i) the Executive shall not be entitled to any benefits pursuant to Section 13(c) below during the period in which the Executive is not in compliance with such Non-Competition Covenant, and (ii) the Company shall be entitled to damages equal to six (6) times the average monthly Base Salary that the Executive received during the last twelve (12) months prior to the Date of Termination.

(c)The Company may unilaterally waive the Non-Competition Covenant in its sole discretion. If the Company waives the Non-Competition Covenant, then the Executive shall not be entitled to any payments pursuant to Section 13(d).

(d)If the Non-Competition Covenant becomes operative, then the Company shall pay to the Executive, as compensation for the inconvenience of such Non-Competition Covenant, up to twelve (12) monthly payments equal to the Executive’s monthly Base Salary as in effect on the Date of Termination, less the monthly salary earned during such month by the Executive in a subsequent employment, if any; provided, however, that the aggregate monthly payments from the Company pursuant to this Section 13(d) shall not exceed sixty percent (60%) of the Executive’s annual Base Salary as in effect on the Date of Termination, and once the 60% aggregate amount has been paid, no further payments will be made under this Section 13(d). As a condition to the receipt of such payments, the Executive must inform the Company of his base salary in his new employment on a monthly basis. No payments shall be made under this Section 13 if the Executive’s employment is terminated in connection with his Retirement.

14.Inventions.

(a)The general nature of any discovery, invention, secret process or improvement made or discovered by the Executive during the period of the Executive’s employment by the Company (hereinafter called “the Executive’s Inventions”) shall be notified by the Executive to the Company forthwith upon it being made or discovered.

(b)The entitlement as between the Company and the Executive to the Executive’s Inventions shall be determined in accordance with the current Act (1949:345) on the Right to Inventions made by Employees and the Executive acknowledges that because of the nature of his duties and the particular responsibilities arising therefrom he has a special obligation to further the interests of the Company’s undertaking.

(c)Where the Executive’s Inventions are to be assigned to the Company, the Executive shall make a full disclosure of the same to the Company and if and whenever required to do so shall at the expense of the Company apply, singly or jointly with the Company or other persons as required by the Company, for letters patent or other equivalent protection in Sweden and in any other part of the world of the Executive’s Inventions.

15.Entire Agreement. This Agreement supersedes any other previous agreements and arrangements whether written, oral or implied between the Company or Veoneer and the Executive relating to the employment of the Executive, without prejudice to any rights accrued to

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the Company or the Executive prior to the commencement of his employment under this Agreement.

16.Disputes. Disputes regarding this Agreement (including, without limitation, disputes regarding the existence of Cause or Good Reason) shall be settled by arbitration in accordance with the Swedish Arbitration Act. The arbitration shall take place in Stockholm and, unless otherwise agreed to by both parties, there shall be three (3) arbitrators. The provisions on voting and cumulation of parties and claims in the Swedish Procedural Code shall be applied in the arbitration. All costs and expenses for the arbitration, whether initiated by the Company or by the Executive, including the Executive’s costs for solicitor, shall be borne by the Company, unless the arbitrators determine the Executive’s claim(s) to be frivolous and in bad faith, in which case the arbitrators may allocate costs as they deem fit. Any payments due to the Executive pursuant to the preceding sentence shall be made within fifteen (15) business days after delivery of the Executive’s written request for payment accompanied with such evidence of costs and expenses incurred as the Company reasonably may require.

17.Governing Law. This Agreement shall be governed by and construed in accordance with Swedish law and, where applicable, the laws of any applicable local jurisdictions.

18.Amendment. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board.

19.Notices. All notices and other communications hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:    

If to the Executive:     Robert Bisciotti

If to the Company:    Veoneer Inc.

WTC, Klarabergsviadukten 70,

111 64 Stockholm, Sweden

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

20.U.S. Tax Code Section 409A. This Section 20 shall apply only in the event that the Executive is or becomes a taxpayer under the laws of the United States at any time during the Employment Period.

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(a)General. This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive as a result of the application of Section 409A of the Code.

(b)Definitional Restrictions. Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable hereunder, or a different form of payment of such Non-Exempt Deferred Compensation would be effected, by reason of a Change in Control or the Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to the Executive, and/or such different form of payment will not be effected, by reason of such circumstance unless the circumstances giving rise to such Change in Control or termination of employment, as the case may be, meet any description or definition of “change in control event” or “separation from service,” as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any Non-Exempt Deferred Compensation upon a Change in Control or termination of employment, however defined. If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “change in control event” or “separation from service,” as the case may be, or such later date as may be required by subsection (c) below. If this provision prevents the application of a different form of payment of any amount or benefit, such payment shall be made in the same form as would have applied absent such designated event or circumstance.

(c)Six-Month Delay in Certain Circumstances. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which he is a “specified employee” (as defined in Code Section 409A and the final regulations thereunder), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes), (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following the Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Executive’s separation from service (or, if the Executive dies during such period, within thirty (30) days after the Executive’s death) (in either case, the “Required Delay Period”); and (ii) the normal payment or distribution

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schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.

(d)Treatment of Installment Payments. Each payment of termination benefits under this Agreement shall be considered a separate payment, as described in Treas. Reg. Section 1.409A2(b)(2), for purposes of Section 409A of the Code.

(e)Timing of Release of Claims. Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution and non-revocation of a release of claims, such as the separation agreement referenced in Section 11(a) hereof, such release must be executed and all revocation periods shall have expired within 60 days after the Date of Termination; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then, subject to subsection (c) above, such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60th day after the Date of Termination provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period.

(f)Timing of Reimbursements and In-kind Benefits. If the Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement and if such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses payable or reimbursable in any one calendar year shall not affect the amount payable or reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. The right to any reimbursement for expenses incurred or provision of in-kind benefits is limited to the lifetime of the Executive, or such shorter period of time as is provided with respect to each particular right to reimbursement in-kind benefits pursuant to the preceding provisions of this Agreement. No right of the Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.

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IN WITNESS whereof this Agreement has been executed the day and year first above written.

/s/ Robert Bisciotti

Robert Bisciotti

Veoneer, Inc.

/s/ Jan Carlson

Jan Carlson

Chairman and CEO

Veoneer, Inc.

/s/ Mikael Landberg

Executive Vice President Human Resources

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EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on August 1, 2020 by and between Veoneer Inc., a Delaware corporation (the “Company”), and Seven Zhang (Born on November 14, 1979) (the “Executive”), to be effective as of the Effective Date, as defined in Section 1. References herein to the “Company” shall, as applicable, be deemed to include the Company’s affiliates.

BACKGROUND

The Company desires to engage the Executive as the Executive Vice President, Business Unit China of the Company from and after the Effective Date, in accordance with the terms of this Agreement. The Executive is willing to serve as such in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Effective Date The effective date of this Agreement (the “Effective Date”) shall be August 1, 2020, or such other date to which the parties agree.

2.Employment. The Executive is hereby employed on the Effective Date as the Executive Vice President, Business Unit China of the Company. In this capacity, the Executive shall have the duties, responsibilities and authority commensurate with such position as shall be assigned to him by the Chief Executive Officer of the Company (the “Chief Executive Officer”).

3.Employment Period. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company from the Effective Date and thereafter unless and until terminated by the Company or the Executive (the “Employment Period”); provided, however, that (i) the Company must give the Executive written notice of termination of the Executive’s employment not less than six (6) calendar months prior to such date of termination, and (ii) the Executive must give the Company written notice of termination of his employment not less than six (6) calendar months prior to such date of termination; provided, further, however, that in the event of a termination by the Company for Cause pursuant to Section 10(b) hereof, the 6-month notice requirement provided in clause (i) of the foregoing provision shall not apply and the Executive’s termination of employment shall be effective immediately. Notwithstanding the foregoing, the Executive’s employment shall automatically terminate on the earlier occurrence of the end of notice period or the last day of the month preceding the Executive’s 65th birthday (“Retirement”).

4.Extent of Service. During the Employment Period, the Executive shall use his best efforts to promote the interests of the Company and those of any parent, subsidiary and associated company of the Company, and shall devote his full time and attention during normal business hours to the business and affairs of the Company and any parent, subsidiary and associated company. In addition, the Executive shall devote as much time outside normal

business hours to the performance of his duties as may in the interests of the Company be reasonably necessary; provided, however, thatthe Executive shall not receive any remuneration in addition to that set out in Section 5 hereof in respect of his work during such time. During the Employment Period, the Executive shall not, without the consent of the Chief Executive Officer, directly or indirectly, either alone or jointly with or as a director, manager, agent or servant of any other person, firm or company, be engaged, concerned or interested in any business in a manner that would conflict with the Executive’s duties under this Section 4 (including holding any shares, loan, stock or any other ownership interest in any competitor of the Company), provided thatnothing in this Section 4 shall preclude the Executive from holding shares, loan, stock or any other ownership interest in an entity other than a competitor of the Company as an investment.

5.Compensation and Benefits.

(a)Base Salary. During the Employment Period, the Executive shall receive a gross salary at the rate of CNY 2,186,251 per year (“Base Salary”), less normal withholdings, payable in equal bi-weekly or other installments as are or become customary under the Company’s payroll practices for its employees from time to time. The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall review the Executive’s Base Salary annually during the Employment Period. Any adjustments to the Executive’s annual base salary shall become the Executive’s Base Salary for purposes of this Agreement.

(b)Bonus. During the Employment Period, the Executive shall be eligible to participate in the Company’s bonus plan for executive officers, if any, pursuant to which he will have an opportunity to receive an annual bonus based upon the achievement of performance goals established from year to year by the Compensation Committee (such bonus earned at the stated “target” level of achievement being referred to herein as the “Target Bonus”). Until otherwise changed by the Compensation Committee, the Executive’s Target Bonus shall be forty-five percent (45%) of his Base Salary.

(c)Equity Incentive Compensation. During the Employment Period, the Executive shall be eligible for equity grants under the Veoneer, Inc. 2018 Stock Incentive Plan (the “Veoneer Plan”), or any successor plan or plans, having such terms and conditions as awards to other peer executives of the Company, as determined by the Compensation Committee in its sole discretion, unless the Executive consents to a different type of award or different terms of such award than are applicable to other peer executives of the Company. Nothing herein requires the Compensation Committee to grant the Executive equity awards or other long-term incentive awards in any year.

(d)Automobile. The Company shall provide the Executive with a company car or, if consistent with local policies where the Executive is based, a car allowance. If a company car is provided, the Executive and his immediate family may also use the company car for personal purposes and the Company shall bear all petrol, maintenance and repair costs, as well as insurance costs and vehicle tax related to the Company car. If a car allowance is provided, the Company shall also bear all petrol, maintenance and repair cost. but no other costs

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for the automobile in addition to the allowance. Whether a company car or a car allowance is provided, the Executive shall be liable for the payment of tax on the car allowance or on the taxable benefit resulting from the right to use the company car for personal purposes.

(e)Medical Benefits. During the Employment Period, the Executive is entitled to medical and health care benefits according to local policies and practice.

(f)Expenses. The Executive shall be entitled to receive payment or reimbursement for all reasonable traveling, hotel and other expenses incurred by him in the performance of his duties under this Agreement, in accordance with the policies, practices and procedures of the Company as in effect from time to time. The Executive shall provide the Company with receipts, vouchers or other evidence of actual payment of the expenses to be reimbursed, as requested by the Company.

(g)Conditions of Employment. Normal conditions of employment as issued by the Company apply to the receipt of benefits under this Section 5.

6.Vacation. The Executive shall be entitled to yearly vacation amounting to 25 days.

7.Pension and benefits. The Company shall pay pension contributions according to local policies and practice.

8.Business or Trade Information. The Executive shall not during or after the termination of his employment hereunder disclose to any person, firm of company whatsoever or use for his own purpose or for any purposes other than those of the Company any information relating to the Company (including any parent, subsidiary or associated company of the Company) or its business or trade secrets of which he has or shall hereafter become possessed. These restrictions shall cease to apply to any information which may come into the public domain (other than by breach of the provisions hereof). In the event that the Executive does not comply with this Section 8, the Company shall be entitled to damages equal to six (6) times the average monthly Base Salary that the Executive received during the preceding twelve (12) months, if the Executive continues to be employed, or during the last twelve (12) months prior to his Date of Termination, if the Executive’s employment has terminated; provided, however, that nothing in this Section 8 shall preclude the Company from pursuing arbitration in accordance with Section 16 herein and seeking additional damages from the Executive in the event that the Company is able to demonstrate to the arbitrators that the value of the damages incurred by the Company due to the Executive’s violation of this Section 8 exceed the aggregate value of the damages paid by the Executive to the Company pursuant to the foregoing provision.

9.Company Property. The Executive shall upon the termination of his employment hereunder for whatever reason immediately deliver to the Company all designs, specifications, correspondence and other documents, papers, the car provided hereunder and all other property belonging to the Company or any of its affiliated companies or which may have been prepared by him or have come into his possession in the course of his employment.

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10.Termination of Employment.

(a)Death; Retirement. The Executive’s employment shall terminate automatically upon his death or Retirement.

(b)Termination by the Company. The Company may terminate the Executive’s employment during the Employment Period with or without Cause. “Cause” for termination by the Company of the Executive’s employment shall mean (i) willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board of Directors of the Company (the “Board”), which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Chief Executive Officer and the Executive Vice President of Human Resources of the Company establish to the Board by clear and convincing evidence that Cause exists, subject to Section 10(f) hereof.

(c)Termination by the Executive. The Executive may terminate his employment during the Employment Period with Good Reason or without Good Reason. “Good Reason” shall mean the occurrence, without the Executive’s express written consent, of any of the following “Good Reason Events”:

(i)the assignment to the Executive of any duties inconsistent with the Executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect on the Effective Date other than any such alteration primarily attributable to the fact that the Company may no longer be a public company;

(ii)a reduction by the Company in the Executive’s annual base salary as in effect on the Effective Date or as the same may be increased from time to time;

(iii)the relocation of the Executive’s principal place of employment to location more than 45 kilometers from the Executive’s principal place of employment on the Effective Date or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(iv)the failure by the Company to pay to the Executive any portion of the Executive’s current compensation within seven (7) days of the date such compensation is due;

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(v)the failure by the Company to continue in effect any compensation plan in which the Executive participates on the Effective Date which is material to the Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed on the Effective Date; or

(vi)the failure by any successor to the business of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

A termination by the Executive shall not constitute termination for Good Reason unless the Executive shall first have delivered to the Company written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 90 days after the initial occurrence of such event), and there shall have passed a reasonable time (not less than 30 days) within which the Company may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Executive. The Executive’s termination for Good Reason must occur within a period of 160 days after the occurrence of an event of Good Reason. The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. Good Reason shall not include the Executive’s death.

(d)Notice of Termination. Any termination by the Company or the Executive of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) specifies the termination date. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. The failure by the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing the Company’s rights hereunder.

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(e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated other than by reason of death or Retirement, the end of the notice period specified in Section 3 hereof (if applicable), or (ii) if the Executive’s employment is terminated by reason of death, the Date of Termination shall be the date of death of the Executive, or (iii) if the Executive’s employment is terminated by reason of Retirement, the Date of Termination shall be the date of Retirement.

(f) Dispute Concerning Termination. Any disputes regarding the termination of the Executive’s employment shall be settled in accordance with Section 16 hereof (including, without limitation, the provisions regarding costs and expenses related to arbitration). If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 10(f)), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of the arbitrators (which is not appealable or with respect to which the time for appeal there from has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

(g) Compensation During Dispute. If the Date of Termination is extended in accordance with Section 10(f) hereof, the Company shall continue to provide the Executive with the compensation and benefits specified in Section 5 hereof until the Date of Termination, as determined in accordance with Section 10(f) hereof. Amounts paid under this Section 10(g) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement; provided, however, that in the event that the arbitration results in a determination that the Executive is not entitled to the severance payments set forth in Section 11(a) hereof, then the Executive shall be obligated to promptly repay to the Company the compensation received by the Executive during the extended period pursuant to this Section 10(g).

11.Obligations of the Company Upon Termination of Employment.

(a)Termination by the Company Other Than for Cause; Termination by the Executive for Good Reason. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, or the Executive shall terminate employment for Good Reason, then the Executive shall be subject to the covenants set forth in Section 13 herein, and only if within forty-five (45) days after the Date of Termination the Executive shall have executed a separation agreement containing a full general release of claims and covenant not to sue, in the form provided by the Company, and such separation agreement shall not have been revoked within such time period, within sixty (60) days after the Date of Termination (or such later date as may be required pursuant to Section 20(c) herein), the Company shall pay to the Executive a lump sum severance payment, in cash, equal to one and a half times (1.5x) the Executive’s Base Salary as in effect immediately prior to the Date of Termination.

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(b)Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive or the Executive’s legal representatives under this Agreement, other than such death benefits he or they would otherwise be entitled to receive under any plan, program, policy or practice or contract or agreement of the Company or its affiliated companies.

(c)Retirement. If the Executive’s employment is terminated in connection with his Retirement during the Employment Period, this Agreement shall terminate without further obligations to the Executive; provided, however, that the Executive shall nonetheless be subject to the covenants set forth in Section 13 herein.

(d)Cause; Voluntary Resignation. If the Executive’s employment is terminated by the Company for Cause during the Employment Period, or the Executive voluntarily resigns his employment without Good Reason, this Agreement shall terminate without further obligations to the Executive; provided, however, that the Executive shall nonetheless be subject to the covenants set forth in Section 13 herein.

12.Non-Duplication of Benefits. Notwithstanding anything to contrary in this Agreement, the aggregate of any amounts payable to the Executive by the Company pursuant to Section 5 (including any compensation and benefits paid pursuant to such section during any applicable termination notice period pursuant to Section 3), Section 10(g) or Section 11 herein shall be offset and reduced to the extent necessary by any other compensation or benefits of the same or similar type, including those payable under local laws of any relevant jurisdiction, so that such other compensation or benefits, if any, do not augment the aggregate of any amounts payable to the Executive by the Company pursuant to Section 5 (including any compensation and benefits paid pursuant to such section during any applicable termination notice period pursuant to Section 3), Section 10(g) or Section 11 herein. It is intended that this Agreement not duplicate compensation or benefits the Executive is entitled to under country “redundancy” laws, the Company’s severance policy, if any, any related or similar policies, or any other contracts, agreements or arrangements between the Executive and the Company.

13.Non-Competition Covenant; Payment for Non-Competition Covenant.

(a)During the twelve (12) months immediately following the termination of his employment with the Company for any reason, the Executive shall not (i) accept employment with a competitor of the Company in a capacity in which such competitor can make use of the confidential information relating to the Company that the Executive has obtained in his employment with the Company, (ii) engage as a partner or owner in such competitor of the Company, nor (iii) act as an advisor to such competitor (the “Non-Competition Covenant”).

(b)If the Executive does not comply with the Non-Competition Covenant when applicable, then (i) the Executive shall not be entitled to any benefits pursuant to Section 13(c) below during the period in which the Executive is not in compliance with such Non-Competition Covenant, and (ii) the Company shall be entitled to damages equal to six (6) times the average monthly Base Salary that the Executive received during the last twelve (12) months prior to the Date of Termination.

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(c)The Company may unilaterally waive the Non-Competition Covenant in its sole discretion. If the Company waives the Non-Competition Covenant, then the Executive shall not be entitled to any payments pursuant to Section 13(d).

(d)If the Non-Competition Covenant becomes operative, then the Company shall pay to the Executive, as compensation for the inconvenience of such Non-Competition Covenant, up to twelve (12) monthly payments equal to the Executive’s monthly Base Salary as in effect on the Date of Termination, less the monthly salary earned during such month by the Executive in a subsequent employment, if any; provided, however, that the aggregate monthly payments from the Company pursuant to this Section 13(d) shall not exceed sixty percent (60%) of the Executive’s annual Base Salary as in effect on the Date of Termination, and once the 60% aggregate amount has been paid, no further payments will be made under this Section 13(d). As a condition to the receipt of such payments, the Executive must inform the Company of his base salary in his new employment on a monthly basis. No payments shall be made under this Section 13 if the Executive’s employment is terminated in connection with his Retirement.

14.Inventions.

(a)The general nature of any discovery, invention, secret process or improvement made or discovered by the Executive during the period of the Executive’s employment by the Company (hereinafter called “the Executive’s Inventions”) shall be notified by the Executive to the Company forthwith upon it being made or discovered.

(b)The entitlement as between the Company and the Executive to the Executive’s Inventions shall be determined in accordance with the current Act (1949:345) on the Right to Inventions made by Employees and the Executive acknowledges that because of the nature of his duties and the particular responsibilities arising therefrom he has a special obligation to further the interests of the Company’s undertaking.

(c)Where the Executive’s Inventions are to be assigned to the Company, the Executive shall make a full disclosure of the same to the Company and if and whenever required to do so shall at the expense of the Company apply, singly or jointly with the Company or other persons as required by the Company, for letters patent or other equivalent protection in Sweden and in any other part of the world of the Executive’s Inventions.

15.Entire Agreement. This Agreement supersedes any other previous agreements and arrangements whether written, oral or implied between the Company or Veoneer and the Executive relating to the employment of the Executive, without prejudice to any rights accrued to the Company or the Executive prior to the commencement of his employment under this Agreement.

16.Disputes. Disputes regarding this Agreement (including, without limitation, disputes regarding the existence of Cause or Good Reason) shall be settled by arbitration in accordance with the Swedish Arbitration Act. The arbitration shall take place in Stockholm and, unless otherwise agreed to by both parties, there shall be three (3) arbitrators. The provisions on voting and cumulation of parties and claims in the Swedish Procedural Code shall be applied in

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the arbitration. All costs and expenses for the arbitration, whether initiated by the Company or by the Executive, including the Executive’s costs for solicitor, shall be borne by the Company, unless the arbitrators determine the Executive’s claim(s) to be frivolous and in bad faith, in which case the arbitrators may allocate costs as they deem fit. Any payments due to the Executive pursuant to the preceding sentence shall be made within fifteen (15) business days after delivery of the Executive’s written request for payment accompanied with such evidence of costs and expenses incurred as the Company reasonably may require.

17.Governing Law. This Agreement shall be governed by and construed in accordance with Swedish law and, where applicable, the laws of any applicable local jurisdictions.

18.Amendment. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board.

19.Notices. All notices and other communications hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:    

If to the Executive:     Seven Zhang

Address

If to the Company:    Veoneer Inc.

WTC, Klarabergsviadukten 70,

111 64 Stockholm, Sweden

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

20.U.S. Tax Code Section 409A. This Section 20 shall apply only in the event that the Executive is or becomes a taxpayer under the laws of the United States at any time during the Employment Period.

(a)General. This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder. Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive as a result of the application of Section 409A of the Code.

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(b)Definitional Restrictions. Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable hereunder, or a different form of payment of such Non-Exempt Deferred Compensation would be effected, by reason of a Change in Control or the Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to the Executive, and/or such different form of payment will not be effected, by reason of such circumstance unless the circumstances giving rise to such Change in Control or termination of employment, as the case may be, meet any description or definition of “change in control event” or “separation from service,” as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any Non-Exempt Deferred Compensation upon a Change in Control or termination of employment, however defined. If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “change in control event” or “separation from service,” as the case may be, or such later date as may be required by subsection (c) below. If this provision prevents the application of a different form of payment of any amount or benefit, such payment shall be made in the same form as would have applied absent such designated event or circumstance.

(c)Six-Month Delay in Certain Circumstances. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which he is a “specified employee” (as defined in Code Section 409A and the final regulations thereunder), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes), (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following the Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Executive’s separation from service (or, if the Executive dies during such period, within thirty (30) days after the Executive’s death) (in either case, the “Required Delay Period”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.

(d)Treatment of Installment Payments. Each payment of termination benefits under this Agreement shall be considered a separate payment, as described in Treas. Reg. Section 1.409A2(b)(2), for purposes of Section 409A of the Code.

(e)Timing of Release of Claims. Whenever in this Agreement a payment or benefit is conditioned on the Executive’s execution and non-revocation of a release of claims, such as the separation agreement referenced in Section 11(a) hereof, such release must be executed and all revocation periods shall have expired within 60 days after the Date of

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Termination; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then, subject to subsection (c) above, such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60th day after the Date of Termination provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period.

(f)Timing of Reimbursements and In-kind Benefits. If the Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement and if such payments or reimbursements are includible in the Executive’s federal gross taxable income, the amount of such expenses payable or reimbursable in any one calendar year shall not affect the amount payable or reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. The right to any reimbursement for expenses incurred or provision of in-kind benefits is limited to the lifetime of the Executive, or such shorter period of time as is provided with respect to each particular right to reimbursement in-kind benefits pursuant to the preceding provisions of this Agreement. No right of the Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.

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IN WITNESS whereof this Agreement has been executed the day and year first above written.

/s/ Seven Zhang

Seven Zhang

Veoneer, Inc.

/s/ Jan Carlson

Jan Carlson

Chairman and CEO

Veoneer, Inc.

/s/ Mikael Landberg

Executive Vice President Human Resources

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EX-31.1

Exhibit 31.1

CERTIFICATION of

the Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jan Carlson, certify that:

1.I have reviewed this quarterly report on Form 10-Q of VEONEER, INC.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 23, 2020

/s/ Jan Carlson

Jan Carlson

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION of

the Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mats Backman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of VEONEER, INC.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 23, 2020

/s/ Mats Backman

Mats Backman

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Veoneer, Inc. (the “Company”) for the period ended September 30, 2020, filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jan Carlson, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 23, 2020

Jan Carlson

President and Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of Veoneer, Inc. (the “Company”) for the period ended September 30, 2020, filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mats Backman, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 23, 2020

/s/ Mats Backman

Mats Backman

Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2020	Oct. 16, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-38471
Entity Registrant Name	Veoneer, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-3720890
Entity Address, Address Line One	Klarabergsviadukten 70, Section C6
Entity Address, Address Line Two	Box 13089
Entity Address, City or Town	Stockholm
Entity Address, Country	SE
Entity Address, Postal Zip Code	SE- 103 02
City Area Code	46
Local Phone Number	8 527 762 00
Title of 12(b) Security	Common stock, $1.00 par value
Trading Symbol	VNE
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		111,594,984
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001733186
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Net sales	$ 371	$ 462	$ 918	$ 1,446
Cost of sales	(317)	(389)	(808)	(1,211)
Gross profit	54	73	110	235
Selling, general and administrative expenses	(43)	(45)	(124)	(148)
Research, development and engineering expenses, net	(124)	(144)	(299)	(459)
Amortization of intangibles	(1)	(6)	(4)	(17)
Other income, net	11	0	27	1
Operating loss	(103)	(122)	(290)	(388)
Loss on divestiture and assets impairment charge, net	(24)	0	(91)	0
Loss from equity method investment	(1)	(16)	(39)	(50)
Interest income	1	7	8	14
Interest expense	(5)	(5)	(15)	(7)
Other non-operating items, net	0	0	0	1
Loss before income taxes	(132)	(136)	(427)	(430)
Income tax expense (benefit)	0	(3)	(26)	1
Net loss	(132)	(139)	(453)	(429)
Less: Net income (loss) attributable to non-controlling interest	0	(6)	1	(26)
Net loss attributable to controlling interest	$ (132)	$ (133)	$ (454)	$ (403)
Net loss per share - basic and diluted (in dollars per share)	$ (1.18)	$ (1.20)	$ (4.07)	$ (4.10)
Weighted average number of shares outstanding, (in millions) (in shares)	111,590	111,400	111,550	98,320
Weighted average number of shares outstanding, assuming dilution (in millions) (in shares)	111,590	111,400	111,550	98,320

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (132)	$ (139)	$ (453)	$ (429)
Other comprehensive loss, before tax:
Change in cumulative translation adjustment	15	(27)	15	(40)
Other comprehensive income (loss), before tax	15	(27)	15	(40)
Other comprehensive income (loss), net of tax	15	(27)	15	(40)
Comprehensive loss	(117)	(166)	(438)	(469)
Less: Comprehensive income (loss) attributable to non-controlling interest	0	(7)	2	(26)
Comprehensive loss attributable to controlling interest	$ (117)	$ (159)	$ (440)	$ (443)

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 846	$ 859
Receivables, net	245	253
Inventories, net	124	144
Related party receivables	6	11
Prepaid expenses and other contract assets	32	47
Other current assets	20	18
Assets held for sale	0	317
Total current assets	1,273	1,649
Property, plant and equipment, net	413	473
Operating lease right-of-use assets	86	100
Equity method investment	129	87
Goodwill	314	290
Intangible assets, net	22	17
Deferred tax assets	6	7
Other long-term investments	9	9
Other non-current assets	27	111
Total assets	2,279	2,743
Liabilities and equity
Accounts payable	223	233
Related party payables	1	3
Accrued expenses	230	192
Income tax payable	28	7
Related party short-term debt	14	1
Other current liabilities	51	37
Liabilities held for sale	0	118
Total current liabilities	547	591
4.00% Convertible Senior Notes due 2024	167	160
Related party long-term debt	103	0
Pension liability	18	17
Deferred tax liabilities	10	13
Operating lease non-current liabilities	68	82
Finance lease non-current liabilities	42	33
Other non-current liabilities	26	29
Total non-current liabilities	434	334
Equity
Common stock (par value $1.00, 325 million shares authorized, 111 million shares issued and outstanding as of September 30, 2020 and December 31, 2019)	111	111
Additional paid-in capital	2,349	2,343
Accumulated deficit	(1,135)	(681)
Accumulated other comprehensive loss	(27)	(44)
Total equity	1,298	1,729
Non-controlling interest	0	89
Total equity and non-controlling interest	1,298	1,818
Total liabilities, equity and non-controlling interest	$ 2,279	$ 2,743

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Par Value (in dollars per share)	$ 1.00	$ 1.00
Shares Authorized (in shares)	325,000,000	325,000,000
Shares Issued (in shares)	111,000,000	111,000,000
Shares Outstanding (in shares)	111,000,000	111,000,000
4% Convertible Senior Dotes due 2024 | Convertible Senior Notes
Stated interest rate	4.00%

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Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Millions	Total	Common Stock	Additional Paid In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Non-controlling Interest
Balance at beginning of period at Dec. 31, 2018	$ 1,927	$ 87	$ 1,938	$ (181)	$ (19)	$ 101
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(429)			(403)		(26)
Foreign currency translation	(40)				(40)	0
Stock based compensation expense	5		5		0
Issuance of common stock	403	24	379
Purchase of minority interest	0		(14)			14
Equity component of issuance of convertible notes, net of taxes (Note 5)	35		35
Balance at end of period at Sep. 30, 2019	1,900	111	2,343	(584)	(59)	89
Balance at beginning of period at Dec. 31, 2019	1,818	111	2,343	(681)	(44)	89
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(453)			(454)		1
Foreign currency translation	15				14
Stock based compensation expense	6		6
Business divestitures	(88)				3	(91)
Balance at end of period at Sep. 30, 2020	$ 1,298	$ 111	$ 2,349	$ (1,135)	$ (27)	$ 0

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Condensed Consolidated Statements of Cash Flow (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities
Net loss	$ (453)	$ (429)
Depreciation and amortization	73	90
Gain on divestitures	(77)	0
Assets impairment charge	168	0
Undistributed loss from equity method investments	39	50
Stock-based compensation	6	5
Deferred income taxes	(3)	(7)
Other, net	3	(7)
Change in operating assets and liabilities:
Receivables, gross	36	48
Accrued expenses	45	42
Related party receivables and payables, net	4	37
Accounts payable	(8)	(18)
Prepaid expenses and other contract assets	14	(10)
Inventories, gross	15	1
Income taxes	20	0
Other current assets and liabilities, net	3	(23)
Net cash used in operating activities	(115)	(221)
Investing activities
Proceeds from divestitures	198	0
Capital expenditures	(70)	(168)
Equity method investment	10
Equity method investment		(32)
Short-term investments mature into cash	0	5
Long term investments	(1)	(3)
Proceeds from sale of property, plant and equipment	10	0
Acquisition of intangible assets	(10)	0
Acquisition of business net of cash acquired	(33)	0
Net cash provided by (used in) investing activities	104	(198)
Financing activities
Issuance of common stock	0	405
Dividend paid to non-controlling interest	(5)	0
(Payments for) proceeds from long-term debt	(1)	206
(Payments for) Proceeds from short-term debt	(2)	22
Net increase in related party short-term debt	0	1
Net cash (used in) provided by financing activities	(8)	634
Effect of exchange rate changes on cash and cash equivalents	6	(17)
Increase (decrease) in cash and cash equivalents	(13)	198
Cash and cash equivalents at beginning of period	859	864
Cash and cash equivalents at end of period	$ 846	$ 1,062

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Basis of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Spin-Off

On June 29, 2018 (the “Distribution Date”), Veoneer, Inc. (“Veoneer” or “the Company”) became an independent, publicly-traded company as a result of the distribution by Autoliv, Inc. (“Autoliv” or “Former Parent”) of 100 percent of the outstanding common stock of Veoneer to the stockholders of Autoliv (the “Spin-Off”). Each Autoliv stockholder and holder of Autoliv’s Swedish Depository Receipts (SDRs) of record as of certain specified dates received one share of Veoneer common stock or one Veoneer SDR, respectively, for every one share of Autoliv common stock or Autoliv SDR. The Spin-Off was completed on June 29, 2018 in a tax free transaction pursuant to Section 355 of the U.S. Internal Revenue Code.

On July 2, 2018, Veoneer common stock began regular trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “VNE” and Veoneer SDRs began trading on Nasdaq Stockholm under the symbol “VNE-SDB”. Agreements entered into between Veoneer and Autoliv in connection with the Spin-Off govern the relationship between the parties following the Spin-Off and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided on a temporary basis between the parties.

The Company has two operating segments, Electronics and Brake Systems. Electronics includes all electronics resources and expertise, Restraint Control Systems and Active Safety products, and Brake Systems provides brake control and actuation systems. The Asian business of the Brake Systems segment was sold on February 3, 2020 and the majority of the Brake Systems business in North America was sold on August 10, 2020. The remaining Brake Systems business is no longer a reportable segment due to immateriality.

The accompanying unaudited condensed consolidated financial statements for Veoneer do not include all of the information and notes required by the accounting principles generally accepted in the U.S. (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Veoneer’s Audited Consolidated Financial Statements for the year ended December 31, 2019 and corresponding notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Certain amounts in the unaudited condensed consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have been calculated using unrounded amounts.

Follow-on Offerings

On May 28, 2019, the Company completed follow-on public offerings of 24,000,000 shares of common stock and $207 million aggregate principal amount of 4.00% Convertible Senior Notes due 2024 (the “Notes”) (including $27 million aggregate principal amount pursuant to the underwriters’ over-allotment option to purchase additional notes). The public offering price for the Company's common stock offering was $17.50 per share. The Company received net proceeds of approximately $403 million from the common stock offering and approximately $200 million from the Notes offering, in each case after deducting the underwriting discounts and issuance costs directly attributable to each offering.

Divestiture of Veoneer Nissin Brake System ("VNBS")

On October 30, 2019, Veoneer signed definitive agreements to sell its 51% ownership in Veoneer Nissin Brake Japan ("VNBJ") and Veoneer Nissin Brake China ("VNBZ") entities that comprise VNBS to its joint venture partner Nissin-Kogyo Co., Ltd. (“Nissin Kogyo”), and Honda Motor Co., Ltd. The aggregate purchase price was $176 million. The divestiture of VNBJ and VNBZ was structured as two separate transactions each of which was completed on February 3, 2020, and the VNBS joint venture was terminated. See Note 5 "Divestiture and held for sale" for additional information.

Divestiture of Veoneer Brake Systems ("VBS")

On August 10, 2020 Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF Friedrichshafen AG ("ZF"). The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement. See Note 5 "Divestiture and held for sale" for additional information.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

A summary of significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Other Income, Net

On March 30, 2020, Veoneer commenced arbitration against Nissin Kogyo regarding a dispute arising out of a Share Purchase Agreement (“SPA”) dated September 2015. On June 30, 2020, Veoneer agreed to settle the proceedings, along with any and all legal claims arising out of or relating to the SPA dispute, for $20 million. The cash settlement was received by the Company on June 30, 2020 and is reported among Other income, net in the unaudited Condensed Consolidated Statements of Operations.

Research, development and engineering

In early 2019, as a result of multiple factors, including general market conditions, numerous customer change requests, and challenges involved in developing new technologies for various customer programs, Veoneer launched a broad initiative to have its customers contribute more to the cost of developing these programs. The Company began to approach customers to negotiate or renegotiate new or existing agreements to provide for more favorable cost sharing terms. As part of this initiative, Veoneer approached a certain customer to adjust the terms of existing award agreements. On May 20, 2020, the Company entered into an adjustment agreement with such customer and received a lump sum settlement of $65 million for past research, development and engineering costs and implementation of change requests, and $11 million for software specific future development.

During the second quarter of 2020, the Company received a total of $76 million from the adjustment agreement. According to the Company’s accounting policies, research, development and most engineering expenses are expensed as incurred. These expenses are reported net of expense reimbursements from contracts to further customize existing products for specific customers.

For the nine months ended September 30, 2020, the Company recognized a total reimbursement from customers of $82 million for past completed engineering services as a reduction of research, development and engineering costs on the unaudited Condensed Consolidated Statement of Operations.

In addition, as of September 30, 2020, the Company recognized $15 million from the adjustment agreement as deferred income reported among Other current liabilities in the unaudited Condensed Consolidated Balance Sheet. The deferred amount will be recognized in a systematic way and in proportion to the completion of the future engineering services related to the adjustment agreement as reimbursement from customers.

Accounting for credit losses

The Company has evaluated the available adoption options of common credit loss methods that are acceptable as per FASB Accounting Standards Codification Topic 326, Credit Losses. The Company adopted the available Loss-rate method where the impairment is calculated using an estimated loss rate and multiplying it by the asset’s amortized cost at the balance sheet date. This method appropriately reflects the Company´s risk pattern in relation to its accounts receivables.

The key components of the Company’s Loss-rate model are as follows:

•A list of the Company's customers credit rating and credit default risk rate from Bloomberg.

•Actual write-offs or reversals of previous write-offs of accounts receivables.

•Evaluation of other unusual facts and circumstances which could impact the credit loss rate, such as risk of bankruptcy or potential collectability issues.

The Company’s credit loss model includes the Company’s customer list. The customer list captures the existing customers. The list is put into a Bloomberg data query to generate customers short-term credit rating. The credit default risk rate is used to calculate the credit loss rate or estimated loss rate.

For customers that do not have credit default risk rate, management uses the six-month LIBOR rate as a credit rating and a credit default risk rate. Management believes that the six-month LIBOR rate adequately reflects the short-term nature of the Company’s trade receivables and is also in line with the Company’s invoice payment terms.

Concentration of Credit Risk

A substantial majority of the Company’s trade receivables are derived from sales to OEMs. For the three and nine months ended September 30, 2020 the Company’s four largest customers accounted for 55% and 57% of net sales, respectively and for the three and nine months ended September 30, 2019, the Company’s four largest customers accounted for 61% and 59% of net sales, respectively. Additionally, as of September 30, 2020 and December 31, 2019, these four largest customers accounted for 41% and 39%, respectively, of the Company’s accounts receivables. The Company believes that the receivable balances from these largest customers do not represent a significant credit risk based on past collection experience. The Company has adopted credit policies and standards intended to accommodate industry growth and inherent risk. The Company believes that credit risks are moderated by the financial stability of the Company’s major customers.

New Accounting Standards

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s condensed consolidated financial statements.

Adoption of New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019, and earlier adoption is permitted for annual periods beginning after December 15, 2018. The Company adopted ASU 2016-13 effective January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance. The adoption of ASU 2016-13 did not have a material impact on the Company's condensed consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18 Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606, which (1) clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC Topic 606, Revenue from Contracts with Customers (Topic 606), when the collaborative arrangement participant is a customer in the context of a unit of account, (2) adds unit-of-account guidance in Topic 808 to align with Topic 606 when an entity is assessing whether the collaborative arrangement, or a part of the arrangement, is within the scope of Topic 606, (3) precludes presenting transactions together with revenue when those transactions involve collaborative arrangement participants that are not directly related to third parties and are not customers. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 did not have a material impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 affects any entity that enters into a lease, with some specified scope exceptions. For public business entities, the amendments in ASU 2016-02 are effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 in the annual period beginning January 1, 2019. The Company applied the modified retrospective transition method and elected the transition option to use the effective date January 1, 2019,

as the date of initial application. The Company did not adjust its comparative period financial statements for effects of ASU 2016-02, and has not made the new required lease disclosures for periods before the effective date. The Company has recognized its cumulative effect transition adjustment as of the effective date. In addition, the Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, have allowed the Company to carry forward the historical lease classification. The adoption of the new standard resulted in recording operating lease assets and lease liabilities of approximately $75 million as of January 1, 2019. The adoption of the new lease standard did not have a material impact on the Company's condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. ASU 2019-12 is effective for public business entities for annual periods beginning after December 15, 2020, and early adoption is permitted. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company plans to adopt ASU 2019-12 as of January 1, 2021. The Company has concluded that the pending adoption of ASU 2019-12 will not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. ASU 2018-14 removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the employer; and the effects of a one-percentage point change in assumed health care cost trend rates. ASU 2018-14 requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact on the Company's condensed consolidated financial statements.

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Revenue

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary region and products.

Net Sales by Region

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	85	$	—	$	85	$	80	$	77	$	157
Americas	123		13		136		133		14		147
Europe	150		—		150		158		—		158
Total net sales	$	358	$	13	$	371	$	371	$	91	$	462

Net Sales by Region

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	202	$	24	$	226	$	259	$	229	$	488
Americas	283		33		316		432		46		478
Europe	376		—		376		480		—		480
Total net sales	$	861	$	57	$	918	$	1,171	$	275	$	1,446

Net Sales by Products

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	188	$	—	$	188	$	193	$	—	$	193
Active Safety products	170		—		170		178		—		178
Brake Systems	—		13		13		—		91		91
Total net sales	$	358	$	13	$	371	$	371	$	91	$	462

Net Sales by Products

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	450	$	—	$	450	$	617	$	—	$	617
Active Safety products	411		—		411		554		—		554
Brake Systems	—		57		57		—		275		275
Total net sales	$	861	$	57	$	918	$	1,171	$	275	$	1,446

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Business Combinations

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Business Combinations

Business Combinations

Business combinations generally take place to either gain key technology or strengthen Veoneer’s position in a certain geographical area or with a certain customer. The results of operations and cash flows from the Company’s acquisitions have been included in the Company’s unaudited condensed consolidated financial statements prospectively from their date of acquisition.

Zenuity, Inc and Zenuity GmbH

On April 2, 2020, the Company entered into a non-binding agreement with Volvo Cars Corporation (VCC) to separate Zenuity, a 50% ownership joint venture with VCC in order for each company to more effectively drive their respective strategies. The parties entered into definitive agreements and effected the separation on July 1, 2020. As part of the transaction the Company paid approximately $37 million to Zenuity for 200 software engineers and two business units located in Germany and the US.

The Company applied the acquisition method of accounting to the Zenuity, Inc and Zenuity GmbH entities, whereby the excess of the fair value of the business over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the workforce. The recognized goodwill of $23 million recorded as part of this acquisition is included in the Electronics reportable segment and is not deductible for tax purposes. The preliminary opening balance sheet is subject to adjustment based on final assessment of the fair values of certain acquired assets, principally intangibles, and certain assumed liabilities. The Company used discounted cash flow ("DCF") analyses, which represent Level 3 fair value measurements, to assess the purchase price allocation. As the Company finalizes the fair value of the acquired assets and assumed liabilities, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments occur.

Total Zenuity, Inc and Zenuity GmbH acquisition related costs were approximately $1 million for the period ended September 30, 2020. These costs were reflected in Selling, general and administrative expenses in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

The following table summarizes the estimated fair values of identifiable acquired assets and assumed liabilities:

Assets	As of July 1, 2020
Cash and cash equivalents	$	4
Receivable, net	12
Property, plant and equipment, net	3
Operating lease right-of-use assets	10
Goodwill	23
Total assets	$	52
Tax payable	2
Accrued liabilities	3
Operating lease non-current liabilities	10
Total liabilities	$	15
Net assets acquired	$	37

Intellectual property

In addition, the Company acquired the right to use VCC intellectual property of $10 million in a transaction outside of the business combination. The acquired intangible asset will be assigned a useful life of 8 years and amortized over the useful life on a straight-line basis.

Separately, the Company has licensed intellectual property for $10 million to VCC with zero cost base in a transaction outside of the business combination and recognized this amount as Other Income in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

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Divestiture and held for sale

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Divestiture and held for sale

Divestiture and held for sale

VBS

In 2019, the Company started exploring strategic options for its non-core business in the Brake Systems segment. In the first quarter of 2020, management committed and approved a plan to sell VBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of June 30, 2020 and were required to be adjusted to the lower of fair value less cost to sell or carrying value. This resulted in an impairment charge of approximately $144 million which was recorded within Gain/(loss) on divestiture and assets held for sales, net on the unaudited Condensed Consolidated Statements of Operations during the period ended June 30, 2020. The impairment was measured using third party sales pricing to determine fair values of the assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The assets and liabilities associated with the transaction are separately classified as held for sale in the unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 and depreciation of long-lived assets ceased on June 30, 2020. The divestiture did not meet the criteria for presentation as a discontinued operation.

On August 10, 2020 Veoneer signed a definitive agreement to sell the majority of the Brake Systems business in North America to ZF. The aggregate purchase price was $1. In connection with the transaction, the Company received approximately $22 million from ZF for VBS operational cost reimbursement. The reimbursement cost was recognized as asset and liability held for sale on the unaudited Condensed Consolidated Balance sheet as of June 30, 2020.

VNBS

In the fourth quarter of 2019, management approved a plan to sell VNBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of December 31, 2019, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.

On October 30, 2019, the Company entered into definitive agreements with Nissin-Kogyo Co., Ltd. and Honda Motor Co., Ltd to divest VNBS. On February 3, 2020, the Company completed the sale of VNBS. The aggregate purchase price of the transaction was $176 million, subject to certain adjustments. The net cash proceeds after adjusting for closing costs was $175 million. The Company recognized a gain on the divestiture of $77 million, net of closing costs.

The major classes of assets and liabilities held for sale were as follows:

(Dollars in millions)	As of
Assets held for sale	December 31, 2019
Cash and cash equivalents	$	35
Receivables, net	58
Inventories, net	17
Property, plant and equipment, net	126
Intangible assets, net	66
Other current assets	15
Total assets held for sale	$	317
Liabilities held for sale
Accounts payable	50
Accrued expenses	20
Related party short-term debt	12
Pension liability	8
Other current liabilities	28
Total liabilities held for sale	$	118

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Debt

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Debt

Debt

The Company’s short and long-term debt consists of the following:

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Short-Term Debt:
Short-term borrowings	$	3	$	3
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	167		160
Other long-term borrowings	6		8
Total Debt	$	176	$	171

Long-Term Debt:

4.00% Convertible Senior Notes

On May 28, 2019, the Company issued, in a registered public offering in the U.S., Convertible Senior Notes (the “Notes”) with an aggregate principal amount of $207 million. The Notes bear interest at a rate of 4.00% per year payable semi-annually in arrears on June 1 and December 1 of each year, beginning December 1, 2019. The Notes will mature on June 1, 2024, unless repurchased, redeemed or converted in accordance with their terms prior to such date.

The net proceeds from the offering of the Notes were approximately $200 million, after deducting issuance costs of $7 million. The Company accounted for these issuance costs as a direct deduction from the carrying amount of the Notes. These costs are being amortized into interest expense for 5 years or through June 2024.

The conversion rate is 44.8179 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $22.3125 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or notice of redemption, as the case may be. In no event will the conversion rate per $1,000 principal amount of notes as a result of this adjustment exceed 57.1428 shares of common stock, as stipulated in the indenture.

The Company may not redeem the Notes prior to June 1, 2022. On or after this date, the Company may redeem for cash, shares or both all or any portion of the Notes, at our option, if the last reported sale price of the Company's common stock has been at

least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

If the Company undergoes a fundamental change (as defined in the indenture), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Notes are the Company's general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment with all of the Company's liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

Holders may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding March 1, 2024 only under the following circumstances: (1) if the last reported sale price of the Company's common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the "trading price" (as defined in the indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.

On or after March 1, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at the Company's election, as stipulated in the indenture.

In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, which does not meet the criteria for separate accounting as a derivative as it is indexed to the Company's own stock, was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the unaudited Consolidated Condensed Balance Sheet and amortized to interest expense using the effective interest method over the term of the Notes. The effective interest rate on the Notes is 10%. The equity component of the Notes of approximately $46 million is included in additional paid-in capital in the unaudited Condensed Consolidated Balance Sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The Company allocated transaction costs related to the Notes using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the unaudited Condensed Consolidated Balance Sheet and amortized to interest expense over the term of the Notes, and transaction costs attributable to the equity component were netted with the equity component in shareholders’ equity.

The following table presents the outstanding principal amount and carrying value of the Notes:

4.00% Convertible Senior Notes due 2024	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Principal amount (face value)	$	207	$	207
Unamortized issuance cost	(4)		(5)
Unamortized debt discount	(36)		(42)
Net Carrying value	$	167	$	160

The Company recognized total interest expense related to the Notes of $4 million and $4 million for three months ended September 30, 2020 and 2019, respectively, and $13 million and $6 million for the nine months ended September 30, 2020 and 2019, respectively, in the unaudited Condensed Consolidated Statements of Operations.

The estimated fair value of the Notes was $198 million as of September 30, 2020. The estimated fair value of the Notes was determined through consideration of quoted market prices. The fair value is classified as Level 2, as defined in Note 7 "Fair Value Measurements".

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs.

Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

Level 2 - Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 - Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Assets which are valued at net asset value per share ("NAV"), or its equivalent, as a practical expedient are reported outside the fair value hierarchy, but are included in the total assets for reporting and reconciliation purposes.

Items Measured at Fair Value on a Recurring Basis

Derivative instruments - The Company uses derivative financial instruments, “derivatives”, to mitigate the market risk that occurs from its exposure to changes in interest and foreign exchange rates. The Company does not enter into derivatives for trading or other speculative purposes. The Company’s use of derivatives is in accordance with the strategies contained in the Company’s overall financial risk policy. The derivatives outstanding as of September 30, 2020 were foreign exchange swaps. All swaps principally match the terms and maturity of the underlying obligation and no swaps have a maturity beyond six months. All derivatives are recognized in the unaudited condensed consolidated financial statements at fair value. Certain derivatives are from time to time designated either as fair value hedges or cash flow hedges in line with the hedge accounting criteria. For certain other derivatives hedge accounting is not applied either because non-hedge accounting treatment creates the same accounting result or the hedge does not meet the hedge accounting requirements, although entered into applying the same rationale concerning mitigating market risk that occurs from changes in interest and foreign exchange rates. The Company’s derivatives are classified as Level 2 of the fair value hierarchy and there were no transfers between the levels during this or comparable periods.

Financial Statement Presentation

The Company enters into master netting agreements, International Swaps and Derivatives Association (ISDA) agreements with all derivative counterparties. The netting agreements allow for netting of exposures in the event of default or breach of the counterparty agreement. The fair values in the Condensed Consolidated Balance Sheets have been presented on a gross basis. Derivative financial instruments designated and non-designated as hedging instruments are included in the Company’s Condensed Consolidated Balance Sheets. The notional value of the derivatives not designated as hedging instruments was $198 million as of September 30, 2020 and $291 million as of December 31, 2019. As of September 30, 2020, derivatives not designated as hedging instruments was an asset of $3 million, and as of December 31, 2019, the derivatives not designated as hedging instruments was a liability of $1 million. There were no derivatives designated as hedging instruments.

Gains and losses on derivative financial instruments recognized in the unaudited Condensed Consolidated Statements of Operations for the three months ended September 30, 2020 and 2019 were a gain of $2 million and a loss of less than $1 million, respectively, and for the nine months ended September 30, 2020 and 2019 were a gain of $4 million and a gain of $1 million, respectively.

Items Measured at Fair Value on a Non-Recurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. The fair value measurements are generally determined using unobservable inputs and are classified within Level 3 of the fair value hierarchy. These assets include long-lived assets, intangible assets and investments in affiliates, which may be written down to fair value as a result of impairment. The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets and settlements of liabilities, as observable inputs are not available. The Company has determined that each of these fair value measurements reside within Level 3 of the

fair value hierarchy. To determine the fair value of long-lived assets, the Company utilizes the projected cash flows expected to be generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets. VBS assets and liabilities classified as held for sale and the related impairment were measured using third party sales pricing to determine fair values of the assets. See Note 5 "Divestiture and held for sale" for additional information.

Investments

The Company may, as a practical expedient, estimate the fair value of certain investments using NAV of the investment as of the reporting date. This practical expedient generally deals with investments that permit an investor to redeem its investment directly with, or receive distributions from, the investee at times specified in the investee’s governing documents. Examples of these investments (often referred to as alternative investments) may include ownership interests in real assets, certain credit strategies, and hedging and diversifying strategies. They are commonly in the form of limited partnership interests. The Company uses NAV as a practical expedient when valuing investments in alternative asset classes and funds which are a limited partnership or similar investment vehicle.

On June 30, 2017, Veoneer committed to make a $15 million investment in Autotech Fund I, L.P. pursuant to a limited partnership agreement, and as a limited partner, periodically makes capital contributions toward this total commitment amount. As of September 30, 2020 and December 31, 2019, Veoneer contributed approximately $12 million and $10 million, respectively, to the investment in Autotech Fund I, L.P. As of September 30, 2020 the Company has received distributions of $3 million from the partnership and was recognized as reduction of the investment amount.

The carrying amounts of $9 million reflected in the unaudited Condensed Consolidated Balance Sheet in Investments for AutoTech Fund I, L.P approximates its fair value as of June 30, 2020 as this is the most recent information available to the Company at this time.

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Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The tax expense for the three and nine month periods ended September 30, 2020, was less than $1 million and $26 million, respectively. During the three and nine month periods ended September 30, 2019, the Company recorded a tax expense of $3 million and a tax benefit of $1 million, respectively. Discrete items, net were a benefit of $2 million and expense of $17 million for the three and nine month periods ended September 30, 2020, respectively, and a benefit of less than $1 million and $6 million for the three and nine month periods ended September 30, 2019, respectively. The discrete item in the nine month period ended September 30, 2020 was primarily related to the tax impact of the divestiture of VNBS. Veoneer's effective tax rate differs from an expected statutory rate primarily due to the discrete item and losses in certain jurisdictions that are not benefited.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company assesses all available evidence, both positive and negative, to determine the amount of any required valuation allowance. Valuation allowances have been established for the Company’s operations in United States, Sweden, France, Japan and China.

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Inventories

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost (according to first-in-first-out basis, "FIFO") and net realizable value. The components of inventories were as follows:

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Raw materials	$	93	$	99
Work in progress	11		8
Finished products	48		62
Inventories	152		169
Inventory valuation reserve	(28)		(25)
Total inventories, net of reserve	$	124	$	144

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Equity Method Investment

9 Months Ended

Sep. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investment

Equity Method Investment

On April 2, 2020, the Company entered into a non-binding agreement with VCC to separate Zenuity, a 50% ownership joint venture with VCC in order for each company to more effectively drive their respective strategies. The parties entered into definitive agreements and effected the separation on July 1, 2020.

On July 1, 2020, the Company finalized the split of Zenuity. As part of the transaction the Company paid approximately $37 million to Zenuity for 200 software engineers and two business units located in Germany and the US. Veoneer acquired the right to use Zenuity's intellectual property for a total consideration of SEK 1,067 million (approximately $114 million) payable in ten annual installment payments, with the first payment due on July 1, 2021.

As the transaction resulted in all of the business of Zenuity being transferred to one of its two owners, the Company determined that the remaining value of that equity investment was equal only to the expected future dividends to be received. This resulted in an impairment charge of approximately $24 million that was recorded in the unaudited Condensed Consolidated Statements of Operations for the period ended September 30, 2020.

As the transaction was between the investor and investee, the Company did not recognize any gain from the transaction.

Following completion of the transaction, Veoneer and VCC continue to own 50% each of Zenuity AB. The joint venture was not dissolved as part of the transaction but continues as a holding company that owns the IP of Zenuity.

During the third quarter of 2020, the Company received dividend of SEK 327 million (approximately $35 million) in cash (representing 50% of the total dividend, with the remainder received by VCC) from Zenuity.

During the second quarter of 2020, Veoneer contributed SEK 90 million (approximately $9 million) in cash (representing 50% of the total contribution, with the remainder made by VCC) into Zenuity to support its current operating cash flow needs.

During the first quarter of 2020, Veoneer contributed SEK 150 million (approximately $16 million) in cash (representing 50% of the total contribution, with the remainder made by VCC) into Zenuity to support its future operating cash flow needs.

The profit and loss attributed to the investment is shown in the line item Loss from equity method investment in the unaudited Condensed Consolidated Statements of Operations. Veoneer’s share of Zenuity’s loss for the three and nine month periods ended September 30, 2020 was $1 million and $39 million, respectively. Veoneer's share of Zenuity's loss for the three and nine month periods ended September 30, 2019, was $16 million and $50 million, respectively. As of September 30, 2020 and December 31, 2019, the Company’s equity investment in Zenuity was $129 million and $87 million, respectively

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Accrued Expenses

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Operating related accruals	$	79	$	43
Employee related accruals	88		76
Customer pricing accruals	22		39
Product related liabilities1	19		15
Other accruals	22		19
Total Accrued Expenses	$	230	$	192

¹ As of September 30, 2020 and December 31, 2019, $10 million and $8 million, respectively, of product related liabilities were indemnifiable losses subject to indemnification by Autoliv and an indemnification asset is included in Other current assets.

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Retirement Plans

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Retirement Plans

Retirement Plans

Defined Benefit Pension Plans

The Company’s net periodic benefit costs for plans for the three and nine months ended September 30, 2020 and 2019 were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Service cost	$	1	$	1	$	3	$	4
Interest cost	1		—		2		1
Expected return on plan assets	(1)		(1)		(2)		(1)
Net periodic benefit cost	$	1	$	—	$	3	$	4

The service cost and amortization of prior service cost components are reported among employee compensation costs in the unaudited Condensed Consolidated Statements of Operations. The remaining components (interest cost, expected return on plan assets and amortization of actuarial loss) are reported in Other non-operating items, net in the unaudited Condensed Consolidated Statements of Operations.

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Stock Incentive Plan

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock Incentive Plan

Stock Incentive Plan

The Veoneer, Inc. 2018 Stock Incentive Plan was established and effective on June 29, 2018 to govern the Company’s stock-based awards that will be granted in the future. The Veoneer, Inc. 2018 Stock Incentive Plan authorizes the grant of 3 million shares of Veoneer common stock for future equity awards to Veoneer employees and non-employee directors and authorizes up to 1.5 million additional shares to be used for the conversion of outstanding Autoliv stock awards in connection with the Spin-Off. Approximately 1 million shares were used for the conversion of the outstanding grants.

During the nine months ended September 30, 2020 under the Company’s long-term incentive (LTI) program, certain employees and non-employee directors received restricted stock units (RSUs) without dividend equivalent rights and performance shares (PSs) without dividend equivalent rights. The allocation between RSUs and PSs was 777,466 RSUs and 415,381 PSs at 100% target.

The majority of the RSUs granted will vest on the third anniversary of the grant date, subject to the grantee’s continued employment with the Company on the vesting date and acceleration of vesting in certain circumstances. The fair value of RSUs and PSs granted in 2020 were calculated by using the closing stock price on the grant dates. The grant date fair value for the RSUs and PSs, granted in 2020 was $11 million.

PSs granted in 2020 will earn out during the first quarter of 2023, upon the Compensation Committee’s certification of achievement of the applicable performance goals. The grantee may earn 0%-200% of the target number of PSs based on the Company’s achievement of specified targets. The performance target is the Company’s gross margin for the applicable performance period. Each PS represents a promise to transfer a share of the Company’s common stock to the employee following completion of the performance period, provided that the performance goals mentioned above are met and provided, further, that the grantee remains employed through the performance period, subject to certain limited exceptions.

Veoneer recognized total stock (RSUs, PS and Stock Options) compensation cost of $1 million and $5 million for the three and nine month periods ended September 30, 2020, respectively. During the three and nine month periods ended September 30, 2019, the Company recorded $2 million and $5 million, respectively.

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Contingent Liabilities

9 Months Ended

Sep. 30, 2020

Loss Contingency [Abstract]

Contingent Liabilities

Contingent Liabilities

Legal Proceedings

Various claims, lawsuits and proceedings are pending or threatened against the Company, covering a range of matters that arise in the ordinary course of its business activities with respect to commercial, product liability and other matters. Litigation is subject to many uncertainties, and the outcome of any litigation cannot be assured. After discussions with counsel, it is the opinion of management that the various legal proceedings and investigations to which the Company currently is a party will not have a material adverse impact on the condensed consolidated financial position of Veoneer, but the Company cannot provide assurance that Veoneer will not experience material litigation, product liability or other losses in the future.

Product Warranty, Recalls, and Intellectual Property

Veoneer is exposed to various claims for damages and compensation if its products fail to perform as expected. Such claims can be made, and result in costs and other losses to the Company, even where the product is eventually found to have functioned properly. Where a product (actually or allegedly) fails to perform as expected or is defective, the Company may face warranty and recall claims. Where such (actual or alleged) failure or defect results, or is alleged to result, in bodily injury and/or property damage, the Company may also face product liability and other claims. There can be no assurance that the Company will not experience material warranty, recall or product (or other) liability claims or losses in the future, or that the Company will not incur significant costs to defend against such claims. The Company may be required to participate in a recall involving its products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. Government safety regulators may also play a role in warranty and recall practices. A warranty, recall or product-liability claim brought against the Company in excess of its insurance may have a material adverse effect on the Company’s business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold the Company responsible for some, or all, of the repair or replacement costs of products when the product supplied did not perform as represented by the Company or expected by the customer. Accordingly, the future costs of warranty claims by the customers may be material. However, the Company believes its established reserves are adequate. Veoneer’s warranty reserves are based upon the Company’s best estimates of amounts necessary to settle future and existing claims. The Company regularly evaluates the adequacy of these reserves, and adjusts them when appropriate. However, the final amounts actually due related to these matters could differ materially from the Company’s recorded estimates.

In addition, as vehicle manufacturers increasingly use global platforms and procedures, quality performance evaluations are also conducted on a global basis. Any one or more quality, warranty or other recall issue(s) (including those affecting few units and/or having a small financial impact) may cause a vehicle manufacturer to implement measures such as a temporary or prolonged suspension of new orders, which may have a material impact on the Company’s results of operations.

The Company carries insurance for potential recall and product liability claims at coverage levels based on the Company’s prior claims experience. Veoneer cannot assure that the level of coverage will be sufficient to cover every possible claim that can arise in the Company’s businesses, now or in the future, or that such coverage always will be available should the Company, now or in the future, wish to extend, increase or otherwise adjust the Company’s insurance.

In its products, the Company utilizes technologies which may be subject to intellectual property rights of third parties. While the Company does seek to procure the necessary rights to utilize intellectual property rights associated with its products, it may fail to do so. Where the Company so fails, the Company may be exposed to material claims from the owners of such rights. Where the Company has sold products which infringe upon such rights, its customers may be entitled to be indemnified by the Company for the claims they suffer as a result thereof. Such claims could be material.

Product Related Liabilities

The Company records liabilities for product related risks when probable claims are identified and when it is possible to reasonably estimate costs. Provisions for warranty claims are estimated based on prior experience, likely changes in performance of newer products, and volume of the products sold. The provisions are recorded on an accrual basis.

The table below summarizes the change in product related liabilities in the unaudited Condensed Consolidated Balance Sheet.

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Reserve at beginning of the period	$	18	$	14	$	15	$	16
Change in reserve	2		—		8		1
Cash payments	(1)		—		(4)		(3)
Reserve at end of the period	$	19	$	14	$	19	$	14

For the three and nine month periods ended September 30, 2020 and 2019, cash paid primarily relate to warranty related issues. The increase in the reserve balance as of September 30, 2020 compared to the prior year was due to a recall related reserve liability. Agreements entered into between Autoliv and Veoneer in connection with the Spin-Off provide for Autoliv to indemnify Veoneer for certain liabilities related to electronics products manufactured before April 1, 2018. As of September 30,

2020 and December 31, 2019, $10 million and $8 million, respectively, of product related liabilities were indemnifiable losses subject to indemnification by Autoliv and an indemnification asset is included in Other current assets.

Guarantees

The Company provided lease guarantees to Zenuity of $14 million and $7 million as of September 30, 2020, and December 31, 2019, respectively. These represent the maximum potential amount of future (undiscounted) payments that Veoneer could be required to make under the guarantees in the event of default by the guaranteed parties. These guarantees will generally cease upon expiration of current lease agreements between 2020 and 2022. There are no liabilities recorded in the unaudited Condensed Consolidated Balance Sheet as of September 30, 2020 and December 31, 2019 related to these guarantees.

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Loss per share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Loss per share

Loss per share

Basic loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. The dilutive effect of outstanding options and equity incentive awards is reflected in diluted loss per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions, except per share amounts)	2020		2019		2020		2019
Numerator:
Basic and diluted:
Net loss attributable to Veoneer	$	(132)	$	(133)	$	(454)	$	(403)
Denominator:
Basic: Weighted average number of shares outstanding (in millions)	111.59		111.4		111.55		98.32
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)1	111.59		111.4		111.55		98.32
Basic loss per share	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)
Diluted loss per share	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)

¹ Shares in the diluted loss per share calculation represent basic shares due to the net loss.

In periods when the Company has a net loss, equity incentive awards are excluded from the Company's calculation of earnings per share as their inclusion would have an anti-dilutive effect. The Company excluded equity incentive awards of 963,171 and 741,120 shares for the three and nine month periods ended September 30, 2020, respectively, and 295,526 and 285,975 for the three and nine month periods ended September 30, 2019, respectively, from the diluted loss per share calculations.

The Company may settle the conversion of the Notes in cash, shares of the Company's common stock or any combination thereof at its election. For the Notes, the number of shares of the Company's common stock issuable at the conversion price of $22.3125 per share would be 9,277,305 shares if the Company elected to settle the conversion wholly in shares. See Note 6 "Debt". Due to anti-dilutive effects, the Company excluded potential convertible shares due under the Notes of 9,277,305 for the three and nine month periods ended September 30, 2020, respectively, and 9,277,305 and 4,247,850 for the three and nine month periods ended September 30, 2019, respectively, from the diluted loss per share calculations.

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

Segment InformationFinancial results for the Company's reportable segments have been prepared using a management approach, which is consistent with the basis and manner in which financial information is evaluated by the Company's Chief Operating Decision Maker (CODM) in allocating resources and in assessing performance. The Company has two operating segments, Electronics and Brake Systems. Electronics includes all of electronics resources and expertise, restraint control systems and active safety products and Brake Systems provides brake control and actuation systems. The operating results of the operating segments are

regularly reviewed by the Company’s CODM, the Chief Executive Officer, to assess the performance of the individual operating segments and to make decisions about resources to be allocated to the operating segments.

The Asian business of the Brake Systems segment was sold on February 3, 2020 and the majority of the Brake Systems business in North America was sold on August 10, 2020. The remaining Brake Systems business is no longer a reportable segment due to immateriality.

The accounting policies for the reportable segments are the same as those described in Note 2 "Summary of Significant Accounting Policies" included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020.

Loss Before Income Taxes	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Electronics	$	(80)	$	(90)	$	(202)	$	(281)
Brake Systems	(3)		(17)		(37)		(54)
Segment operating loss	(83)		(107)		(239)		(335)
Corporate and other	(20)		(15)		(51)		(53)
Loss on divestiture and assets impairment charge, net	(24)		—		(91)		—
Interest and other non-operating items, net	(4)		2		(7)		8
Loss from equity method investment	(1)		(16)		(39)		(50)
Loss before income taxes	$	(132)	$	(136)	$	(427)	$	(430)

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Relationship with Former Parent and Related Entities

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Relationship with Former Parent and Related Entities

Relationship with Former Parent and Related Entities

Transactions with Related Parties

Veoneer and Autoliv entered into a Transition Services Agreement ("TSA") under which certain services are provided by Autoliv to Veoneer and certain services are provided by Veoneer to Autoliv. The Company recognized less than $1 million of expense under the TSA for the three and nine month periods ended September 30, 2020, and $1 million and $4 million of expense under the TSA for the three and nine month periods ended September 30, 2019 respectively. The Company recognized less than $1 million of income under the TSA for the three and nine month periods ended September 30, 2020 and 2019.

Throughout the periods covered by the unaudited condensed consolidated financial statements, Veoneer sold finished goods to Autoliv and Nissin Kogyo, the 49% owner in VNBS (a former 51% owned subsidiary). Related party sales amounted to $18 million and $48 million for the three and nine month periods ended September 30, 2020, respectively and $24 million and $77 million for the three and nine month periods ended September 30, 2019, respectively.

Related Party Balances

Amounts due to and due from related parties are summarized in the below table:

Related Party	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Related party receivable	$	6	$	11
Related party payables	1		3
Related party short-term debt	14		1
Related party long-term debt	103		—

Related party receivables are mainly driven by reseller agreements put in place in connection with the Spin-Off. The reseller agreements are between Autoliv and Veoneer and facilitate the temporary arrangement of the sale of Veoneer products manufactured for certain customers for a limited period after the Spin-Off. Autoliv will collect the customer payments and will remit the payments to Veoneer.

Related party short-term and long-term debt mainly related to Zenuity's intellectual property that Veoneer acquired the right to use for a total consideration of approximately $114 million payable in ten annual installment payments, with the first payment due on July 1, 2021.

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Factoring

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Factoring

Factoring

The Company receives bank notes generally maturing within six months from certain of its customers in China to settle trade accounts receivable. The Company may hold such bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash.

For the nine months ended September 30, 2020 and 2019, the Company has entered into arrangements with financial institutions and sold $38 million and $59 million, respectively, of trade receivables without recourse and $10 million and $37 million, respectively, of bank notes without recourse, which qualify as sales as all rights to the trade and notes receivable have passed to the financial institution.

As of September 30, 2020, the Company had $7 million of trade notes receivables which remain outstanding and will mature within the fourth quarter of 2020. The collections of such bank notes are included in operating cash flows based on the substance of the underlying transactions, which are operating in nature.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Segments

The Company has two operating segments, Electronics and Brake Systems. Electronics includes all electronics resources and expertise, Restraint Control Systems and Active Safety products, and Brake Systems provides brake control and actuation systems

Basis of Accounting

The accompanying unaudited condensed consolidated financial statements for Veoneer do not include all of the information and notes required by the accounting principles generally accepted in the U.S. (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to Veoneer’s Audited Consolidated Financial Statements for the year ended December 31, 2019 and corresponding notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 21, 2020. Certain amounts in the unaudited condensed consolidated financial statements and associated notes may not reconcile due to rounding. All percentages have been calculated using unrounded amounts

Accounting for Credit Losses

Accounting for credit losses

The Company has evaluated the available adoption options of common credit loss methods that are acceptable as per FASB Accounting Standards Codification Topic 326, Credit Losses. The Company adopted the available Loss-rate method where the impairment is calculated using an estimated loss rate and multiplying it by the asset’s amortized cost at the balance sheet date. This method appropriately reflects the Company´s risk pattern in relation to its accounts receivables.

The key components of the Company’s Loss-rate model are as follows:

•A list of the Company's customers credit rating and credit default risk rate from Bloomberg.

•Actual write-offs or reversals of previous write-offs of accounts receivables.

•Evaluation of other unusual facts and circumstances which could impact the credit loss rate, such as risk of bankruptcy or potential collectability issues.

The Company’s credit loss model includes the Company’s customer list. The customer list captures the existing customers. The list is put into a Bloomberg data query to generate customers short-term credit rating. The credit default risk rate is used to calculate the credit loss rate or estimated loss rate.

For customers that do not have credit default risk rate, management uses the six-month LIBOR rate as a credit rating and a credit default risk rate. Management believes that the six-month LIBOR rate adequately reflects the short-term nature of the Company’s trade receivables and is also in line with the Company’s invoice payment terms.

New Accounting Standards

New Accounting Standards

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s condensed consolidated financial statements.

Adoption of New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019, and earlier adoption is permitted for annual periods beginning after December 15, 2018. The Company adopted ASU 2016-13 effective January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance. The adoption of ASU 2016-13 did not have a material impact on the Company's condensed consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18 Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606, which (1) clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC Topic 606, Revenue from Contracts with Customers (Topic 606), when the collaborative arrangement participant is a customer in the context of a unit of account, (2) adds unit-of-account guidance in Topic 808 to align with Topic 606 when an entity is assessing whether the collaborative arrangement, or a part of the arrangement, is within the scope of Topic 606, (3) precludes presenting transactions together with revenue when those transactions involve collaborative arrangement participants that are not directly related to third parties and are not customers. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 did not have a material impact on the Company's condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 affects any entity that enters into a lease, with some specified scope exceptions. For public business entities, the amendments in ASU 2016-02 are effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 in the annual period beginning January 1, 2019. The Company applied the modified retrospective transition method and elected the transition option to use the effective date January 1, 2019,

as the date of initial application. The Company did not adjust its comparative period financial statements for effects of ASU 2016-02, and has not made the new required lease disclosures for periods before the effective date. The Company has recognized its cumulative effect transition adjustment as of the effective date. In addition, the Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, have allowed the Company to carry forward the historical lease classification. The adoption of the new standard resulted in recording operating lease assets and lease liabilities of approximately $75 million as of January 1, 2019. The adoption of the new lease standard did not have a material impact on the Company's condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. ASU 2019-12 is effective for public business entities for annual periods beginning after December 15, 2020, and early adoption is permitted. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company plans to adopt ASU 2019-12 as of January 1, 2021. The Company has concluded that the pending adoption of ASU 2019-12 will not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. ASU 2018-14 removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the employer; and the effects of a one-percentage point change in assumed health care cost trend rates. ASU 2018-14 requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact on the Company's condensed consolidated financial statements.

Fair Value Measurements

The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs.

Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

Level 2 - Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 - Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Assets which are valued at net asset value per share ("NAV"), or its equivalent, as a practical expedient are reported outside the fair value hierarchy, but are included in the total assets for reporting and reconciliation purposes.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. The fair value measurements are generally determined using unobservable inputs and are classified within Level 3 of the fair value hierarchy. These assets include long-lived assets, intangible assets and investments in affiliates, which may be written down to fair value as a result of impairment. The Company has determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets and settlements of liabilities, as observable inputs are not available. The Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. To determine the fair value of long-lived assets, the Company utilizes the projected cash flows expected to be generated by the long-lived assets, then discounts the future cash flows over the expected life of the long-lived assets.

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Revenue (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue disaggregated by primary region and products of revenue recognition

In the following tables, revenue is disaggregated by primary region and products.

Net Sales by Region

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	85	$	—	$	85	$	80	$	77	$	157
Americas	123		13		136		133		14		147
Europe	150		—		150		158		—		158
Total net sales	$	358	$	13	$	371	$	371	$	91	$	462

Net Sales by Region

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	202	$	24	$	226	$	259	$	229	$	488
Americas	283		33		316		432		46		478
Europe	376		—		376		480		—		480
Total net sales	$	861	$	57	$	918	$	1,171	$	275	$	1,446

Net Sales by Products

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	188	$	—	$	188	$	193	$	—	$	193
Active Safety products	170		—		170		178		—		178
Brake Systems	—		13		13		—		91		91
Total net sales	$	358	$	13	$	371	$	371	$	91	$	462

Net Sales by Products

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	450	$	—	$	450	$	617	$	—	$	617
Active Safety products	411		—		411		554		—		554
Brake Systems	—		57		57		—		275		275
Total net sales	$	861	$	57	$	918	$	1,171	$	275	$	1,446

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Business Combinations (Tables)

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

The following table summarizes the estimated fair values of identifiable acquired assets and assumed liabilities:

Assets	As of July 1, 2020
Cash and cash equivalents	$	4
Receivable, net	12
Property, plant and equipment, net	3
Operating lease right-of-use assets	10
Goodwill	23
Total assets	$	52
Tax payable	2
Accrued liabilities	3
Operating lease non-current liabilities	10
Total liabilities	$	15
Net assets acquired	$	37

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Discontinued Operations and Disposal Groups (Tables)

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Major Classes of Assets and Liabilities Held for Sale

VNBS

The major classes of assets and liabilities held for sale were as follows:

(Dollars in millions)	As of
Assets held for sale	December 31, 2019
Cash and cash equivalents	$	35
Receivables, net	58
Inventories, net	17
Property, plant and equipment, net	126
Intangible assets, net	66
Other current assets	15
Total assets held for sale	$	317
Liabilities held for sale
Accounts payable	50
Accrued expenses	20
Related party short-term debt	12
Pension liability	8
Other current liabilities	28
Total liabilities held for sale	$	118

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Debt (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of Debt

The Company’s short and long-term debt consists of the following:

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Short-Term Debt:
Short-term borrowings	$	3	$	3
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	167		160
Other long-term borrowings	6		8
Total Debt	$	176	$	171

The following table presents the outstanding principal amount and carrying value of the Notes:

4.00% Convertible Senior Notes due 2024	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Principal amount (face value)	$	207	$	207
Unamortized issuance cost	(4)		(5)
Unamortized debt discount	(36)		(42)
Net Carrying value	$	167	$	160

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Inventories (Tables)

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Components of Inventories

Inventories are stated at the lower of cost (according to first-in-first-out basis, "FIFO") and net realizable value. The components of inventories were as follows:

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Raw materials	$	93	$	99
Work in progress	11		8
Finished products	48		62
Inventories	152		169
Inventory valuation reserve	(28)		(25)
Total inventories, net of reserve	$	124	$	144

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Summary of Accrued Expenses

	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Operating related accruals	$	79	$	43
Employee related accruals	88		76
Customer pricing accruals	22		39
Product related liabilities1	19		15
Other accruals	22		19
Total Accrued Expenses	$	230	$	192

¹ As of September 30, 2020 and December 31, 2019, $10 million and $8 million, respectively, of product related liabilities were indemnifiable losses subject to indemnification by Autoliv and an indemnification asset is included in Other current assets.

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Retirement Plans (Tables)

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Schedule of components of net periodic benefit cost

The Company’s net periodic benefit costs for plans for the three and nine months ended September 30, 2020 and 2019 were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Service cost	$	1	$	1	$	3	$	4
Interest cost	1		—		2		1
Expected return on plan assets	(1)		(1)		(2)		(1)
Net periodic benefit cost	$	1	$	—	$	3	$	4

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Contingent Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Loss Contingency [Abstract]

Schedule of change in balance sheet position of product related liabilities

The table below summarizes the change in product related liabilities in the unaudited Condensed Consolidated Balance Sheet.

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Reserve at beginning of the period	$	18	$	14	$	15	$	16
Change in reserve	2		—		8		1
Cash payments	(1)		—		(4)		(3)
Reserve at end of the period	$	19	$	14	$	19	$	14

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Loss per share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted loss per share for the three and nine month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions, except per share amounts)	2020		2019		2020		2019
Numerator:
Basic and diluted:
Net loss attributable to Veoneer	$	(132)	$	(133)	$	(454)	$	(403)
Denominator:
Basic: Weighted average number of shares outstanding (in millions)	111.59		111.4		111.55		98.32
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)1	111.59		111.4		111.55		98.32
Basic loss per share	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)
Diluted loss per share	$	(1.18)	$	(1.20)	$	(4.07)	$	(4.10)

1 Shares in the diluted loss per share calculation represent basic shares due to the net loss.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of (loss)/income before income taxes

Loss Before Income Taxes	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2020		2019		2020		2019
Electronics	$	(80)	$	(90)	$	(202)	$	(281)
Brake Systems	(3)		(17)		(37)		(54)
Segment operating loss	(83)		(107)		(239)		(335)
Corporate and other	(20)		(15)		(51)		(53)
Loss on divestiture and assets impairment charge, net	(24)		—		(91)		—
Interest and other non-operating items, net	(4)		2		(7)		8
Loss from equity method investment	(1)		(16)		(39)		(50)
Loss before income taxes	$	(132)	$	(136)	$	(427)	$	(430)

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Relationship with Former Parent and Related Entities (Tables)

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Summary of amount due to and from related parties

Amounts due to and due from related parties are summarized in the below table:

Related Party	As of
(Dollars in millions)	September 30, 2020		December 31, 2019
Related party receivable	$	6	$	11
Related party payables	1		3
Related party short-term debt	14		1
Related party long-term debt	103		—

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Basis of Presentation - Additional Information (Details)				9 Months Ended
	Aug. 10, 2020 USD ($)	May 28, 2019 USD ($) $ / shares shares	Jun. 29, 2018	Sep. 30, 2020 USD ($) segment	Sep. 30, 2019 USD ($)	Feb. 03, 2020 USD ($) transaction	Oct. 30, 2019
Restructuring Cost and Reserve [Line Items]
Number of operating segments | segment				2
Shares issued in public offering (in shares) | shares		24,000,000
Public offering price (in dollars per share) | $ / shares		$ 17.50
Issuance of common stock		$ 403,000,000		$ 0	$ 405,000,000
Proceeds from divestitures				$ 198,000,000	$ 0
Honda VNBS Product Line | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Restructuring Cost and Reserve [Line Items]
Ownership percentage in joint venture							51.00%
Disposal group, including discontinued operation, consideration						$ 176,000,000
Number of transactions | transaction						2
Veoneer Nissin Brakes Systems | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Restructuring Cost and Reserve [Line Items]
Disposal group, including discontinued operation, consideration	$ 1
Proceeds from divestitures	$ 22,000,000
4% Convertible Senior Dotes due 2024 | Convertible Senior Notes
Restructuring Cost and Reserve [Line Items]
Aggregate principal amount of debt		$ 207,000,000
Stated interest rate		4.00%		4.00%
Net proceeds		$ 200,000,000
Over-Allotment Option | 4% Convertible Senior Dotes due 2024 | Convertible Senior Notes
Restructuring Cost and Reserve [Line Items]
Aggregate principal amount of debt		$ 27,000,000
Spin-Off | Autoliv
Restructuring Cost and Reserve [Line Items]
Distribution percentage of outstanding common stock in spinoff transaction			100.00%
Spin off conversion ratio			1
Spin-Off | Autoliv | SDR
Restructuring Cost and Reserve [Line Items]
Spin off conversion ratio			1
Spin-Off | Autoliv | Common Stock
Restructuring Cost and Reserve [Line Items]
Spin off conversion ratio			1

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Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions					3 Months Ended			9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	May 20, 2020	Dec. 31, 2019	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Payments for legal settlements		$ 20
Net sales					$ 371		$ 462	$ 918	$ 1,446
Operating lease right-of-use assets	$ 86			$ 100	86			86
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, liability										$ 75
Operating lease right-of-use assets										$ 75
Other Current Liabilities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred income	$ 15				$ 15			15
Research, Development and Implementation of Change
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales			$ 65
Future Software Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales			$ 11
Research, Development and Software Adjustment Agreement
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales						$ 76
Engineering Services
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reimbursements from customers								$ 82
Revenue from Contract with Customer | Customer Concentration Risk | Four Largest Customers [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration risk, percentage					55.00%		61.00%	57.00%	59.00%
Accounts Receivable | Customer Concentration Risk | Four Largest Customers [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration risk, percentage	41.00%			39.00%

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Revenue - Revenue Disaggregated by Primary Region and Products of Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 371	$ 462	$ 918	$ 1,446
Operating Segments | Restraint Control Systems
Disaggregation of Revenue [Line Items]
Net sales	188	193	450	617
Operating Segments | Active Safety products
Disaggregation of Revenue [Line Items]
Net sales	170	178	411	554
Operating Segments | Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	13	91	57	275
Electronics
Disaggregation of Revenue [Line Items]
Net sales	358	371	861	1,171
Electronics | Operating Segments | Restraint Control Systems
Disaggregation of Revenue [Line Items]
Net sales	188	193	450	617
Electronics | Operating Segments | Active Safety products
Disaggregation of Revenue [Line Items]
Net sales	170	178	411	554
Electronics | Operating Segments | Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	13	91	57	275
Brake Systems | Operating Segments | Restraint Control Systems
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Brake Systems | Operating Segments | Active Safety products
Disaggregation of Revenue [Line Items]
Net sales	0	0	0	0
Brake Systems | Operating Segments | Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	13	91	57	275
Asia | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	85	157	226	488
Asia | Electronics | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	85	80	202	259
Asia | Brake Systems | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	0	77	24	229
Americas | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	136	147	316	478
Americas | Electronics | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	123	133	283	432
Americas | Brake Systems | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	13	14	33	46
Europe | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	150	158	376	480
Europe | Electronics | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	150	158	376	480
Europe | Brake Systems | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0	$ 0	$ 0

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Business Combinations - Narrative (Details) kr in Millions, $ in Millions		3 Months Ended						9 Months Ended
	Jul. 01, 2020 USD ($) numberOfSoftwareEngineers numberOfBusinessUnits	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2020 SEK (kr)	Mar. 31, 2020 USD ($)	Mar. 31, 2020 SEK (kr)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Business Acquisition [Line Items]
Goodwill		$ 314						$ 314		$ 290
Acquisition of intangible assets								10	$ 0
Net sales		$ 371					$ 462	918	$ 1,446
Zenuity
Business Acquisition [Line Items]
Cash contribution to joint venture			$ 9	kr 90	$ 16	kr 150
Intellectual Property
Business Acquisition [Line Items]
Acquisition of intangible assets	$ 10
Finite-lived intangible asset, useful life	8 years
Intellectual Property | License
Business Acquisition [Line Items]
Net sales								10
Zenuity, Inc
Business Acquisition [Line Items]
Goodwill	$ 23
Business combination, acquisition related costs								$ 1
Zenuity, Inc | Zenuity
Business Acquisition [Line Items]
Cash contribution to joint venture	$ 37
Number of software engineers | numberOfSoftwareEngineers	200
Number of business units | numberOfBusinessUnits	2

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Business Combinations - Schedule of Business Acquisitions by Acquisition (Details) - USD ($) $ in Millions	Sep. 30, 2020	Jul. 01, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill	$ 314		$ 290
Zenuity, Inc
Business Acquisition [Line Items]
Cash and cash equivalents		$ 4
Receivable, net		12
Property, plant and equipment, net		3
Operating lease right-of-use assets		10
Goodwill		23
Total assets		52
Tax payable		2
Accrued liabilities		3
Operating lease non-current liabilities		10
Total liabilities		15
Net assets acquired		$ 37

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Discontinued Operations and Disposal Groups - Narrative (Details) - USD ($)			6 Months Ended	9 Months Ended
	Aug. 10, 2020	Oct. 30, 2019	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Feb. 03, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets impairment charge			$ 144,000,000	$ 168,000,000	$ 0
Proceeds from divestitures				$ 198,000,000	$ 0
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Honda VNBS Product Line
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, including discontinued operation, consideration						$ 176,000,000
Disposal group, not discontinued operation, gain (loss) on disposal, net		$ 175,000,000
Disposal group, not discontinued operation, gain (loss) on disposal, net of closing costs		$ 77,000,000
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Veoneer Nissin Brakes Systems
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal group, including discontinued operation, consideration	$ 1
Proceeds from divestitures	$ 22,000,000

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Discontinued Operations and Disposal Groups - Disposal Group, Including Discontinued Operations (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Honda VNBS Product Line $ in Millions	Dec. 31, 2019 USD ($)
Assets held for sale
Cash and cash equivalents	$ 35
Receivables, net	58
Inventories, net	17
Property, plant and equipment, net	126
Intangible assets, net	66
Other current assets	15
Total assets held for sale	317
Liabilities held for sale
Accounts payable	(50)
Accrued expenses	20
Related party short-term debt	12
Pension liability	8
Other current liabilities	28
Total liabilities held for sale	$ (118)

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Debt - Schedule of Short and Long Term Debt (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019	May 28, 2019
Short-Term Debt:
Short-term borrowings	$ 3	$ 3
Long-Term Debt:
Total Debt	176	171
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	$ 167	160
Stated interest rate	4.00%		4.00%
Secured Debt | Other Long-Term Borrowings
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	$ 6	$ 8

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Debt - Narrative (Details)		3 Months Ended		9 Months Ended
	May 28, 2019 USD ($) tradingDay $ / shares	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Short-term borrowings		$ 3,000,000		$ 3,000,000		$ 3,000,000
Interest expense		$ 4,000,000	$ 4,000,000	$ 13,000,000	$ 6,000,000
Minimum
Debt Instrument [Line Items]
Trading days | tradingDay	20
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Debt Instrument [Line Items]
Stated interest rate	4.00%	4.00%		4.00%
Aggregate principal amount of debt	$ 207,000,000
Net proceeds	200,000,000
Debt issuance costs	$ 7,000,000
Amortization period of interest expense	5 years
Initial conversion price (in dollars per share) | $ / shares	$ 22.3125
Threshold percentage of stock price trigger	130.00%
Redemption price	100.00%
Effective interest rate		10.00%		10.00%
Equity component of notes		$ 46,000,000		$ 46,000,000
Convertible debt fair value		$ 198,000,000		$ 198,000,000
Debt instrument, convertible, conversion ratio	0.0448179000
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024 | Minimum
Debt Instrument [Line Items]
Threshold percentage of stock price trigger	98.00%
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024 | Maximum
Debt Instrument [Line Items]
Debt instrument, convertible, conversion ratio	0.0571428000

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Debt - Schedule of Notes (Details) - Convertible Senior Notes - 4% Convertible Senior Dotes due 2024 - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Principal amount (face value)	$ 207	$ 207
Unamortized issuance cost	(4)	(5)
Unamortized debt discount	(36)	(42)
4% Convertible Senior Notes due 2024 (Carrying value)	$ 167	$ 160

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Fair Value Measurements - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) contract	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) contract	Sep. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 30, 2017 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
(Losses) and gains on derivative financial instruments recognized in other non-operating items (less than)	$ 2	$ 1	$ 4	$ 1
Other long-term investments	$ 9		$ 9		$ 9	$ 9
Foreign exchange swaps | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Maturity period of swap contracts			6 months
Foreign exchange swaps | Maturity Beyond Six Months
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of foreign currency derivatives held | contract	0		0
Foreign exchange forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional value	$ 198		$ 198			291
Derivative asset	3		3			1
Fair Value Measured at Net Asset Value Per Share
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment	$ 12		12			$ 10	$ 15
Distributions from fund			$ 3

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Income tax benefit	$ 0	$ 3	$ 26	$ (1)
Net discrete (benefit) expense related to changes in valuation allowance	$ 2	$ 1	$ 17	$ 6

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Inventories - Components of Inventories (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 93	$ 99
Work in progress	11	8
Finished products	48	62
Inventories	152	169
Inventory valuation reserve	(28)	(25)
Total inventories, net of reserve	$ 124	$ 144

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Equity Method Investment - Narrative (Details) kr in Millions, $ in Millions			3 Months Ended							9 Months Ended
	Jul. 01, 2020 USD ($) numberOfSoftwareEngineers numberOfBusinessUnits numberOfInstallments	Jul. 01, 2020 SEK (kr) numberOfSoftwareEngineers numberOfBusinessUnits numberOfInstallments	Sep. 30, 2020 USD ($)	Sep. 30, 2020 SEK (kr)	Jun. 30, 2020 USD ($)	Jun. 30, 2020 SEK (kr)	Mar. 31, 2020 USD ($)	Mar. 31, 2020 SEK (kr)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Apr. 02, 2020	Dec. 31, 2019 USD ($)
Schedule of Equity Method Investments [Line Items]
Impairment charges										$ 24
Loss from equity method investment			$ 1						$ 16	39	$ 50
Equity investments after consideration of foreign exchange movements			129							129			$ 87
Zenuity
Schedule of Equity Method Investments [Line Items]
Ownership percentage in joint venture					50.00%	50.00%	50.00%	50.00%				50.00%
Cash contribution to joint venture					$ 9	kr 90	$ 16	kr 150
Proceeds from dividends received			35	kr 327
Loss from equity method investment			1						$ 16	39	$ 50
Equity investments after consideration of foreign exchange movements			$ 129							$ 129			$ 87
Zenuity | Zenuity, Inc
Schedule of Equity Method Investments [Line Items]
Cash contribution to joint venture	$ 37
Number of software engineers | numberOfSoftwareEngineers	200	200
Number of business units | numberOfBusinessUnits	2	2
Zenuity | Intellectual Property | Zenuity, Inc
Schedule of Equity Method Investments [Line Items]
Intellectual property acquired, consideration	$ 114	kr 1,067
Number of annual installment payments | numberOfInstallments	10	10

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Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Loss Contingencies [Line Items]
Operating related accruals	$ 79	$ 43
Employee related accruals	88	76
Customer pricing accruals	22	39
Product related liabilities	19	15
Other accruals	22	19
Total Accrued Expenses	230	192
Affiliated Entity
Loss Contingencies [Line Items]
Product related liabilities	$ 10	$ 8

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Retirement Plans - Schedule of Components of Net Periodic Benefit Cost (Details) - Pension Plans, Defined Benefit - Existing Veoneer Plans - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 1	$ 1	$ 3	$ 4
Interest cost	1	0	2	1
Expected return on plan assets	(1)	(1)	(2)	(1)
Net periodic benefit cost	$ 1	$ 0	$ 3	$ 4

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Stock Incentive Plan - Narrative (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
	Jun. 29, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage grantee may earn based on achievement of specific targets				100.00%
2018 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for grant of common stock for future equity awards (in shares)	3,000,000
Number of shares used for conversion of outstanding grants (in shares)	1,000,000
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)				777,466
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted (in shares)				415,381
RSUs and PSs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value				$ 11
Stock-based compensation expense		$ 1	$ 2	$ 5	$ 5
Spin-Off | 2018 Stock Incentive Plan | Autoliv
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares authorized to be used for conversion of outstanding Autoliv stock awards (in shares)	1,500,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage grantee may earn based on achievement of specific targets				0.00%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage grantee may earn based on achievement of specific targets				200.00%

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Contingent Liabilities - Schedule of Change in Balance Sheet Position of Product Related Liabilities (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Product Warranty Accrual [Roll Forward]
Reserve at beginning of the period	$ 18	$ 14	$ 15	$ 16
Change in reserve	2	0	8	1
Cash payments	(1)	0	(4)	(3)
Reserve at end of the period	$ 19	$ 14	$ 19	$ 14

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Contingent Liabilities - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Loss Contingencies [Line Items]
Product related liabilities	$ 19	$ 15
Guarantee obligations	14	7
Affiliated Entity
Loss Contingencies [Line Items]
Product related liabilities	$ 10	$ 8

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Loss per share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Basic and diluted:
Net loss attributable to Veoneer	$ (132)	$ (133)	$ (454)	$ (403)
Denominator:
Basic: Weighted average number of shares outstanding (in millions) (in shares)	111,590	111,400	111,550	98,320
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions) (in shares)	111,590	111,400	111,550	98,320
Basic loss per share (in dollars per share)	$ (1.18)	$ (1.20)	$ (4.07)	$ (4.10)
Diluted loss per share (in dollars per share)	$ (1.18)	$ (1.20)	$ (4.07)	$ (4.10)

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Loss per share - Narrative (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	May 28, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Maximum number of shares issuable if debt was converted (in shares)	9,277,305		9,277,305
Stock Compensation Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from calculation (in shares)	963,171	295,526	741,120	285,975
Convertible Debt Securities
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from calculation (in shares)	9,277,305	9,277,305	9,277,305	4,247,850
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Initial conversion price (in dollars per share)					$ 22.3125

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Segment Information - Narrative (Details)	9 Months Ended
	Sep. 30, 2020 segment
Segment Reporting [Abstract]
Number of operating segments	2

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Segment Information - Schedule of (Loss)/Income Before Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	$ (103)	$ (122)	$ (290)	$ (388)
Loss on divestiture and assets impairment charge, net	(24)	0	(91)	0
Interest and other non-operating items, net	(4)	2	(7)	8
Loss from equity method investment	(1)	(16)	(39)	(50)
Loss before income taxes	(132)	(136)	(427)	(430)
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	(83)	(107)	(239)	(335)
Corporate and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	(20)	(15)
Electronics | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	(80)	(90)	(202)	(281)
Brake Systems | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	$ (3)	$ (17)	(37)	(54)
Corporate and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)			$ (51)	$ (53)

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Relationship with Former Parent and Related Entities - Narrative (Details) kr in Millions, $ in Millions			3 Months Ended		9 Months Ended
	Jul. 01, 2020 SEK (kr)	Jul. 01, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Zenuity | Zenuity, Inc | Intellectual Property
Related Party Transaction [Line Items]
Intellectual property acquired, consideration	kr 1,067	$ 114
Autoliv | Affiliated Entity
Related Party Transaction [Line Items]
Revenue from related parties			$ 18	$ 24	$ 48	$ 77
Autoliv | Transition Services Agreement | Affiliated Entity
Related Party Transaction [Line Items]
Expense under the TSA			$ 1	1	$ 1	4
Income under the TSA				$ 1		$ 1
Veoneer Nissin Brakes Systems
Related Party Transaction [Line Items]
Minority ownership percentage			49.00%		49.00%
Veoneer Nissin Brakes Systems | Autoliv | Transition Services Agreement | Affiliated Entity
Related Party Transaction [Line Items]
Majority ownership percentage			51.00%		51.00%

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Relationship with Former Parent and Related Entities - Summary of Amount Due to and from Related Parties (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Related Party Transactions [Abstract]
Related party receivable	$ 6	$ 11
Related party payables	1	3
Related party short-term debt	14	1
Related party long-term debt	$ 103	$ 0

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Factoring (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Receivables [Abstract]
Sale of trade receivables	$ 38	$ 59
Sale of bank notes without recourse	10	$ 37
Trade notes receivables	$ 7