Veoneer's Sweden-listed shares were up 8.5% by 0825 GMT on Friday with several equity analysts saying the collaboration was a vote of confidence Veoneer's technology and would strengthen its position versus rivals such as Mobileye.
"We believe this collaboration has increased Veoneer's chances of being one of the major players in this market," Handelsbanken Capital Markets said in a research note.
Handelsbanken, which repeated its buy recommendation for the Veoneer stock, said the joint product would be the number one competitor to the market-leading EyeQ SoC system from Intel-owned Mobileye.
Jefferies analysts said the team-up would likely broaden Veoneer's addressable market and ultimately strengthen its positioning versus Mobileye although the collaboration would take time to bear fruit.
Veoneer, spun off from airbag maker Autoliv in 2018, remains loss-making and has like the rest of the auto industry been hit hard by the pandemic.
Despite the recent gains, its shares are down 17% in the year to date.
(Reporting by Johannes Hellstrom and Helena Soderpalm; editing by Niklas Pollard)