BMW has teamed up with Chinese technology giant Tencent in a bid to accelerate its development of self-driving cars, Financial Times reported.

The companies will build a processing and storage centre to handle data from test trials in China and BMW’s computer simulations.

BMW’s partnership with Tencent comes a year after the leading Chinese artificial intelligence and cloud storage company launched a push to develop self-driving technologies after similar initiatives from its main rivals Baidu and Alibaba, the report said.

The agreement comes a day after the German carmaker promoted its production chief Oliver Zipse to succeed Harald Krüger as its next chief executive. Norbert Reithofer, chairman of the supervisory board, said that Zipse “will provide the BMW Group with fresh momentum in shaping the mobility of the future.”

Zipse, who will take over as CEO in the middle of August, takes the wheel of BMW when the company is looking to reverse a decline in profits and as the industry grapples with the high cost of investments in self-driving and battery-powered vehicles. As manufacturing chief,  Zipse helped BMW quicken its rollout of electric vehicles as the luxury brand battles to catch up with rivals.

Yet amid a series of ambitious goals for automation set by car companies, BMW has put forward a relatively measured target of selling semi-autonomous vehicles by 2021. The centre that BMW and Tencent are developing is a duplication of the software development process in Munich and a “key component” for autonomous driving both in China and globally, BMW vice-president for autonomous driving development Alejandro Vukotich said in an interview.

“This is not a fancy, short-term opportunity . . . It’s a real tool that we need,” Vukotich said. “The traffic here [in China] is so special and different and it offers you such rich information . . . that can be applied to other parts of the world. It makes sense to develop here.”

Tencent has been lagging behind its main rivals in developing a focus on self-driving technologies, where it is pitted against the current Chinese leader in the field, Baidu, China’s largest search engine provider, as well as e-commerce group Alibaba, the report said.

Dowson Tong, head of Tencent cloud and smart industries, said in a statement that the company hoped the deal would be a “new benchmark” for Chinese technology companies working with international carmakers. In 2017, Tencent acquired a 5% stake in Tesla for US$1.78 billion and also announced an initiative to team up with Guangzhou Automobile Group to develop internet-connected “smart cars” with driving aided by artificial intelligence.

The company began building a self-driving research team in Silicon Valley last year. Baidu, by comparison, has racked up more miles of road test data than any of its domestic rivals, both via its own programme and through its open-source Apollo platform, which counts BMW as a member.

Car sales in China shrunk 14%t in the first half of 2019, compared with a year earlier, putting the world’s largest new-car market on track for a second consecutive year of declining sales. Luxury carmakers have, however, largely weathered the downturn.