Mercedes-Benz has struck a partnership deal with Wayve, the London-based autonomous driving start-up, as the German premium brand seeks to close an AI technology gap with Tesla and software-focused Chinese rivals. The deal — Wayve’s third — is the latest effort by a traditional carmaker to keep pace with the industry’s costly transition towards more intelligent cars while seeking to retain control over key aspects of the software and vehicle design. Wayve has already inked partnerships with Nissan and Stellantis, and the three automakers backed Wayve when it raised $1.2bn in February.

The start-up also counts Nvidia, Qualcomm and Microsoft among its investors. Mercedes-Benz said it planned to integrate Wayve’s autonomous driving system into at least one model that it will deploy in the next two years, offering “advanced urban point-to-point driving assistance”. Wayve’s current system delivers “Level 2” advanced driver assistance software — industry terminology for technology that requires active monitoring by a human driver behind the wheel, similar to Tesla’s Autopilot.