Polestar Automotive Holding UK Plc is setting up a $200 million software joint venture with tech company Xingji Meizu, also owned by parent Zhejiang Geely Holding Group Co., to keep up on digital features in China.

The new unit will develop Xingji Meizu’s technology platform, Flyme Auto, into an operating system to offer in-car apps, streaming services and intelligent vehicle software. The services will extend to augmented reality devices, the company said in a statement.

The Flyme Auto operating system is a result of Geely’s efforts to develop more car technology in-house. Some automakers like Volkswagen AG are struggling to extend their engineering knowhow to integrating software for a range of services, with customers facing blank screens and glitches. Drivers in China have taken to options such as in-car karaoke and friendly robots for entertainment that Western brands are so far unable to match.

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“It’s definitely a question of software competence, a question of being able to cater to this digital world that is happening there,” Polestar Chief Executive Officer Thomas Ingenlath said in an interview. “You see companies that have been for decades successful in China, suddenly having big issues with selling EVs in that market.”

Polestar will own 49% of the joint venture. Polestar expects to transfer around 150 commercial staff in China to the new company. The new venture will only cater to the Chinese market and will have no impact on the company’s collaboration with Google.

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