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 March 31, 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 April 17, 2020, there were 111,554,896 shares of common stock of Veoneer, Inc., par value $1.00 per share, outstanding.

Exhibit index located on page 37

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 impact of the coronavirus (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; our ability to complete the transactions contemplated by the non-binding agreements with Volvo Cars and to divest Veoneer Brake Systems("VBS"), which are subject to the negotiation and documentation of definitive agreements and closing; the cyclical nature of automotive sales and production; 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	4
Item 1 – Condensed Consolidated Financial Statements	4
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	34
Item 4 - Controls and Procedures	34
Part II – Other Information	35
Item 1 - Legal Proceedings	35
Item 1A - Risk Factors	35
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3 – Defaults Upon Senior Securities	36
Item 4 – Mine Safety Disclosures	36
Item 5 – Other Information	36
Item 6 - Exhibits	37
Signature	38

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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 March 31
		2020		2019
Net sales	Note 3	$	362	$	494
Cost of sales		(309)		(409)
Gross profit		53		85
Selling, general and administrative expenses		(44)		(52)
Research, development and engineering expenses, net		(131)		(156)
Amortization of intangibles		(1)		(5)
Other income, net		1		—
Operating loss		(122)		(128)
Gain (loss) on divestiture and assets held for sales, net	Note 4	(67)		—
Loss from equity method investment	Note 9	(18)		(17)
Interest income		4		3
Interest expense		(5)		—
Loss before income taxes	Note 15	(208)		(142)
Income tax expense	Note 7	(23)		(6)
Net loss		(231)		(148)
Less: Net income (loss) attributable to non-controlling interest		2		(11)
Net loss attributable to controlling interest		$	(233)	$	(137)
Net loss per share - basic	Note 14	$	(2.09)	$	(1.57)
Net loss per share - diluted		$	(2.09)	$	(1.57)
Weighted average number of shares outstanding,    (in millions)		111.47		87.24
Weighted average number of shares outstanding,    assuming dilution (in millions)		111.47		87.24

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 March 31
	2020		2019
Net loss	$	(231)	$	(148)
Other comprehensive loss, before tax:
Change in cumulative translation adjustment	(22)		(11)
Pension liability	1		—
Other comprehensive loss, before tax	(21)		(11)
Expense for taxes	—		—
Other comprehensive loss, net of tax	(21)		(11)
Comprehensive loss	(252)		(159)
Less: Comprehensive income (loss) attributable to non-controlling interest	2		(11)
Comprehensive loss attributable to controlling interest	$	(254)	$	(148)

See notes to the unaudited condensed consolidated financial statements.

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Veoneer, Inc.

Condensed Consolidated Balance Sheets

(U.S. DOLLARS IN MILLIONS)

		(unaudited)
		March 31, 2020		December 31, 2019
Assets
Cash and cash equivalents		$	970	$	859
Receivables, net		216		253
Inventories, net	Note 8	135		144
Related party receivables	Note 16	6		11
Prepaid expenses and other contract assets		36		47
Other current assets		18		18
Assets held for sale	Note 4	26		317
Total current assets		1,407		1,649
Property, plant and equipment, net		395		473
Operating lease right-of-use assets		96		100
Equity method investment	Note 9	79		87
Goodwill		289		290
Intangible assets, net		12		17
Deferred tax assets		7		7
Investments		10		9
Other non-current assets		26		111
Total assets		$	2,321	$	2,743
Liabilities and equity
Accounts payable		$	233	$	233
Related party payables	Note 16	2		3
Accrued expenses	Note 10	198		192
Income tax payable		26		7
Other current liabilities		41		38
Liabilities held for sale	Note 4	7		118
Total current liabilities		507		591
4.00% Convertible Senior Notes due 2024	Note 5	163		160
Pension liability	Note 11	17		17
Deferred tax liabilities		13		13
Operating lease non-current liabilities		78		82
Finance lease non-current liabilities		34		33
Other non-current liabilities		27		29
Total non-current liabilities		332		334
Equity
Common stock  (par value $1.00, $325 million shares authorized, 111 million shares issued and outstanding as of March 31, 2020 and December 31, 2019)		111		111
Additional paid-in capital		2,345		2,343
Accumulated deficit		(914)		(681)
Accumulated other comprehensive loss		(60)		(44)
Total equity		1,482		1,729
Non-controlling interest		—		89
Total equity and non-controlling interest		1,482		1,818
Total liabilities, equity and non-controlling interest		$	2,321	$	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)

	Three months ended March 31, 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	—		—		(233)		—		2		(231)
Foreign currency translation	—		—		—		(19)		—		(19)
Stock based compensation expense	—		2		—		—		—		2
Business divestitures	—		—		—		3		(91)		(88)
Balance at end of period	$	111	$	2,345	$	(914)	$	(60)	$	—	$	1,482

	Three months ended March 31, 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
Net loss	—		—		(137)		—		(11)		(148)
Foreign currency translation	—		—		—		(11)		—		(11)
Stock based compensation expense	—		1		—		—		—		1
Balance at end of period	$	87	$	1,939	$	(318)	$	(30)	$	90	$	1,768

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Veoneer, Inc.

Condensed Consolidated Statements of Cash Flow (Unaudited)

(U.S. DOLLARS IN MILLIONS)

	Three Months Ended March 31
	2020		2019
Operating activities
Net loss	$	(231)	$	(148)
Depreciation and amortization	23		29
Gain on divestitures	(77)		—
Assets impairment charge	144		—
Undistributed loss from equity method investments	18		17
Stock-based compensation	2		—
Deferred income taxes	—		3
Other, net	(4)		7
Change in operating assets and liabilities:
Receivables, gross	36		7
Accrued expenses	17		22
Related party receivables and payables, net	4		7
Accounts payable	9		(33)
Prepaid expenses	21		(6)
Inventories, gross	7		(3)
Income taxes	20		(2)
Other current assets and liabilities, net	2		10
Net cash used in operating activities	(9)		(90)
Investing activities
Proceeds from divestitures	176		—
Capital expenditures	(27)		(59)
Equity method investment	(16)		—
Short-term investments mature into cash	—		5
Net cash provided by (used in) investing activities	133		(54)
Financing activities
Dividend paid to non-controlling interest	$	(5)	$	—
(Payments for) proceeds from long-term debt	(1)		1
Payments for short-term debt	(1)		—
Net increase in related party short-term debt	—		1
Net cash provided by (used in) financing activities	(7)		2
Effect of exchange rate changes on cash and cash equivalents	(6)		(7)
Increase (decrease) in cash and cash equivalents	111		(149)
Cash and cash equivalents at beginning of period	859		864
Cash and cash equivalents at end of period	$	970	$	715

See notes to the unaudited condensed consolidated financial statements.

8

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 is expected to be sold in second quarter. We do not expect the remaining Brake Systems business to be 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 our 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., 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 under the definitive agreements, and the VNBS joint venture was terminated. See Note 4 "Divestiture and held for sale" for additional information.

Assets held for sale Veoneer Brake Systems ("VBS")

Following the strategic review initially launched in April 2019, in March 2020, Veoneer decided to focus on its core Electronics business and exit the brake control business. See Note 4 "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.

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 customers 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 months ended March 31, 2020 and 2019, the Company’s four largest customers accounted for 61% and 58% of net sales, respectively. Additionally, as of March 31, 2020 and December 31, 2019, these four largest customers accounted for 42% 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.

Goodwill impairment indicator

During the first quarter of 2020 the Company determined that the economic uncertainty caused by the novel strain of coronavirus (“COVID-19”) pandemic was a trigger for an impairment review of goodwill. As a result of management’s review, we determined that no impairment charge should be recorded in the quarter. As of March 31, 2020, the goodwill asset balance was $289 million.

New Accounting Standards

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 does not have a material impact on the Company's condensed consolidated financial statements.

10

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 is required to adopt ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 does 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 is required to adopt ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 does 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 Statements of Operations or Statements of Cash Flows.

Accounting Standards Issued But Not Yet Adopted

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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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 March 31, 2020						Three Months Ended March 31, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	58	$	24	$	82	$	89	$	72	$	161
Americas	117		13		130		154		15		169
Europe	150		—		150		164		—		164
Total net sales	$	325	$	37	$	362	$	407	$	87	$	494

Net Sales by Products

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	162	$	—	$	162	$	215	$	—	$	215
Active Safety products	163		—		163		192		—		192
Brake Systems	—		37		37		—		87		87
Total net sales	$	325	$	37	$	362	$	407	$	87	$	494

Note 4. Divestiture and held for sale

VBS

In 2019, the Company started exploring strategic options for its non-core business in the Brake System segment. In the first quarter of 2020, management committed and approved a plan to sell VBS. The Company expects to sell the business within one year from management's approval of the plan. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 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 Condensed Consolidated Statements of Operations during the period end March 31, 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 Condensed Consolidated Balance Sheet as of March 31, 2020 and depreciation of long-lived assets ceased on March 31, 2020. The planned divestiture did not meet the criteria for presentation as a discontinued operation.

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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	March 31, 2020
Prepaid exp/accrued income	$	1
Property, plant and equipment, net	79
Current deferred charges	90
Impairment of carrying value	(144)
Total assets held for sale	$	26
Liabilities held for sale
Accounts payable	6
Accrued exp/prepaid income	1
Total liabilities held for sale	$	7

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 closing fees was $175 million. The Company recognized a gain on the divestiture of $77 million, net of closing cost.

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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Note 5. Debt

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

	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Short-Term Debt:
Short-term borrowings	$	3	$	3
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	163		160
Other long-term borrowings	6		8
Total Debt	$	172	$	171

Short-Term Debt:

Short -term debt is included in Other current liabilities in the Consolidated Balance Sheet.

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 deliver 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

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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 Consolidated and 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 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 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)	March 31, 2020		December 31, 2019
Principal amount (face value)	$	207	$	207
Unamortized issuance cost	(4)		(5)
Unamortized debt discount	(40)		(42)
Net Carrying value	$	163	$	160

The Company recognized total interest expense related to the Notes of approximately $4 million for the three months ended March 31, 2020, in the Unaudited Condensed Consolidated Statements of Operations.

The estimated fair value of the Notes was $135 million as of March 31, 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 6 "Fair Value Measurements".

Note 6. 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.

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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 March 31, 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 $100 million as of March 31, 2020 and $291 million as of December 31, 2019. As of March 31, 2020, the asset of the derivatives not designated as hedging instruments was $1 million, and as of December 31, 2019, the derivatives not designated as hedging instruments was a liability of $1 million.

Gains and losses on derivative financial instruments recognized in the Unaudited Condensed Consolidated Statements of Operations, were a gain of $2 million and a gain of less than $1 million for the three months ended March 31, 2020 and 2019, 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 4 "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 March 31, 2020 and December 31, 2019, Veoneer contributed approximately $11 million and $10 million, respectively, to the investment in Autotech Fund I, L.P. For the period ended March 31, 2020 the Company has received distributions of $1 million from the fund.

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The carrying amounts reflected in the Consolidated Balance Sheet in Investments for AutoTech Fund I, L.P approximates its fair values as of December 31, 2019 as this is the most recent information available to the Company at this time.

Note 7. Income Taxes

During the three month periods ended March 31, 2020 and 2019, the Company recorded a tax provision of $23 million and $6 million, respectively. Discrete items, net were a expense of $21 million and $3 million for the three month periods ended March 31, 2020 and 2019, respectively. The discrete item in the three month period ended March 31, 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 United States, Swedish, French, Japanese operations and Chinese operations.

Note 8. 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)	March 31, 2020		December 31, 2019
Raw materials	$	99	$	99
Work in progress	9		8
Finished products	54		62
Inventories	162		169
Inventory valuation reserve	(27)		(25)
Total inventories, net of reserve	$	135	$	144

Note 9. Equity Method Investment

As of March 31, 2020, the Company has one equity method investment, which is Zenuity, a 50% ownership joint venture with Volvo cars.

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 Volvo Cars) 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 months ended March 31, 2020 and 2019 was $18 million and $17 million, respectively. As of March 31, 2020 and December 31, 2019, the Company’s equity investment in Zenuity was $79 million and $87 million, respectively.

Certain unaudited summarized income statement information of Zenuity, for the three months ended March 31, 2020 and 2019, is shown below:

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Net sales	$	1	$	—
Gross profit	—		—
Operating loss	(37)		(34)
Loss before income taxes	(36)		(34)
Net loss	(37)		(34)

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Note 10. Accrued Expenses

	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Operating related accruals	$	58	$	43
Employee related accruals	66		76
Customer pricing accruals	34		39
Product related liabilities1	18		15
Other accruals	22		19
Total Accrued Expenses	$	198	$	192

¹ As of March 30, 2020 and December 31, 2019, $11 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.

Note 11. Retirement Plans

Defined Benefit Pension Plans

The defined benefit pension plans impacting Veoneer's financial results include the following:

Existing Veoneer Plans comprised of plans in Japan, Canada, and France. Transferred Veoneer Plans comprised of plans in Germany, India, Japan and South Korea.

The Company’s net periodic benefit costs for plans for the three months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Service cost	$	1	$	1
Interest cost	1		—
Expected return on plan assets	(1)		(1)
Net periodic benefit cost	$	1	$	—

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 12. 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 first quarter of 2020 under the Company’s long-term incentive (LTI) program, certain employees received restricted stock units (RSUs) without dividend equivalent rights and performance shares (PSs) without dividend equivalent rights. The allocation between RSUs and PSs for the grants made in February and March was 659,231 RSUs and 415,381 PSs at 100% target.

The RSUs were granted during the first quarter 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 $10 million.

The PSs were granted in 2020 and 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

18

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 PSs and Stock Options) compensation cost of $2 million and $1 million for the three months ended March 31, 2020 and 2019, respectively.

Note 13. 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.

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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 Condensed Consolidated Balance Sheets.

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Reserve at beginning of the period	$	15	$	16
Change in reserve	6		(1)
Cash payments	(3)		(2)
Reserve at end of the period	$	18	$	14

For the three months ended March 31, 2020 and 2019, cash paid primarily relate to warranty related issues. The increase in the reserve balance as of March 31, 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 March 31, 2020 and December 31, 2019, $11 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 $15 million and $7 million as of March 31, 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 on the Condensed Consolidated Balance Sheet as of March 31, 2020 and December 31, 2019 related to these guarantees.

Note 14. 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 months ended March 31, 2020 and 2019.

	Three Months Ended March 31
(Dollars in millions, except per share amounts)	2020		2019
Numerator:
Basic and diluted:
Net loss attributable to Veoneer	$	(233)	$	(137)
Denominator:
Basic: Weighted average number of shares outstanding (in millions)	111.47		87.24
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)1	111.47		87.24
Basic loss per share	$	(2.09)	$	(1.57)
Diluted loss per share	$	(2.09)	$	(1.57)

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

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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 antidilutive effect. The Company excluded equity incentive awards of 443,168 and 321,619 shares for the three months ended March 31, 2020 and 2019, respectively.

The Company may settle the conversions 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 5 "Debt". Due to anti-dilutive effects, the Company excluded potential convertible shares due to the Notes of 9,277,305 for the three months ended March 30, 2020 and zero for the three months ended March 31, 2019 from the diluted loss per share calculations.

Note 15. 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 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 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 March 31
(Dollars in millions)	2020		2019
Electronics	$	(94)	$	(90)
Brake Systems	(13)		(19)
Segment operating loss	(107)		(109)
Corporate and other	(15)		(19)
Gain/(loss) on divestiture and Assets held for sale	(67)		—
Interest and other non-operating items, net	(1)		3
Loss from equity method investment	(18)		(17)
Loss before income taxes	$	(208)	$	(142)

Note 16. 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 and $1 million of expense under the TSA for the three months ended March 31, 2020 and 2019, respectively. The Company recognized less than $1 million of income under the TSA for the three months ended March 31, 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 amount to $18 million and $26 million for the three months ended March 31, 2020 and 2019, respectively.

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Related Party Balances

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

Related Party	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Related party receivable	$	6	$	11
Related party payables	2		3
Related party short-term debt	1		1

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.

Note 17. 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.

During the three months ended March 31, 2020 and 2019, the Company has entered into arrangements with financial institutions and sold $13 million and $19 million, respectively, of trade receivables without recourse and $17 million and $20 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 March 31, 2020, the Company has $4 million of trade notes receivables which remain outstanding and will mature within the second 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.

Note 18. Subsequent Events

On April 2, 2020, the Company entered into a non-binding agreement with Volvo Cars to separate Zenuity, a 50% ownership joint venture with Volvo Cars.

Veoneer expects to bring more than 200 of the current Zenuity employees into its systems and software team. The Zenuity development centers in U.S and Germany will become part of Veoneer’s research and development organization. The development centers in Sweden and China will become part of a new stand-alone company wholly owned by Volvo Cars. As part of the intended transaction Veoneer expects to receive a payment of around $15 million, subject to final agreement.

The process to separate the Zenuity joint venture has started and is expected to be completed during the third quarter 2020.

On April 23, 2020, Veoneer announced the entry into a non-binding agreement to divest VBS. The agreed purchase price is $1. The transaction is expected to be completed during the second quarter of 2020.

On April 24, 2020, a wholly-owned subsidiary of the Company entered into a credit agreement with a customer pursuant to which it may borrow an aggregate amount of up to of $17 million in the form of term loans. The proceeds of any such term loans may only be used to fund costs and expenses incurred by the subsidiary for such customer’s projects. Obligations incurred under the credit agreement are guaranteed by the Company.

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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:

•COVID-19 Commentary

•Executive Overview

•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 (AD). 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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COVID-19 Commentary

The situation created by the COVID-19 pandemic has led to an unprecedented economic uncertainty globally. This includes the automotive industry and the LVP for 2020. We have been more conservative with our contingency planning assumptions than the April industry estimate from IHS which assumes a year over year decline of approximately 21%.

As noted in our 2020 Outlook, in response to the pandemic, the Company has additional Market Adjustment Initiatives ("MAI") underway to further mitigate the impact on its cash levels. Veoneer estimates the organic sales impact from the lower customer demand to be approximately $33 million for the first quarter. In the first quarter, despite the severe downturn, Veoneer reduced its cash consumption, and the MAIs contributed approximately $25 million to our first quarter operating results.

The Company intends to continue to extend its market adjustment initiatives to further mitigate the impact of the pandemic on its cash flow and operating results. This includes reducing its annual RD&E, net by an approximately $100 million, as well as other expenses with the intention of reducing its operating loss and conserving cash in 2020 so as to enter 2021 in a stable cash position.

Toward the end of the first quarter 2020, Veoneer saw many of its OEM customers in North America and Europe halt production, while China, S. Korea and the Rest of Asia slowly began to restart production, although still well below pre-crisis levels. As a health priority and in response to the customer production schedules, Veoneer also halted or reduced production in all locations. Currently our OEM customers in North America and Europe are essentially shut-down through April and are planning for a staggered recovery during May, while China is returning to high production levels and production in the Rest of Asia is higher than in Europe and the US, albeit not at China levels.

As our OEM customers return to production in the upcoming weeks and months, we are preparing to return to production as well, taking additional precautions to ensure the safety of our workers in each of our facilities, in accordance with detailed developed protocols. It is uncertain how quickly our customers will ramp-up and production volumes may fluctuate.

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, while some have been postponed by about one quarter and the rest are on track, or actually even slightly pulled ahead of schedule. The exact volumes and consumer take rates are hard to predict at this point in time. Health and safety continue to be our first priority, and we continue to take actions to protect our associates, safeguard our operations and meet our customers' needs while managing through these unprecedented circumstances.

Executive Overview

The spread of the coronavirus is first and foremost a global health crisis and our thoughts go out to everybody around the world suffering from its consequences. For us at Veoneer, health and safety is our first priority and we are taking the necessary actions to protect our people and safeguard our operations.

During the quarter we managed to combine the needed health and safety actions with strong execution in our business. We improved in basically all areas under our control, despite lower business volumes. Our cash balance increased to $970 million, net working capital improved by $89 million, RD&E decreased by $25 million, and capital expenditures were down by $32 million. We have also quickly adapted our ways of working, as exemplified by transitioning 4,100 employees to work from home without technical issues. As a response to the crisis, we have reduced our workforce by more than 200 people and an equivalent to around 1,000 full time employees furloughed. While these decisions are hard to make, we will continue to take the actions needed to steer Veoneer through the crisis.

The good outcome of a very unusual quarter is the result of the sharp focus of all our employees on operations and adapting to the on-going crisis. I would like to take the opportunity to thank the entire Veoneer team for the dedication and strong contributions in this difficult time.

The strategic reviews first communicated in 2019 are now concluded and Veoneer will focus on building a world leader in hardware and software for collaborative driving in the safety domain. Through the split of Zenuity and the integration of more than 200 skilled Zenuity employees to Veoneer’s Systems and Software Group, we will further improve our integration and full system capabilities in this area. The transfer of the brake control business to a well established automotive supplier allows us to fully focus on our core activities knowing that the customer and our people in brakes have a good new home.

2020 continues to be an important launch year for Veoneer and while the timing of certain customer launches will be delayed, our deliveries of new technologies to multiple new vehicle platforms are progressing well.

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The balance we are seeking is, to make Veoneer more efficient and effective, handling the consequences of the crisis while continuing to strengthen the core technology and products of the company, so far we are on track. In 2020 we expect, despite the significantly lower than expected business volumes, to be able to meaningfully reduce our RD&E, net, operating loss and negative cash flow as compared to 2019.

This is a difficult time for the automotive industry, but thanks to the long-term efforts of the entire team, we are today a stronger, more focused company.

2020 Outlook

Due to the market uncertainty that has been created by the COVID-19 pandemic, Veoneer is currently withdrawing its 2020 sales indication of mid-single digits organic sales growth as compared to 2019. We currently expect some launch delays during 2020, however the Company expects to out-perform the global LVP in 2020, assuming no major additional launch delays.

Veoneer continues to implement additional MAIs with the goal to off-set the negative effects from lower sales and impact on cash flow. As a result of these actions, Veoneer expects cash flow before financing activities¹ to significantly improve in 2020 as compared to 2019, and the operating loss is expected to improve in 2020 as compared to 2019, both on a comparable basis and excluding any one-time effects related to the outcome of our strategic reviews of Zenuity and Brake Control business. The Company also expects RD&E, net in 2020 to improve by approximately $100 million as compared to 2019, on a comparable basis and capital expenditures to be less than $150 million.

Lastly, due to the uncertain and changing market environment, as a result of the COVID-19 pandemic, it is too early for Veoneer to provide any updates regarding its 2022 Sales targets, and 2020 order intake or order book, which were previously communicated during the first quarter of 2020.

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 quarter of 2020, could impact 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. 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 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 EU General Safety Regulation 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 Advanced Driver Assistance Systems (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 EU General Safety Regulations (GSR) generally will influence other market regulators as they evaluate their respective vehicle test rating programs and safety legislation.

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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 (CNCAP) 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 Highly Automated Driving (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 (USG) approach to AV technologies, and to detail the authorities, research, and investments being made across the USG so that the United States can continue to lead AV technology research, development, and integration.

In 2018 the UN Economic Commission for Europe (ECE) created a new Working Party to deal with regulations for Automated/Autonomous and Connected Vehicles (GRVA). 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 April 16, 2020	Light Vehicle Production by Region - 2020
	China		Japan		Rest of Asia		Americas		Europe		Other		Total
First Quarter 2020	2.9		2.2		2.7		4.1		4.5		0.4		16.7
Change vs. 2019	(49)	%	(8)	%	(18)	%	(12)	%	(20)	%	(22)	%	(24)	%

For the first quarter of 2020, the global light vehicle production (according to IHS) declined by approximately 24% mainly due to the global outbreak of the COVID-19 Pandemic. At the beginning of the quarter the global LVP was expected to decline by approximately 6%. Every major vehicle producing geography was impacted by the Pandemic including: China (49)%, Europe (20)%, South Korea (15)%, North America (11)% and Japan (8)%.

Millions (except where specified) IHS as of April 16, 2020	Light Vehicle Production by Region - 2020
	China		Japan		Rest of Asia		Americas		Europe		Other		Total
Full Year 2020	19.6		7.4		9.6		13.5		15.9		1.5		67.5
Change vs. 2019	(16)	%	(19)	%	(22)	%	(26)	%	(24)	%	(23)	%	(21)	%

For the full year of 2020, the global light vehicle production (according to IHS) is expected to decline by approximately 21%, due the anticipated full year effects of the COVID-19 Pandemic. At the beginning of the quarter the global LVP was expected to decline by approximately 1%. Every major vehicle producing geography is expected to be impacted by the Pandemic including: China (16)%, Europe (24)%, South Korea (16)%, North America (26)% and Japan (19)%.

This expected decline of approximately 18 million light vehicles in 2020 from 2019 is the highest light vehicle decline in a single year on record, and is the third consecutive annual decline in light vehicle production from 2017 when a record 92 million light vehicles were produced.

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Results of Operations

Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019

The following tables show Veoneer’s overall performance and by segment for the three months ended March 31, 2020 and 2019 along with components of change compared to the prior year.

Net Sales by Product

The following tables show Veoneer’s consolidated net sales by product for the three months ended March 31, 2020 and 2019 along with components of change compared to the prior year.

Net Sales	Three Months Ended March 31								Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020		2019		US GAAP Reported Change				Currency				Divestiture				Organic1
	$		$		$		%		$		%		$		%		$		%
Restraint Control Systems	162		215		(53)		(25)		(5)		(2)		—		—		(48)		(23)
Active Safety	163		192		(29)		(15)		(5)		(2)		—		—		(24)		(13)
Brake Systems	37		87		(50)		(57)		—		—		(46)		(53)		(4)		(4)
Total	$	362	$	494	$	(132)	(27)	%	$	(10)	(2)	%	$	(46)	(10)	%	$	(76)	(15)	%

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

Net Sales - Veoneer’s net sales for the quarter declined by 27% to $362 million as compared to 2019. Organic sales¹ declined by 15%, as compared to the drop in LVP of 24% for the quarter. The remainder of the decline was from currency translation effects of 2% and VNBS-Asia divestiture of 10%. During the quarter, our organic sales developed essentially in-line with our expectations, until mid-March when the COVID19 pandemic affected our sales.

Sequentially, from the fourth quarter in 2019, net sales decreased $94 million or 21%, mostly due to the VNBS-Asia divestiture effect $58 million. In addition RCS declined $35 million due the LVP decline. This was partially offset by an increase in Active Safety of $17 million.

Restraint Control Systems - Net sales for the quarter of $162 million decreased by 25% as compared to 2019. The organic sales decline of 23% was primarily due to the LVP drop driving lower volumes in China, South Korea, and North America.

Active Safety - Net sales for the quarter of $163 million decreased by 15% as compared to 2019. This decline was primarily driven by the organic sales decline of 13%. This out-performance versus the LVP was driven 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 volume effect from the product mix shift from our 24Ghz to 77Ghz radar technology and the phase-out of certain mono-vision programs with BMW, and lower underlying LVP.

Brake Systems - Net sales for the quarter of $37 million decreased by 57% as compared to 2019. The organic sales decline of 4% was much better than the LVP decline. In addition, the VNBS-Asia divestiture accounted for a 53% decline or $46 million.

Electronics Segment	Three Months Ended March 31						Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020		2019		US GAAP Reported Change		Currency		Organic1
	$	%	$	%	$	%	$	%	$	%
Net Sales	325		407		(82)	(20)	(10)	(2)	(72)	(18)
Operating Loss / Margin	(94)	(29.0)	(90)	(22.1)	(4)
Segment EBITDA1 / Margin	(72)	(22.2)	(71)	(17.3)	(1)
Associates	7,178		7,716		(538)

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

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Net Sales - The net sales for the Electronics segment decreased by $82 million to $325 million for the quarter as compared to 2019. This sales decline was mainly due to the organic sales¹ decline in Active Safety and Restraint Control Systems of $24 million and $48 million, respectively, along with the currency translation effects of $10 million.

Operating Loss - The operating loss for the Electronics segment of $94 million for the quarter increased by $4 million as compared to 2019, mainly due to the reduction in RD&E, net which was more than offset by the negative volume and product mix effects causing the lower organic sales in Active Safety and Restraint Control Systems.

EBITDA¹ - The segment EBITDA^l loss for Electronics increased by $1 million to negative $72 million for the quarter as compared to 2019. This change is mainly due to the increase in operating loss for the segment while depreciation and amortization increased by $3 million.

Associates - Associates in the Electronics segment decreased by 538 net to 7,178 as compared to 2019, mainly due to a reduction in engineering of approximately 400 and direct labor of approximately 250. Temporary associates decreased by ~240 reflecting the volume decline as compared to 2019.

Deliveries - The quantities delivered during the quarter were 3.7 million units for Restraint Controls Systems and 1.9 million units for Active Safety.

Brake Systems Segment	Three Months Ended March 31						Components of Change vs. Prior Year
(Dollars in millions, except where specified)	2020		2019		US GAAP Reported Change		Currency		Divestiture			Organic1
	$	%	$	%	$	%	$	%	$	%		$	%
Net Sales	37		87		(50)	(57)	—	0	(46)	(53)	%	(4)	(4)
Operating Loss / Margin	(13)	(34.5)	(19)	(21.8)	6
Segment EBITDA1 / Margin	(12)	(31.8)	(10)	(11.6)	(2)
Associates	351		1,430		(1,079)

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

Net Sales - The net sales for the Brake Systems segment decreased by $50 million to $37 million for the quarter as compared to 2019. The sales decrease was mainly attributable to the VNBS-Asia divestiture of $46 million.

Operating Loss - The operating loss for the Brake Systems segment for the quarter decreased to $13 million from $19 million as compared to 2019. This change was mainly due to the divestiture of VNBS-Asia where the loss in 2019 was $7 million for the quarter.

EBITDA¹ - The segment EBITDA loss for Brake Systems increased by $2 million to negative $12 million for the quarter as compared to 2019. This change was mainly due to the net effect of the VNBS-Asia divestiture.

Associates - The number of associates in the Brake Systems segment decreased by 1,079 to 351 net as compared to 2019, mainly due to the divestiture of VNBS-Asia.

Deliveries - The quantities delivered during the quarter were 0.2 million units for the Brake Systems.

Corporate and Other	Three Months Ended March 31
(Dollars in millions, except where specified)	2020		2019		US GAAP Reported Change
	$	%	$	%	$	%
Net Sales	—		—		—
Operating Loss / Margin	(15)	—	(19)	—	4
EBITDA1 / Margin	(15)	—	(18)	—	3
Associates	42		46		(4)

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

Operating Loss and EBITDA¹ - The operating loss and EBITDA for Corporate and other for the quarter decreased to $15 million from an operating loss of $19 million and EBITDA $(18) million as compared to 2019. This decrease was mainly due to process improvements and lower consultancy and IT support costs.

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Associates - The number of associates decreased by 4 to 42 for the quarter as compared to 2019 due to a reduction in temporary associates related to process improvements of being a standalone company.

The Veoneer associates and financial figures for the quarter are comparable to 2019 as the second quarter in 2018 was the last quarter of carve-out reporting.

Veoneer Performance

Income Statement	Three Months Ended March 31
(Dollars in millions, except per share data)	2020				2019
	$		%		$		%		Change
Net sales	$	362			$	494			$	(132)
Cost of sales	(309)		(85.4)	%	(409)		(82.8)	%	100
Gross profit	$	53	14.6	%	$	85	17.2	%	$	(32)
Selling, general & administrative expenses	(44)		(12.2)	%	(52)		(10.5)	%	8
Research, development & engineering expenses, net	(131)		(36.2)	%	(156)		(31.6)	%	25
Amortization of intangibles	(1)		(0.3)	%	(5)		(1.0)	%	4
Other income / (expense)	1		0.3	%	—		0.0	%	1
Operating loss	$	(122)	(33.7)	%	$	(128)	(25.9)	%	$	6
Gain (loss) on divestiture and assets held for sales, net	(67)		(18.5)	%	—		0.0	%	(67)
Loss from equity method investments	(18)		(5.0)	%	(17)		(3.4)	%	(1)
Interest income	4		1.1	%	3		0.6	%	1
Interest expense	(5)		(1.4)	%	—		0.0	%	(5)
Loss before income taxes	$	(208)	(57.5)	%	$	(142)	(28.7)	%	$	(66)
Income tax expense	(23)		(6.4)	%	(6)		(1.2)	%	(17)
Net loss1	$	(231)	(63.8)	%	$	(148)	(30.0)	%	$	(83)
Less: Net Income (loss) attributable to non-controlling interest	2		0.6	%	(11)		(2.2)	%	13
Net loss attributable to controlling interest	$	(233)	(64.4)	%	$	(137)	(27.7)	%	$	(96)
Net loss per share – basic2	$	(2.09)			$	(1.57)			$	(0.52)
Weighted average number of shares outstanding 2	111.47				87.24				24.22

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 - The gross profit for the quarter of $53 million was $32 million lower as compared to 2019, where the negative LVP, volume and product mix effects that caused the lower organic sales were the main contributors. Net currency effects on the gross profit were negligible, while the impact from the VNBS-Asia divestiture was $(6) million.

Operating Loss - The operating loss for the quarter of $122 million decreased by $6 million as compared to 2019, despite the decline in organic sales. The benefit of the VNBS-Asia divestiture was $8 million.

The RD&E, net of $131 million decreased $25 million as compared to 2019, due to lower gross costs and higher engineering reimbursement. The benefit of the VNBS-Asia divestiture was $8 million.The SG&A expense of $44 million for the quarter decreased by $8 million as compared to 2019, primarily due to lower consultancy and IT costs, and includes a $3 million benefit related to the VNBS-Asia divestiture.Other income and amortization of intangibles combined were $5 million lower for the quarter as compared to 2019 mainly due to lower amortization of intangibles including $2 million related to VNBS-Asia divestiture. Net currency effects on the operating loss were $4 million favorable for the quarter as compared to 2019.

Net Loss - The net loss for the quarter of $231 million increased by $83 million as compared to 2019, primarily due to the combined $67 million net loss, due to the divestiture of VNBS-Asia $77 million gain, and the impairment of VBS-US assets held for sale of $(144) million. The equity method investment loss increased $1 million as compared to 2019.

The interest expense, net for the quarter was $4 million lower as compared to 2019, due to interest expense related to the convertible debt of $4 million.

Income tax expense of $23 million for the quarter was $17 million higher as compared to 2019. This is mainly due to the $21 million of discrete tax expense related to the VNBS-Asia divestiture.The non-controlling interest expense of $2 million in the

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VNBS JV for the quarter was $13 million unfavorable as compared to 2019. This is due to VBS-US being excluded from non-controlling interest and the VNBS-Asia divestiture in February 2020.

Loss per Share - The loss per share of $2.09 increased for the quarter as compared to a $(1.57) in 2019. This decline was mainly due to the combined net loss of $0.60 per share from the VNBS-Asia divestiture gain, and VBS-US write-down. The share count increase from the common stock issuance in 2019 reduced the loss by $0.52 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. The Company has historically made several acquisitions and divestitures, although none that impacted the reporting periods in question. Organic sales and organic sales growth represent the increase or decrease in the overall U.S. dollar net sales on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates on the Company’s performance. The tables in this report present the reconciliation of 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.

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

Net Loss to EBITDA	Three Months Ended March 31				Last 12 Months		Full Year 2019
Dollars in millions	2020		2019
Net Loss	$	(231)	$	(148)	$	(605)	$	(522)
Net (Gain) loss on divestiture and assets held for sale	67		—		67		—
Depreciation and amortization	23		29		110		115
Loss from equity method investment	18		17		71		70
Interest and other non-operating items, net	1		(3)		(6)		(9)
Income tax expense (benefit)	23		6		18		1
EBITDA	$	(99)	$	(99)	$	(345)	$	(345)

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Segment EBITDA to EBITDA	Three Months Ended March 31				Last 12 Months		Full Year 2019
Dollars in millions	2020		2019
Electronics	$	(72)	$	(71)	$	(243)	$	(242)
Brake Systems	(12)		(10)		(34)		(32)
Segment EBITDA	$	(84)	$	(81)	$	(277)	$	(274)
Corporate and other	(15)		(18)		(68)		(71)
EBITDA	$	(99)	$	(99)	$	(345)	$	(345)

Working Capital to Net Working Capital	March 31, 2020		March 31, 2019		December 31, 2019		December 31, 2018
Dollars in millions
Total current assets	$	1,407	$	1,352	$	1,649	$	1,543
less Total current liabilities	507		593		591		636
Working Capital	$	900	$	759	$	1,058	$	907
less Cash and cash equivalents	(970)		(715)		(859)		(864)
less Short-term debt	3		—		3		—
less Net of Assets and Liabilities held for sale	(19)		—		(199)		—
Net Working Capital	$	(86)	$	44	$	3	$	42

Cash Flow before Financing Activities	Three Months Ended March 31				Last 12 Months		Full Year 2019
Dollars in millions	2020		2019
Net cash used in Operating Activities	$	(9)	$	(90)	$	(244)	$	(325)
Plus Net cash provided by (used in) Investing Activities	133		(54)		(78)		(265)
Cash flow before Financing Activities	$	124	$	(144)	$	(322)	$	(590)

Liquidity and Capital Resources

Liquidity

As of March 31, 2020, the Company had cash and cash equivalents of $970 million.

The Company's primary source of liquidity is the existing cash balance of $970 million which will primarily be used for ongoing working capital requirements, capital expenditures and investments in Zenuity. The Company believes that its existing cash resources will be sufficient to support its current operations for at least the next twelve months.

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 March 31, 2020, Veoneer contributed a total of $11 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 fund.

Zenuity - Veoneer and Volvo Cars have agreed and signed a letter of intent to separate the Zenuity JV, allowing each company to focus on their strategic priorities. The final agreement may influence the level of funding and participation of Veoneer in the Zenuity JV, as well as future sharing of intellectual property and IP licenses. The Company made a funding contribution of $16 million during the first quarter of 2020.

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.

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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, 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.

Cash Flows

Selected Cash flow items	Three Months Ended March 31
(Dollars in millions, except where specified)	2020		2019
Net working capital 1	$	(86)	$	44
Net cash used in operating activities	$	(9)	$	(90)
Capital expenditures	$	(27)	$	(59)
Equity method investments	$	(16)	$	—
Net cash provided by (used in) investing activities	$	133	$	(54)
Cash flow before financing activities 1	$	124	$	(144)
Net cash provided by (used in) financing activities	$	(7)	$	2

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

Net cash used in operating activities - Net cash used in operating activities of $9 million during the quarter was $81 million favorable as compared to 2019. The improvement was driven by net working capital1 of $89 million, partially due to the timing effects from Q4'19.

Days receivables outstanding, outstanding receivables relative to average daily sales was 49 days for March 31, 2020, as compared to 67 days at March 31, 2019. This improvement is mainly due to lower customer past due receivables. Days inventory outstanding, outstanding inventory relative to average daily sales, increased to 34 days as of March 31, 2020, as compared to 31 days at March 31, 2019. This ratio increased only slightly despite the year-over-year sales decline and drop off of customer demand during the second half of March 2020 in certain markets due to the COVID-19 Pandemic..

Net Working Capital¹ - The positive change in net working capital of $89 million for the quarter was partially due to the $30 million reversal of timing effects at year-end, further improvements in receivables, net and proactive inventory management related to the COVID-19.

Net cash proceeds from investing activities - Net cash proceeds from investing activities of $133 million during the quarter was $187 million higher as compared to 2019. This was due to lower capital expenditures of $32 million and the VNBS-Asia divestiture of $176 million.

Cash flow before financing activities¹ - The cash flow before financing activities of $124 million for the quarter was $268 million higher as compared to 2019 mainly due to improved net working capital, lower capital expenditures and the VNBS-Asia divestiture.

Number of Associates

		March 31, 2020	December 31, 2019	September 30, 2019	June 30, 2019	March 31, 2019
TOTAL		7,571	8,874	9,127	9,235	9,191
Whereof:	Direct Manufacturing	1,326	2,002	2,116	2,153	2,110
	RD&E	4,590	4,907	5,086	5,154	5,192
	Temporary	1,166	1,396	1,630	1,659	1,563

The net number of associates decreased by 1,303 to 7,571 during the quarter as compared to 8,874 in the previous quarter. The VNBS-Asia divestiture effect of the decline was 1,074.

The underlying Veoneer decrease of 229 associates was mainly due to reductions in direct manufacturing and RD&E of 154 and 97, respectively. Temporary associates also declined during the quarter by 51 from the previous quarter. These reductions are primarily a result of our MAI actions to mitigate the impact of the COVID-19 pandemic on our business and engineering efficiency improvements.

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The net number of associates decreased by 1,620 to 7,571 during the quarter from 9,191 as compared to the first quarter in 2019. The VNBS-Asia divestiture effect of the decline was 1,093.

The underlying Veoneer decrease of 527 associates was mainly due to reductions in direct manufacturing and RD&E of 262 and 377 respectively. Temporary associates also declined during the quarter by 233 as compared to the same quarter in 2019. These reductions are primarily a result of our MAIs to mitigate the COVID-19 impact on our business and engineering efficiency improvements.

Significant Legal Matters

For discussion of legal matters we are involved in, see Note 13 "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

Except as set forth below, 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.

On May 28, 2019, the Company issued, in a registered public offering in the U.S., 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. The Notes will mature on June 1, 2024, unless repurchased, redeemed or converted in accordance with their terms prior to such date.

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 March 31, 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 March 31, 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 13 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 COVID-19, including widespread illness, pandemic fears and market downturns, restrictions on business and individual activities and changes in consumer behavior, has created significant volatility in the global economy and led to a steep drop in economic activity. This 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 and some vehicle manufacturers have completely 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, delays in the production and distribution of our products and the loss of sales to our customers.

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 a significant portion of our workforce, our suppliers’ workforce, or our customers’ workforce are affected by COVID-19 either directly or due to government closures or otherwise, associated work stoppages or facility closures would halt or 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 normal economic conditions, operations, and the demand for our products can resume and whether the pandemic leads to recessionary conditions in any of our key markets. 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 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.

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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*+	Form of Employee restricted stock unit grant agreement to be used under the Veoneer, Inc. 2018 Stock Incentive Plan effective February 18, 2020.
10.2*+	Form of Employee performance shares grant agreement to be used under the Veoneer, Inc. 2018 Stock Incentive Plan effective February 18, 2020.
10.3*+	Form of Employee restricted stock unit grant agreement to be used for retention awards granted in2020 under the Veoneer, Inc. 2018 Stock Incentive Plan effective February 18, 2020.
10.4*+	Employment Agreement, dated September 7, 2019, by and between Veoneer, Inc. and Mikael Landberg.
10.5*+	Revised Employment Agreement, dated March 31, 2020, by and between Veoneer, Inc. and Nishant Batra.
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 March 31, 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: April 24, 2020

VEONEER, INC.

(Registrant)

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

38

EX-10.1

Exhibit 10.1

GRANT AGREEMENT

Applicable to Restricted Stock Units promised under the Veoneer, Inc. 2018 Stock Incentive Plan

Your above-described grant of restricted stock units (“RSUs”) is subject to the following provisions in addition to those set forth in the attached Notice of Grant (the “Grant Notice”) and the Veoneer, Inc. 2018 Stock Incentive Plan (“the Plan”):

1.Defined Terms:

Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.  In addition, for purposes of this Grant Agreement:

a.“Cause” will have the meaning assigned such term in the employment, severance or similar agreement, if any, between you and Veoneer, Inc. (“the Company”) or one of its subsidiaries; provided, however, that if there is no such employment, severance or similar agreement in which such term is defined, “Cause” shall mean any of the following acts by you, as determined by the Company or one of its subsidiaries, as applicable, in its sole discretion: gross neglect of duty; prolonged absence from duty, as reasonably determined by the Company, without the consent of the Company or one of its subsidiaries, as applicable; your material breach of any published Company code of conduct or code of ethics; or your willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Company or one of its subsidiaries.

b.“Disability” means your inability, as reasonably determined by the Company, to perform the essential functions of your regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months.

c.“EMT” means Executive Management.

d.“Good Reason” shall have the meaning, if any, assigned such term in the employment, severance or similar agreement, if any, between you and the Company or one of its subsidiaries, provided, however that if there is no such employment, severance or similar agreement in which such term is defined, then “Good Reason” as used herein shall not be operative and shall not apply to the Restricted Stock Units.

e.“Qualifying Retirement” means your termination of employment with the Company or one of its subsidiaries at or after satisfying the eligibility requirements for retirement under the retirement provisions of local law in your home country, provided such termination of employment has been approved by the Company, if you are not a member of EMT, or by the Compensation Committee, if you are a member of EMT. Notwithstanding the foregoing, your termination of employment will not be considered a Qualifying Retirement if (i) the termination occurs within six (6) months following the Date of Promise, or (ii) you are terminated for Cause by the Company or one of its subsidiaries. 

2.Vesting:

The RSUs have been credited to a bookkeeping account (“Account”) on your behalf as of the grant date specified in the Grant Notice (the “Grant Date”). Your Account will reflect the number of RSUs awarded to you as set forth in the Grant Notice. Each RSU represents an unfunded, unsecured right to receive Common Stock, subject to the terms and conditions stated in the Plan and this Grant Agreement. Your RSUs will vest and become non-forfeitable on the earliest to occur of the following (each, a “Date of Vesting’”):

a.as to all of the RSUs, on the Date of Vesting specified in the Grant Notice, provided that you are then still employed by the Company or one of its subsidiaries;

b.as to all of the RSUs, upon the termination of your employment by reason of death, Disability or a Qualifying Retirement;

c.as to all of the RSUs, upon a Change in Control if (i) the Change in Control occurs while you are employed by the Company or one of its subsidiaries, and (ii) the RSUs are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control; or

d.as to all of the RSUs, upon your termination of employment without Cause or your resignation for Good Reason, in each within twenty-four (24) months following a Change in Control if (i) the Change in Control occurs while you are employed by the Company or one of its subsidiaries and (ii) the RSUs are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control.

If your employment terminates for any reason other than as described in (b) or (d) above, you will forfeit all right, title and interest in and to the unvested RSUs as of the date of such termination, and the unvested RSUs will be reconveyed to the Company without further consideration or any act or action by you.

3.Conversion to Shares of Common Stock; Procedure at Date of Vesting:

a.Unless the RSUs are forfeited prior to the Date of Vesting as provided in Section 2 above, the RSUs will be converted on the Date of Vesting to actual shares of Common Stock. The shares of Common Stock to be issued pursuant to this Grant Agreement shall be issued in the form of book-entry shares of Common Stock in your name as the beneficial owner as of the Date of Vesting.

b.You will, if requested, within the specified time set forth in any such request (not to exceed 30 days), deliver to the Company such written representations and undertakings as may, in the opinion of the Company’s legal counsel, be necessary or desirable to comply with tax and securities laws.

4.Securities Law Restrictions; Insider Trading Policy:

You may not offer, sell or otherwise dispose of any shares of Common Stock in a manner which would violate any applicable laws, including, without limitation, the laws of Sweden, U.S. federal and state securities laws, U.S. federal law, the requirements of any stock exchange or quotation system upon which the Common Stock may then be listed or quoted and any laws of any other country or jurisdiction that may be applicable to you.

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s VS 314 Insider Trading Policy which may be found on the Company’s intranet or is available upon request to the Legal department of the Company.

5.Non-Transferability:

Your RSUs are personal to you and shall not be transferable by you otherwise than by will or the laws of descent and distribution.

6.Conformity with Plan:

Your RSUs are intended to conform in all respects with the Plan, including any future amendments thereto. Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance with the terms of the Plan. All definitions stated in the Plan shall be fully applicable to this Grant Agreement.

7.Employment and Successors:

Nothing herein or in the Grant Notice or in the Plan confers any right or obligation on you to continue in the employment of the Company or any subsidiary or shall affect in any way your right or the right of the Company or any subsidiary, as the case may be, to terminate your employment at any time. This Grant Agreement, the Grant Notice, and the Plan, including any future amendments thereto, shall be binding upon you, your estate, any person succeeding to your rights hereunder and any successor or successors of the Company.  The RSUs do not confer to you or any person succeeding to your rights hereunder any rights of a shareholder of the Company unless and until shares of Common Stock are in fact issued to you or such person in connection with the settlement of the RSUs.

8.No Dividend Equivalent Rights:

You will not be entitled to dividends or dividend equivalent rights with respect to your RSUs.

9.Tax:

You are totally responsible for paying all taxes that you incur in respect of this Grant. The Company has the authority and the right to deduct or withhold, or require you to remit, an amount sufficient to satisfy all applicable taxes required by law to be withheld with respect to any taxable event arising as a result of vesting or settlement of the RSUs. The withholding requirement may be satisfied, in whole or in part, by withholding from the settlement of the RSUs, shares of Common Stock having a fair market value on the date of withholding equal to the minimum amount (and not any greater amount unless such other withholding rate will not cause an adverse accounting consequence or cost) required to be withheld for tax purposes, all in accordance with such procedures as the Company establishes. The obligations of the Company hereunder will be conditional on such payment, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to you.

10.Governing Law:

This Grant Agreement, the Grant Notice, and the Plan shall be construed in accordance with and governed by the laws of the State of Delaware, USA, and, to the extent relevant, the local laws of your home country.

11.Severability:

If any one or more of the provisions contained in this Grant Agreement are invalid, illegal or unenforceable, the other provisions of this Grant Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

12.Recoupment Policy; Agreement to Repayments of Incentive Compensation When Payments Are Required Under Federal Law:

The Company’s policy regarding “Return of Compensation in Restatement Situations” is enclosed herewith.  Such policy also may be found on the Company’s intranet at “Functions, HR.”  In connection with receipt of this Grant Agreement, you acknowledge that you are subject to such policy.  In addition, the RSUs shall be subject to any future compensation recoupment policy that the Company may adopt from time to time, as required by law or otherwise, to the extent applicable.

This provision applies to any policy adopted by the New York Stock Exchange (or any other exchange on which the securities of the Company are listed) pursuant to Section 10D of the Securities Exchange Act of 1934.  Section 10D provides for the recovery of incentive-based compensation that has been erroneously paid because of material errors in financial statements of the Company.  To the extent such policy requires the repayment of incentive-based compensation received by you, whether paid pursuant to this Grant Agreement or any other plan of incentive-based compensation maintained in the past or adopted in the future by the Company, you agree to the repayment of such amounts to the extent required by such policy.

13.Executive Stock Ownership Requirements:

14.In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s policy regarding “Stock Ownership Policy for Executives”, if you are a member of the EMT. 

15.U.S. Taxpayers:

Notwithstanding anything in this Agreement to the contrary, this Section 15 shall become applicable only if your RSUs constitute “deferred compensation” under Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (“Section 409A”).

a. If Section 2(c) becomes operative and you are a U.S. taxpayer for the taxable year in which the Change in Control occurs, then the Change in Control must meet any definition of “change in control event” in Section 409A (without giving effect to any elective provisions that may be available under such definition).

b.If your RSUs become payable upon your termination of employment pursuant to Section 2(b) or Section 2(d) hereof (or otherwise) and you are a U.S. taxpayer for the taxable year in which your termination of employment occurs, then (i) the circumstances giving rise to your termination of employment must meet any definition of “separation from service” in Section 409A (without giving effect to any elective provisions that may be available under such definition) and (ii) if you are a “specified employee” of the Company (as defined

in Section 409A) as of the date of your termination of employment, vested RSUs will be delivered to you on the first day of the seventh month following the date of your termination of employment (or if earlier, upon death); provided, however, that such delay shall be implemented only to the extent necessary in order to avoid the imposition of taxes under Section 409A; and further provided that you have otherwise complied with the requirements for such delivery of vested shares as provided herein.

EX-10.2

Exhibit 10.2

GRANT AGREEMENT

Applicable to Performance Shares promised under the Veoneer, Inc., 2018 Stock Incentive Plan

Your above-described grant of performance shares (the “Performance Shares”) is subject to the following provisions, in addition to those set forth in the attached Notice of Grant (the “Grant Notice”): and the Veoneer, Inc. 2018 Stock Incentive Plan (“the Plan”):

1.Defined Terms:

Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan or Exhibit A to the Grant Agreement.  In addition, for purposes of this Grant Agreement:

a.“Cause” will have the meaning assigned such term in the employment, severance or similar agreement, if any, between you and Veoneer, Inc. (the “Company) or one of its subsidiaries; provided, however, that if there is no such employment, severance or similar agreement in which such term is defined, “Cause” shall mean any of the following acts by you, as determined by the Company or one of its subsidiaries, as applicable, in its sole discretion: gross neglect of duty, as reasonably determined by the Company, prolonged absence from duty without the consent of the Company or one of its subsidiaries, as applicable; your material breach of any published Company code of conduct or code of ethics; or your wilful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Company or one of its subsidiaries.

b.“Date of Vesting” means the earlier of (i) the date of the Compensation Committee’s certification of (A) the Company’s attainment of the Performance Objective and (B) application of the Cap Adjustment Factor, in each case following the last day of the Tranche 3 Performance Period, (ii) the date on which a Change of Control of the Company occurs, if the Performance Shares are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, as described in Section 5(a) below, or (iii) the date of your termination of employment without Cause or resignation for Good Reason within twenty-four (24) months following a Change in Control, if the Performance Shares are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, as described in Section 5(b) below, in each case provided that, except as otherwise stated herein, you are then still employed by the Company or one of its subsidiaries.

c.“Disability” means your inability, as reasonably determined by the Company, to perform the essential functions of your regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months.

d.“EMT” means Executive Management.

e.“Good Reason” will have the meaning, if any, assigned such term in the employment, severance or similar agreement, if any, between you and the Company or one of its subsidiaries, provided, however that if there is no such employment, severance or similar agreement in which such term is defined, then “Good Reason” as used herein shall not be operative and shall not apply to the Performance Shares.

f.“Performance Objective” shall have the meaning set forth in Exhibit A

g.“Performance Period” shall have the meaning set forth in Exhibit A

h.“Qualifying Retirement” means your termination of employment with the Company or one of its subsidiaries at or after satisfying the eligibility requirements for retirement under the retirement provisions of local law in your home country, provided such termination of employment has been approved by the Company, if you are not a member of EMT, or by the Compensation Committee, if you are a member of EMT. Notwithstanding the foregoing, your termination of employment will not be considered a Qualifying Retirement if (i) the termination occurs within six (6) months following the Date of Promise, or (ii) you are terminated for Cause by the Company or one of its subsidiaries. 

i.“Target Award” is the target number of shares of Common Stock subject to this award, as set forth in your Grant Notice.

2.Vesting; Termination of Employment:

a.The Performance Shares have been credited to a bookkeeping account (“Account”) on your behalf as of the grant date specified in the Grant Notice (the “Grant Date”). Your Account will reflect the number of Performance Shares awarded to you as set forth in the Grant Notice. Each Performance Share represents an unfunded, unsecured right to receive Common Stock, subject to the terms and conditions stated in the Plan and this Grant Agreement. The Confirmed Performance Shares in your account will be earned in whole, in part, or not at all, on the Date of Vesting based on the achievement of the Performance Objective and the Cap Adjustment Factor, if applicable, as provided on Exhibit A attached hereto, provided that, except as otherwise stated herein, you are then still employed by the Company or one of its subsidiaries. Any Performance Shares that fail to vest in accordance with the terms of this Grant Agreement will be forfeited and reconveyed to the Company without further consideration or any act or action by you.

b.If your employment with the Company or one of its subsidiaries terminates by reason of your death, Disability or Qualifying Retirement prior to the Date of Vesting, you or, as the case may be, your estate, will retain the Performance Shares and the Performance Shares may be earned, in whole, in part, or not at all, on the Date of Vesting based on the achievement of the Performance Objective and the Cap Adjustment Factor, if applicable, as provided on Exhibit A attached hereto.

c.Except as provided in Section 5(b) hereof, if your employment terminates for any reason other than as described in subsection (b) above, you will forfeit all right, title and interest in and to the unvested Performance Shares as of the date of such termination and the unvested Performance Shares will be reconveyed to the Company without further consideration or any act or action by you.

3.Conversion to Shares of Common Stock; Procedure at Date of Vesting:

Unless the Performance Shares are forfeited prior to the Date of Vesting as provided in Section 2 above, the Performance Shares in your Account that are earned based on the achievement of the Performance Objective and the application of the Cap Adjustment Factor will be converted on the Date of Vesting to actual shares of Common Stock. The shares of Common Stock to be issued pursuant to this Grant Agreement shall be issued in the form of book-entry shares of Common Stock in your name as the beneficial owner as of the Date of Vesting.

4.Securities Law Restrictions; Insider Trading Policy:

You may not offer, sell or otherwise dispose of any shares of Common Stock in a manner which would violate any applicable laws, including, without limitation, the laws of Sweden, U.S. federal and state securities laws, U.S. federal law, the requirements of any stock exchange or quotation system upon which the Common Stock may then be listed or quoted and any laws of any other country or jurisdiction that may be applicable to you.

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s VS 314 Insider Trading Policy.  Such policy may be found on the Company’s intranet or is available upon request to the Legal department of the Company. 

5.Change in Control of the Company:

Notwithstanding any provision herein to the contrary:

a.If (i) a Change in Control occurs during a Performance Period and while you are employed by the Company or one of its subsidiaries, and (ii) the Performance Shares are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, then as of the date of the Change in Control, then your Performance Shares shall be immediately vested (X) at a level based on actual achievement with respect to PSs for which the applicable Performance Period has concluded prior to the Change in Control (and disregarding any application of the Cap Adjustment Factor), and (Y) at the Target Award level with respect to PSs for which the Change in Control occurs during the applicable Performance Period.

b.If (i) a Change in Control occurs during a Performance Period and while you are employed by the Company or one of its subsidiaries, (ii) the Performance Shares are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, and (iii) within twenty-four (24)

months after the effective date of the Change in Control your employment is terminated without Cause or you resign for Good Reason (as defined herein), then as of your date of termination your Performance Shares shall be immediately vested (X) at a level based on actual achievement with respect to PSs for which the applicable Performance Period has concluded prior to your termination of employment (and disregarding any application of the Cap Adjustment Factor), and (Y) at the Target Award level with respect to PSs for which your termination of employment occurs during the applicable Performance Period.

6.Non-Transferability:

Your Performance Shares are personal to you and shall not be transferable by you otherwise than by will or the laws of descent and distribution.

7.Conformity with Plan:

Your Performance Shares are intended to conform in all respects with the Plan, including any future amendments thereto. Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance with the terms of the Plan. All definitions stated in the Plan shall be fully applicable to this Grant Agreement.

8.Employment and Successors:

Nothing herein or in the Grant Notice or in the Plan confers any right or obligation on you to continue in the employment of the Company or any subsidiary or shall affect in any way your right or the right of the Company or any subsidiary, as the case may be, to terminate your employment at any time. This Grant Agreement, the Grant Notice, and the Plan, including any future amendments thereto, shall be binding upon you, your estate, any person succeeding to your rights hereunder and any successor or successors of the Company. The Performance Shares do not confer to you or any person succeeding to your rights hereunder any rights of a shareholder of the Company unless and until shares of Common Stock are in fact issued to you or such person in connection with the settlement of the Performance Shares.

9.No Dividend Equivalent Rights:

You will not be entitled to dividends or dividend equivalent rights with respect to the PSs.

10.Tax:

You are totally responsible for paying all taxes that you incur in respect of this Grant. The Company has the authority and the right to deduct or withhold, or require you to remit, an amount sufficient to satisfy all applicable taxes required by law to be withheld with respect to any taxable event arising as a result of vesting or settlement of the Performance Shares. The withholding requirement may be satisfied, in whole or in part, by withholding from the settlement of the Performance Shares, shares of Common Stock having a fair market value on the date of withholding equal to the minimum amount (and not any greater amount unless such other withholding rate will not cause an adverse accounting consequence or cost) required to be withheld for tax purposes, all in accordance with such procedures as the Company establishes. The obligations of the Company hereunder will be conditional on such payment, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to you.

11.Governing Law:

This Grant Agreement, the Grant Notice, and the Plan shall be construed in accordance with and governed by the laws of the State of Delaware, USA, and, to the extent relevant, the local laws of your home country.

12.Severability:

If any one or more of the provisions contained in this Grant Agreement are invalid, illegal or unenforceable, the other provisions of this Grant Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

13.Recoupment Policy; Agreement to Repayments of Incentive Compensation When Payments Are Required Under Federal Law:

The Company’s policy regarding “Return of Compensation in Restatement Situations” is enclosed herewith.  Such policy also may be found on the Company’s intranet at “Functions, HR.”  In connection with receipt of this Grant Agreement, you acknowledge that you are subject to such policy.  In addition, the Performance Shares shall be subject to any future compensation recoupment policy that the Company may adopt from time to time, as required by law or otherwise, to the extent applicable.

This provision applies to any policy adopted by the New York Stock Exchange (or any other exchange on which the securities of the Company are listed) pursuant to Section 10D of the Securities Exchange Act of 1934.  Section 10D provides for the recovery of incentive-based compensation that has been erroneously paid because of material errors in financial statements of the Company. 

To the extent such policy requires the repayment of incentive-based compensation received by you, whether paid pursuant to this Grant Agreement or any other plan of incentive-based compensation maintained in the past or adopted in the future by the Company, you agree to the repayment of such amounts to the extent required by such policy.

14.Executive Stock Ownership Requirements:

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s policy regarding “Stock Ownership Policy for Executives”, if you are a member of the EMT. 

15.Confidentiality:

By accepting this Grant, you agree (a) to keep this Grant Agreement and all of its provisions, as well as any ancillary materials related to this Grant provided to you, confidential; (b) not to disclose the contents thereof to anyone except your attorney, your immediate family or your financial consultant (“Permitted Persons”), provided such Permitted Persons agree in advance to keep such information confidential and not disclose it to others; and (c) not to use the contents thereof for any purpose other than the interpretation of this Grant.  If you or any Permitted Person violate the terms and conditions of this Section 15, the Performance Shares will be forfeited as of the date of such violation, and the Performance Shares will be reconveyed to the Company without further consideration or any act or action by you.  In addition, violations of this Section 15 may result in potential civil or criminal penalties under the US federal securities laws. Anything herein to the contrary notwithstanding, you shall not be restricted from: (i) disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, you shall provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by you; and (ii) reporting possible violations of federal, state, or local law or regulation to any governmental agency or entity, or from making other disclosures that are protected under the whistleblower provisions of federal, state, or local law or regulation, and you shall not need the prior authorization of the Company to make any such reports or disclosures and shall not be required to notify the Company that you have made such reports or disclosures.

16.Fractional Shares:

No fractional shares of Common Stock, nor the cash value of any fractional shares of Common Stock will be issuable or payable to you pursuant to this Agreement. On the Date of Vesting, the aggregate number of PSs shall be rounded down to the nearest whole share. 

17.U.S. Taxpayers:

Notwithstanding anything in this Agreement to the contrary, this Section 16 shall become applicable only if your Performance Shares constitute “deferred compensation” under Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (“Section 409A”).

a. If Section 5(a) becomes operative and you are a U.S. taxpayer for the taxable year in which the Change in Control occurs, then the Change in Control must meet any definition of “change in control event” in Section 409A (without giving effect to any elective provisions that may be available under such definition).

b.If your Performance Shares become payable upon your termination of employment pursuant to Section 5(b) hereof (or otherwise) and you are a U.S. taxpayer for the taxable year in which your termination of employment occurs, then (i) the circumstances giving rise to your termination of employment must meet any

definition of “separation from service” in Section 409A (without giving effect to any elective provisions that may be available under such definition) and (ii) if you are a “specified employee” of the Company (as defined in Section 409A) as of the date of your termination of employment, vested Performance Shares will be delivered to you on the first day of the seventh month following the date of your termination of employment (or if earlier, upon death); provided, however, that such delay shall be implemented only to the extent necessary in order to avoid the imposition of taxes under Section 409A; and further provided that you have otherwise complied with the requirements for such delivery of vested shares as provided herein.

EX-10.3

Exhibit 10.3

RETENTION GRANT AGREEMENT

Applicable to Restricted Stock Units promised under the Veoneer, Inc. 2018 Stock Incentive Plan

Your above-described grant of restricted stock units (“RSUs”) is subject to the following provisions in addition to those set forth in the attached Notice of Grant (the “Grant Notice”) and the Veoneer, Inc. 2018 Stock Incentive Plan (“the Plan”):

1.Defined Terms:

Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.  In addition, for purposes of this Grant Agreement:

a.“Cause” will have the meaning assigned such term in the employment, severance or similar agreement, if any, between you and Veoneer, Inc. (“the Company”) or one of its subsidiaries; provided, however, that if there is no such employment, severance or similar agreement in which such term is defined, “Cause” shall mean any of the following acts by you, as determined by the Company or one of its subsidiaries, as applicable, in its sole discretion: gross neglect of duty; prolonged absence from duty, as reasonably determined by the Company, without the consent of the Company or one of its subsidiaries, as applicable; your material breach of any published Company code of conduct or code of ethics; or your willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Company or one of its subsidiaries.

b.“Disability” means your inability, as reasonably determined by the Company, to perform the essential functions of your regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months.

c.“EMT” means Executive Management.

d.“Good Reason” shall have the meaning, if any, assigned such term in the employment, severance or similar agreement, if any, between you and the Company or one of its subsidiaries, provided, however that if there is no such employment, severance or similar agreement in which such term is defined, then “Good Reason” as used herein shall not be operative and shall not apply to the RSUs.

2.Vesting:

The RSUs have been credited to a bookkeeping account (“Account”) on your behalf as of the grant date specified in the Grant Notice (the “Grant Date”). Your Account will reflect the number of RSUs awarded to you as set forth in the Grant Notice. Each RSU represents an unfunded, unsecured right to receive Common Stock, subject to the terms and conditions stated in the Plan and this Grant Agreement. Your RSUs will vest and become non-forfeitable on the earliest to occur of the following (each, a “Date of Vesting’”):

a.as to all of the RSUs, on the Date of Vesting specified in the Grant Notice, provided that you are then still employed by the Company or one of its subsidiaries;

b.as to all of the RSUs, upon the termination of your employment by reason of death or Disability;

c.as to all of the RSUs, upon a Change in Control if (i) the Change in Control occurs while you are employed by the Company or one of its subsidiaries, and (ii) the RSUs are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control; or

d.as to all of the RSUs, upon your termination of employment without Cause or your resignation for Good Reason.

If your employment terminates for any reason other than as described in (b) or (d) above, you will forfeit all right, title and interest in and to the unvested RSUs as of the date of such termination, and the unvested RSUs will be reconveyed to the Company without further consideration or any act or action by you.

3.Conversion to Shares of Common Stock; Procedure at Date of Vesting:

a.Unless the RSUs are forfeited prior to the Date of Vesting as provided in Section 2 above, the RSUs will be converted on the Date of Vesting to actual shares of Common Stock. The shares of Common Stock to be issued pursuant to this Grant Agreement shall be issued in the form of book-entry shares of Common Stock in your name as the beneficial owner as of the Date of Vesting.

b.You will, if requested, within the specified time set forth in any such request (not to exceed 30 days), deliver to the Company such written representations and undertakings as may, in the opinion of the Company’s legal counsel, be necessary or desirable to comply with tax and securities laws.

4.Securities Law Restrictions; Insider Trading Policy:

You may not offer, sell or otherwise dispose of any shares of Common Stock in a manner which would violate any applicable laws, including, without limitation, the laws of Sweden, U.S. federal and state securities laws, U.S. federal law, the requirements of any stock exchange or quotation system upon which the Common Stock may then be listed or quoted and any laws of any other country or jurisdiction that may be applicable to you.

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s VS 314 Insider Trading Policy which may be found on the Company’s intranet or is available upon request to the Legal department of the Company.

5.Non-Transferability:

Your RSUs are personal to you and shall not be transferable by you otherwise than by will or the laws of descent and distribution.

6.Conformity with Plan:

Your RSUs are intended to conform in all respects with the Plan, including any future amendments thereto. Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance with the terms of the Plan. All definitions stated in the Plan shall be fully applicable to this Grant Agreement.

7.Employment and Successors:

Nothing herein or in the Grant Notice or in the Plan confers any right or obligation on you to continue in the employment of the Company or any subsidiary or shall affect in any way your right or the right of the Company or any subsidiary, as the case may be, to terminate your employment at any time. This Grant Agreement, the Grant Notice, and the Plan, including any future amendments thereto, shall be binding upon you, your estate, any person succeeding to your rights hereunder and any successor or successors of the Company.  The RSUs do not confer to you or any person succeeding to your rights hereunder any rights of a shareholder of the Company unless and until shares of Common Stock are in fact issued to you or such person in connection with the settlement of the RSUs.

8.No Dividend Equivalent Rights:

You will not be entitled to dividends or dividend equivalent rights with respect to your RSUs.

9.Tax:

You are totally responsible for paying all taxes that you incur in respect of this Grant. The Company has the authority and the right to deduct or withhold, or require you to remit, an amount sufficient to satisfy all applicable taxes required by law to be withheld with respect to any taxable event arising as a result of vesting or settlement of the RSUs. The withholding requirement may be satisfied, in whole or in part, by withholding from the settlement of the RSUs, shares of Common Stock having a fair market value on the date of withholding equal to the minimum amount (and not any greater amount unless such other withholding rate will not cause an adverse accounting consequence or cost) required to be withheld for tax purposes, all in accordance with such procedures as the Company establishes. The obligations of the Company hereunder will be conditional on such payment, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to you.

10.Governing Law:

This Grant Agreement, the Grant Notice, and the Plan shall be construed in accordance with and governed by the laws of the State of Delaware, USA, and, to the extent relevant, the local laws of your home country.

11.Severability:

If any one or more of the provisions contained in this Grant Agreement are invalid, illegal or unenforceable, the other provisions of this Grant Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

12.Recoupment Policy; Agreement to Repayments of Incentive Compensation When Payments Are Required Under Federal Law:

The Company’s policy regarding “Return of Compensation in Restatement Situations” is enclosed herewith.  Such policy also may be found on the Company’s intranet at “Functions, HR.”  In connection with receipt of this Grant Agreement, you acknowledge that you are subject to such policy.  In addition, the RSUs shall be subject to any future compensation recoupment policy that the Company may adopt from time to time, as required by law or otherwise, to the extent applicable.

This provision applies to any policy adopted by the New York Stock Exchange (or any other exchange on which the securities of the Company are listed) pursuant to Section 10D of the Securities Exchange Act of 1934.  Section 10D provides for the recovery of incentive-based compensation that has been erroneously paid because of material errors in financial statements of the Company.  To the extent such policy requires the repayment of incentive-based compensation received by you, whether paid pursuant to this Grant Agreement or any other plan of incentive-based compensation maintained in the past or adopted in the future by the Company, you agree to the repayment of such amounts to the extent required by such policy.

13.Executive Stock Ownership Requirements:

In connection with receipt of this Grant Agreement, you acknowledge that you are subject to the Company’s policy regarding “Stock Ownership Policy for Executives”, if you are a member of the EMT. 

14.U.S. Taxpayers:

Notwithstanding anything in this Agreement to the contrary, this Section 14 shall become applicable only if your RSUs constitute “deferred compensation” under Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (“Section 409A”).

a. If Section 2(c) becomes operative and you are a U.S. taxpayer for the taxable year in which the Change in Control occurs, then the Change in Control must meet any definition of “change in control event” in Section 409A (without giving effect to any elective provisions that may be available under such definition).

b.If your RSUs become payable upon your termination of employment pursuant to Section 2(b) or Section 2(d) hereof (or otherwise) and you are a U.S. taxpayer for the taxable year in which your termination of employment occurs, then (i) the circumstances giving rise to your termination of employment must meet any definition of “separation from service” in Section 409A (without giving effect to any elective provisions that may be available under such definition) and (ii) if you are a “specified employee” of the Company (as defined in Section 409A) as of the date of your termination of employment, vested RSUs will be delivered to you on the first day of the seventh month following the date of your termination of employment (or if earlier, upon death); provided, however, that such delay shall be implemented only to the extent necessary in order to avoid the imposition of taxes under Section 409A; and further provided that you have otherwise complied with the requirements for such delivery of vested shares as provided herein.

EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on September 07, 2019 by and between Veoneer Inc., a Delaware corporation (the “Company”) and Mikael Landberg (the “Executive"), to be effective as of the Effective Date, as defined in Section I. 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, Human Resources 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 March 1, 2020, or such earlier date to which the parties agree.

2.Employment. The Executive is hereby employed on the Effective Date as the Executive Vice President, Human Resources 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 Stockholm, Sweden.

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 I O(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, that the 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 that nothing 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 SEK 2,691,200 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 thirty-five percent (35%) of his Base Salary. Notwithstanding the foregoing, the Executive’s Short-Term Incentive earned during fiscal year 2019, if any, shall be multiplied by a fraction, the numerator of which is the number of days between the Effective Date and the last day of the 2019 fiscal year, and the denominator of which is 365.

(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 awards in any year. For 2020 the Company intends to award the Employee a stock incentive grant having an annual value equal to 200 000 USD, the amount will be prorated based on the number of months the Executive will be employed during 2020. The grant will be made to the Executive on the effective date of the employment.

(d)Sign-on Bonus. The Executive shall be eligible to receive a sign-on bonus, according to the following schedule and pursuant to the terms and conditions set forth below. An amount equal to 500,000 SEK, to be paid in cash in a single lump sum within thirty (30) days following the Effective Date, provided that the Executive remains employed with the Company on such payment date.

(e)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 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.

(f)Medical Benefits. During the Employment Period, the Employee and his spouse or significant other is entitled to the Skandia Medical Care Insurance, or any successor arrangement or plan having similar terms and conditions.

(g)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.

(h)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 30 days.

7.Pension and benefits. The Company shall pay pension premiums for defined contribution insurance with an amount equal to thirty-five percent (35%) of the Employee’s Base Salary. The pension premiums shall include premiums under the ITP plan, giving the Employee certain benefits in the event of his temporary or permanent illness. The insurance shall be taken out at a reputable insurance company, to be approved of in advance by the Company.

8.Business or Trade Information. The Executive shall not, during or after the termination of his employment hereunder, disclose to any person, firm, or 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 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 te1mination 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 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 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 for 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 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 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. The “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 1O(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.

(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 representative s 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 1O (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 1O(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 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.

(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”༉j shall be notified by the Executive to the Company fo11hwith 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 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: Mikael Landberg

If to the Company: Veoneer, Inc.

          WTC, Klarabergsviadukten 70, Section C6

          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

(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 ”༉j 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༌C” 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 1.409A-3U)(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 1.409A-2(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 sixty (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

[The remainder of this page is blank]

IN WITNESS whereof this Agreement has been executed the day and year first above written.

              /s/ Mikael Landberg

              Mikael Landberg

              Veoneer, Inc.

              /s/ Jan Carlson

              Jan Carlson

              Chairman and CEO, Veoneer, Inc.

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on March 31, 2020 by and between Veoneer Inc. (the “Company”), and Nishant Batra (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 Executive Vice President and Chief Technology Officer (the “CTO”) 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 March 31, 2020.

2.Employment. The Executive is hereby employed on the Effective Date as the Executive Vice President, Chief Technology Officer 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 and President of the Company (the “Chief Executive Officer”). As of July 1, 2020 or such other date to which the parties agree, the principal workplace for the Executive shall be Detroit, Michigan, 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 one (1) calendar month prior to such date of termination, and (ii) the Executive must give the Company written notice of termination of his employment not less than one (1) calendar month 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 1-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 the 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 538,593 per year (“Base Salary”), less normal withholdings, payable in 26 equal 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, the first review becoming effective as from January 2021. 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 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)Retention Bonus. The Executive shall be eligible for the following gross Sign-On and Retention payments:

(i)USD 50,000 on November 13, 2020 provided that the Executive remains employed by the Company on such date and has been continuously employed by the Company since the start date of the employment date. This retention payment shall be paid through the ordinary payroll following November 13, 2020.

(ii)USD 1,000,000 on April 1, 2021 provided that the Executive remains employed by the Company on such date and has been continuously employed by the Company since the Effective date. This retention payment shall be paid through the ordinary payroll following April 1, 2021.

(iii)No part of the Retention payments will be paid prior to the payment dates above other than as provided in Section 5 (d) (iv) hereof.

(iv) If the employment with the Company terminates prior to the dates set forth in Section 5 (d) (i) or (ii) above because of (i) the Executive’s Death, (ii) termination of the Executive’s employment by the Company without Cause or, (iii) termination of employment by the Executive for Good Reason, any remaining retention payments shall accelerate and be paid to the Executive or the Executive’s estate, as applicable within thirty (30) days following such termination date.

(1)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.

(2)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 thirty (30) days. All Executive’s currently accrued and unused vacation prior to the Effective Date will carry over under this Agreement.

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.

The Company shall provide the Executive with a company car or, if consistent with local policies where the Executive is based, a car allowance. 

Upon the transfer to Detroit, Michigan, USA the Company shall pay or reimburse the Executive for verified removal expenses including freight insurance and any custom duty for normal household goods, not exceeding 65m3.

The Company will not pay any removal expenses, custom duty, etc. for cars, boats, motorcycles, caravan/trailers, animals, liquor, etc. Antiquities and other special and expensive items are not included in the normal household goods and will not be moved at the expense of the Company.

Up until the actual relocation to Detroit, Michigan, USA the employee will be tax equalized to the US in accordance with the Company’s then applicable practices.

Accommodation costs to a maximum of USD 5,000 per month including costs for utilities such as heating and electricity, shall be paid by the Company until end of year 2021.

The Company will pay or reimburse the Executive for Accompanying Family Member’s elementary and primary educational (international curriculum) costs in the US (including tuition fees and school books) until the end of year 2021. All expenses are to be verified by receipts. Post high school education expenses are not included. Non-school and extracurricular activities (music, athletics, filed trips, etc.) will continue to be the responsibility of the Executive.

The Veoneer Group Expatriate Medical Plan and a private health insurance shall cover the Executive and accompanying family members until the end of year 2021.

The Company will cover the tax on the moving expenses and the temporary benefits of Accommodation, Schooling and Expatriate Medical Plan.

During the employment period, if requested by the Executive, the Company shall provide assistance in the preparation and filing of the Executives annual tax return in his home country of USA and in Sweden. The tax advisor shall be selected by the Company.

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.

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 establishes 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;

(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.

(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, 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 21(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)Except as provided in Section 13(b), during the twelve (12) months immediately following the termination of his employment with the Company, 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)The Non-Competition Covenant shall not apply:

(i)in the event the Executive’s employment is terminated by the Company other than for Cause; or

(ii)in the event the Executive resigns for Good Reason.

(c)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(d) 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.

(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 there from 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 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 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:  Nishant Batra

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 21 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.

(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 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 termination of employment, as the case may be, meet any description or definition of “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 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 “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 1.409A‑3(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 1.409A‑2(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.

(signatures on following page)

IN WITNESS whereof this Agreement has been executed the day and year first above written.

/s/ Nishant Batra

Nishant Batra

Veoneer Inc.

/s/ Jan Carlson   

Jan Carlson

Chief Executive Officer and President

/s/ Mikael Landberg   

Mikael Landberg

EVP, Human Resources

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.

April 24, 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.

April 24, 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 March 31, 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.

April 24, 2020

/s/ Jan Carlson

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 March 31, 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.

April 24, 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

Factoring (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Receivables [Abstract]
Sale of trade receivables	$ 13	$ 19
Sale of bank notes without recourse	17	$ 20
Trade notes receivables	$ 4

XML

Debt - Schedule of Notes (Details) - Convertible Senior Notes - 4% Convertible Senior Dotes due 2024 - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Principal amount (face value)	$ 207	$ 207
Unamortized issuance cost	(4)	(5)
Unamortized debt discount	(40)	(42)
4% Convertible Senior Notes due 2024 (Carrying value)	$ 163	$ 160

XML

Discontinued Operations and Disposal Groups - Narrative (Details) - USD ($) $ in Millions		3 Months Ended
	Oct. 30, 2019	Mar. 31, 2020	Mar. 31, 2019	Feb. 03, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets impairment charge		$ 144	$ 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
Disposal group, not discontinued operation, gain (loss) on disposal, net	$ 175
Disposal group, not discontinued operation, gain (loss) on disposal, net of closing costs	$ 77

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Equity Method Investment - Narrative (Details) kr in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2020 SEK (kr)	Mar. 31, 2020 USD ($) investment	Mar. 31, 2019 USD ($)	Apr. 02, 2020	Dec. 31, 2019 USD ($)
Schedule of Equity Method Investments [Line Items]
Number of equity method investments | investment		1
Loss from equity method investment		$ 18	$ 17
Equity investments after consideration of foreign exchange movements		$ 79			$ 87
Zenuity
Schedule of Equity Method Investments [Line Items]
Ownership percentage in joint venture		50.00%
Cash contribution to joint venture	kr 150	$ 16
Loss from equity method investment		18	$ 17
Equity investments after consideration of foreign exchange movements		$ 79			$ 87
Zenuity | Subsequent Event
Schedule of Equity Method Investments [Line Items]
Ownership percentage in joint venture				50.00%

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 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.

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 customers 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 months ended March 31, 2020 and 2019, the Company’s four largest customers accounted for 61% and 58% of net sales, respectively. Additionally, as of March 31, 2020 and December 31, 2019, these four largest customers accounted for 42% 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.

Goodwill impairment indicator

During the first quarter of 2020 the Company determined that the economic uncertainty caused by the novel strain of coronavirus (“COVID-19”) pandemic was a trigger for an impairment review of goodwill. As a result of management’s review, we determined that no impairment charge should be recorded in the quarter. As of March 31, 2020, the goodwill asset balance was $289 million.

New Accounting Standards

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 does 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 is required to adopt ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 does 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 is required to adopt ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 does 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 Statements of Operations or Statements of Cash Flows.

Accounting Standards Issued But Not Yet Adopted

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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Discontinued Operations and Disposal Groups (Tables)

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Major Classes of Assets and Liabilities Held for Sale

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

(Dollars in millions)	As of
Assets held for sale	March 31, 2020
Prepaid exp/accrued income	$	1
Property, plant and equipment, net	79
Current deferred charges	90
Impairment of carrying value	(144)
Total assets held for sale	$	26
Liabilities held for sale
Accounts payable	6
Accrued exp/prepaid income	1
Total liabilities held for sale	$	7

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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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019	May 28, 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%		4.00%

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Contingent Liabilities

3 Months Ended

Mar. 31, 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 Condensed Consolidated Balance Sheets.

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Reserve at beginning of the period	$	15	$	16
Change in reserve	6		(1)
Cash payments	(3)		(2)
Reserve at end of the period	$	18	$	14

For the three months ended March 31, 2020 and 2019, cash paid primarily relate to warranty related issues. The increase in the reserve balance as of March 31, 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 March 31, 2020 and December 31, 2019, $11 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 $15 million and $7 million as of March 31, 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 on the Condensed Consolidated Balance Sheet as of March 31, 2020 and December 31, 2019 related to these guarantees.

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Cover - shares	3 Months Ended
	Mar. 31, 2020	Apr. 17, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 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		111,554,896
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001733186
Current Fiscal Year End Date	--12-31

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Factoring

3 Months Ended

Mar. 31, 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.

During the three months ended March 31, 2020 and 2019, the Company has entered into arrangements with financial institutions and sold $13 million and $19 million, respectively, of trade receivables without recourse and $17 million and $20 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 March 31, 2020, the Company has $4 million of trade notes receivables which remain outstanding and will mature within the second 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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Loss per share (Tables)

3 Months Ended

Mar. 31, 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 months ended March 31, 2020 and 2019.

	Three Months Ended March 31
(Dollars in millions, except per share amounts)	2020		2019
Numerator:
Basic and diluted:
Net loss attributable to Veoneer	$	(233)	$	(137)
Denominator:
Basic: Weighted average number of shares outstanding (in millions)	111.47		87.24
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)1	111.47		87.24
Basic loss per share	$	(2.09)	$	(1.57)
Diluted loss per share	$	(2.09)	$	(1.57)

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

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Equity Method Investment (Tables)

3 Months Ended

Mar. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Summary of Unaudited Income Statement Information

Certain unaudited summarized income statement information of Zenuity, for the three months ended March 31, 2020 and 2019, is shown below:

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Net sales	$	1	$	—
Gross profit	—		—
Operating loss	(37)		(34)
Loss before income taxes	(36)		(34)
Net loss	(37)		(34)

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Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions		3 Months Ended	12 Months Ended
	Dec. 31, 2019	Mar. 31, 2020	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Goodwill	$ 290	$ 289	$ 290
Operating lease right-of-use assets	$ 100	$ 96	$ 100
Four Largest Customers | Revenue from Contract with Customer | Customer Concentration Risk
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration risk, percentage		61.00%	58.00%
Four Largest Customers | Accounts Receivable | Customer Concentration Risk
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration risk, percentage	39.00%	42.00%
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets				$ 75
Operating lease liabilities				$ 75

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Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

Debt

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

	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Short-Term Debt:
Short-term borrowings	$	3	$	3
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	163		160
Other long-term borrowings	6		8
Total Debt	$	172	$	171

Short-Term Debt:

Short -term debt is included in Other current liabilities in the Consolidated Balance Sheet.

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 deliver 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 Consolidated and 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 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 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)	March 31, 2020		December 31, 2019
Principal amount (face value)	$	207	$	207
Unamortized issuance cost	(4)		(5)
Unamortized debt discount	(40)		(42)
Net Carrying value	$	163	$	160

The Company recognized total interest expense related to the Notes of approximately $4 million for the three months ended March 31, 2020, in the Unaudited Condensed Consolidated Statements of Operations.

The estimated fair value of the Notes was $135 million as of March 31, 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 6 "Fair Value Measurements".

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Equity Method Investment

3 Months Ended

Mar. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investment

Equity Method Investment

As of March 31, 2020, the Company has one equity method investment, which is Zenuity, a 50% ownership joint venture with Volvo cars.

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 Volvo Cars) 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 months ended March 31, 2020 and 2019 was $18 million and $17 million, respectively. As of March 31, 2020 and December 31, 2019, the Company’s equity investment in Zenuity was $79 million and $87 million, respectively.

Certain unaudited summarized income statement information of Zenuity, for the three months ended March 31, 2020 and 2019, is shown below:

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Net sales	$	1	$	—
Gross profit	—		—
Operating loss	(37)		(34)
Loss before income taxes	(36)		(34)
Net loss	(37)		(34)

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Segment Information - Narrative (Details)	3 Months Ended
	Mar. 31, 2020 segment
Segment Reporting [Abstract]
Number of operating segments	2

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Equity Method Investment - Summary of Unaudited Income Statement Information (Details) - Zenuity - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Schedule of Equity Method Investments [Line Items]
Net sales	$ 1	$ 0
Gross profit	0	0
Operating loss	(37)	(34)
Loss before income taxes	(36)	(34)
Net loss	$ (37)	$ (34)

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Contingent Liabilities - Schedule of Change in Balance Sheet Position of Product Related Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Product Warranty Accrual [Roll Forward]
Reserve at beginning of the period	$ 15	$ 16
Change in reserve	6	(1)
Cash payments	(3)	(2)
Reserve at end of the period	$ 18	$ 14

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Basis of Presentation - Additional Information (Details)			3 Months Ended
	May 28, 2019 USD ($) $ / shares shares	Jun. 29, 2018	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)	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
Dividend paid to non-controlling interest	$ 403,000,000
Proceeds from divestiture of businesses			$ 176,000,000	$ 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
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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Contingent Liabilities (Tables)

3 Months Ended

Mar. 31, 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 Condensed Consolidated Balance Sheets.

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Reserve at beginning of the period	$	15	$	16
Change in reserve	6		(1)
Cash payments	(3)		(2)
Reserve at end of the period	$	18	$	14

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Inventories (Tables)

3 Months Ended

Mar. 31, 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)	March 31, 2020		December 31, 2019
Raw materials	$	99	$	99
Work in progress	9		8
Finished products	54		62
Inventories	162		169
Inventory valuation reserve	(27)		(25)
Total inventories, net of reserve	$	135	$	144

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Fair Value Measurements

3 Months Ended

Mar. 31, 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 March 31, 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 $100 million as of March 31, 2020 and $291 million as of December 31, 2019. As of March 31, 2020, the asset of the derivatives not designated as hedging instruments was $1 million, and as of December 31, 2019, the derivatives not designated as hedging instruments was a liability of $1 million.

Gains and losses on derivative financial instruments recognized in the Unaudited Condensed Consolidated Statements of Operations, were a gain of $2 million and a gain of less than $1 million for the three months ended March 31, 2020 and 2019, 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 4 "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 March 31, 2020 and December 31, 2019, Veoneer contributed approximately $11 million and $10 million, respectively, to the investment in Autotech Fund I, L.P. For the period ended March 31, 2020 the Company has received distributions of $1 million from the fund.

The carrying amounts reflected in the Consolidated Balance Sheet in Investments for AutoTech Fund I, L.P approximates its fair values as of December 31, 2019 as this is the most recent information available to the Company at this time.

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Accrued Expenses

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Operating related accruals	$	58	$	43
Employee related accruals	66		76
Customer pricing accruals	34		39
Product related liabilities1	18		15
Other accruals	22		19
Total Accrued Expenses	$	198	$	192

¹ As of March 30, 2020 and December 31, 2019, $11 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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Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Loss Contingencies [Line Items]
Operating related accruals	$ 58	$ 43
Employee related accruals	66	76
Customer pricing accruals	34	39
Product related liabilities	18	15
Other accruals	22	19
Total Accrued Expenses	198	192
Affiliated Entity
Loss Contingencies [Line Items]
Product related liabilities	$ 11	$ 8

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Contingent Liabilities - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Loss Contingencies [Line Items]
Product related liabilities	$ 18	$ 15
Guarantee obligations	15	7
Affiliated Entity
Loss Contingencies [Line Items]
Product related liabilities	$ 11	$ 8

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Segment Information - Schedule of (Loss)/Income Before Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	$ (122)	$ (128)
Gain (loss) on divestiture and assets held for sales, net	(67)	0
Interest and other non-operating items, net	(1)	3
Loss from equity method investment	(18)	(17)
Loss before income taxes	(208)	(142)
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	(107)	(109)
Corporate and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	(15)	(19)
Electronics | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	(94)	(90)
Brake Systems | Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income (loss)	$ (13)	$ (19)

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Subsequent Events (Details)	Apr. 02, 2020 USD ($) employee	Jun. 30, 2020 USD ($)	Apr. 24, 2020 USD ($)	Mar. 31, 2020
Subsequent Event | Secured Debt | Subsidiary Term Loans
Subsequent Event [Line Items]
Aggregate principal amount of debt			$ 17,000,000
Subsequent Event | Zenuity
Subsequent Event [Line Items]
Number of employees | employee	200
Subsequent Event | Scenario, Forecast | Disposal Group, Disposed of by Sale, Not Discontinued Operations | VBS Disposition
Subsequent Event [Line Items]
Disposal group, including discontinued operation, consideration		$ 1
Zenuity
Subsequent Event [Line Items]
Ownership percentage in joint venture				50.00%
Zenuity | Subsequent Event
Subsequent Event [Line Items]
Ownership percentage in joint venture	50.00%
Zenuity | Subsequent Event | Scenario, Forecast
Subsequent Event [Line Items]
Proceeds from divestiture of interest in joint venture	$ 15,000,000

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Inventories - Components of Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 99	$ 99
Work in progress	9	8
Finished products	54	62
Inventories	162	169
Inventory valuation reserve	(27)	(25)
Total inventories, net of reserve	$ 135	$ 144

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Debt - Narrative (Details)		3 Months Ended
	May 28, 2019 USD ($) tradingDay $ / shares	Mar. 31, 2020 USD ($)
Debt Instrument [Line Items]
Interest expense		$ 4,000,000
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Debt Instrument [Line Items]
Stated interest rate	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
Conversion ratio	0.0448179000
Debt Instrument, Annual Principal Payment	$ 1,000
Initial conversion price | $ / shares	$ 22.3125
Threshold percentage of stock price trigger	130.00%
Redemption price	100.00%
Effective interest rate		10.00%
Equity component of notes		$ 46,000,000
Convertible debt fair value		$ 135,000,000
Minimum
Debt Instrument [Line Items]
Trading days | tradingDay	20
Minimum | Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Debt Instrument [Line Items]
Threshold percentage of stock price trigger	98.00%
Maximum | Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Debt Instrument [Line Items]
Conversion ratio	0.0571428000

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Revenue - Revenue Disaggregated by Primary Region and Products of Revenue Recognition (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 362	$ 494
Operating Segments | Restraint Control Systems
Disaggregation of Revenue [Line Items]
Net sales	162	215
Operating Segments | Active Safety products
Disaggregation of Revenue [Line Items]
Net sales	163	192
Operating Segments | Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	37	87
Electronics
Disaggregation of Revenue [Line Items]
Net sales	325	407
Electronics | Operating Segments | Restraint Control Systems
Disaggregation of Revenue [Line Items]
Net sales	162	215
Electronics | Operating Segments | Active Safety products
Disaggregation of Revenue [Line Items]
Net sales	163	192
Electronics | Operating Segments | Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	0	0
Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	37	87
Brake Systems | Operating Segments | Restraint Control Systems
Disaggregation of Revenue [Line Items]
Net sales	0	0
Brake Systems | Operating Segments | Active Safety products
Disaggregation of Revenue [Line Items]
Net sales	0	0
Brake Systems | Operating Segments | Brake Systems
Disaggregation of Revenue [Line Items]
Net sales	37	87
Asia | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	82	161
Asia | Electronics | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	58	89
Asia | Brake Systems | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	24	72
Americas | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	130	169
Americas | Electronics | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	117	154
Americas | Brake Systems | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	13	15
Europe | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	150	164
Europe | Electronics | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	150	164
Europe | Brake Systems | Operating Segments
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 970	$ 859
Receivables, net	216	253
Inventories, net	135	144
Related party receivables	6	11
Prepaid expenses and other contract assets	36	47
Other current assets	18	18
Assets held for sale	26	317
Total current assets	1,407	1,649
Property, plant and equipment, net	395	473
Operating lease right-of-use assets	96	100
Equity method investment	79	87
Goodwill	289	290
Intangible assets, net	12	17
Deferred tax assets	7	7
Other Long-term Investments	10	9
Other non-current assets	26	111
Total assets	2,321	2,743
Liabilities and equity
Accounts payable	233	233
Related party payables	2	3
Accrued expenses	198	192
Income tax payable	26	7
Other current liabilities	41	38
Liabilities held for sale	7	118
Total current liabilities	507	591
4% Convertible Senior Notes due 2024 (Carrying value)	163	160
Pension liability	17	17
Deferred tax liabilities	13	13
Operating lease non-current liabilities	78	82
Finance lease non-current liabilities	34	33
Other non-current liabilities	27	29
Total non-current liabilities	332	334
Equity
Common stock  (par value $1.00, $325 million shares authorized, 111 million shares issued and outstanding as of March 31, 2020 and December 31, 2019)	111	111
Additional paid-in capital	2,345	2,343
Accumulated deficit	(914)	(681)
Accumulated other comprehensive loss	(60)	(44)
Total equity	1,482	1,729
Non-controlling interest	0	89
Total equity and non-controlling interest	1,482	1,818
Total liabilities, equity and non-controlling interest	$ 2,321	$ 2,743
Shares Issued (in shares)	111,000,000	111,000,000
Shares Outstanding (in shares)	111,000,000	111,000,000
Shares Authorized (in shares)	325,000,000	325,000,000
Par Value (in dollars per share)	$ 1.00	$ 1.00

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Loss per share

3 Months Ended

Mar. 31, 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 months ended March 31, 2020 and 2019.

	Three Months Ended March 31
(Dollars in millions, except per share amounts)	2020		2019
Numerator:
Basic and diluted:
Net loss attributable to Veoneer	$	(233)	$	(137)
Denominator:
Basic: Weighted average number of shares outstanding (in millions)	111.47		87.24
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions)1	111.47		87.24
Basic loss per share	$	(2.09)	$	(1.57)
Diluted loss per share	$	(2.09)	$	(1.57)

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 antidilutive effect. The Company excluded equity incentive awards of 443,168 and 321,619 shares for the three months ended March 31, 2020 and 2019, respectively.

The Company may settle the conversions 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 5 "Debt". Due to anti-dilutive effects, the Company excluded potential convertible shares due to the Notes of 9,277,305 for the three months ended March 30, 2020 and zero for the three months ended March 31, 2019 from the diluted loss per share calculations.

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On April 2, 2020, the Company entered into a non-binding agreement with Volvo Cars to separate Zenuity, a 50% ownership joint venture with Volvo Cars.

Veoneer expects to bring more than 200 of the current Zenuity employees into its systems and software team. The Zenuity development centers in U.S and Germany will become part of Veoneer’s research and development organization. The development centers in Sweden and China will become part of a new stand-alone company wholly owned by Volvo Cars. As part of the intended transaction Veoneer expects to receive a payment of around $15 million, subject to final agreement.

The process to separate the Zenuity joint venture has started and is expected to be completed during the third quarter 2020.

On April 23, 2020, Veoneer announced the entry into a non-binding agreement to divest VBS. The agreed purchase price is $1. The transaction is expected to be completed during the second quarter of 2020.

On April 24, 2020, a wholly-owned subsidiary of the Company entered into a credit agreement with a customer pursuant to which it may borrow an aggregate amount of up to of $17 million in the form of term loans. The proceeds of any such term loans may only be used to fund costs and expenses incurred by the subsidiary for such customer’s projects. Obligations incurred under the credit agreement are guaranteed by the Company.

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Basis of Presentation

3 Months Ended

Mar. 31, 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 is expected to be sold in second quarter. We do not expect the remaining Brake Systems business to be 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 our 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., 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 under the definitive agreements, and the VNBS joint venture was terminated. See Note 4 "Divestiture and held for sale" for additional information.

Assets held for sale Veoneer Brake Systems ("VBS")

Following the strategic review initially launched in April 2019, in March 2020, Veoneer decided to focus on its core Electronics business and exit the brake control business. See Note 4 "Divestiture and held for sale" for additional information.

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Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Debt

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

	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Short-Term Debt:
Short-term borrowings	$	3	$	3
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	163		160
Other long-term borrowings	6		8
Total Debt	$	172	$	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)	March 31, 2020		December 31, 2019
Principal amount (face value)	$	207	$	207
Unamortized issuance cost	(4)		(5)
Unamortized debt discount	(40)		(42)
Net Carrying value	$	163	$	160

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Stock Incentive Plan

3 Months Ended

Mar. 31, 2020

Disclosure of Compensation Related Costs, Share-based Payments [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 first quarter of 2020 under the Company’s long-term incentive (LTI) program, certain employees received restricted stock units (RSUs) without dividend equivalent rights and performance shares (PSs) without dividend equivalent rights. The allocation between RSUs and PSs for the grants made in February and March was 659,231 RSUs and 415,381 PSs at 100% target.

The RSUs were granted during the first quarter 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 $10 million.

The PSs were granted in 2020 and 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 PSs and Stock Options) compensation cost of $2 million and $1 million for the three months ended March 31, 2020 and 2019, respectively.

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Divestiture and held for sale

3 Months Ended

Mar. 31, 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 System segment. In the first quarter of 2020, management committed and approved a plan to sell VBS. The Company expects to sell the business within one year from management's approval of the plan. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 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 Condensed Consolidated Statements of Operations during the period end March 31, 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 Condensed Consolidated Balance Sheet as of March 31, 2020 and depreciation of long-lived assets ceased on March 31, 2020. The planned divestiture did not meet the criteria for presentation as a discontinued operation.

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

(Dollars in millions)	As of
Assets held for sale	March 31, 2020
Prepaid exp/accrued income	$	1
Property, plant and equipment, net	79
Current deferred charges	90
Impairment of carrying value	(144)
Total assets held for sale	$	26
Liabilities held for sale
Accounts payable	6
Accrued exp/prepaid income	1
Total liabilities held for sale	$	7

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 closing fees was $175 million. The Company recognized a gain on the divestiture of $77 million, net of closing cost.

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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Inventories

3 Months Ended

Mar. 31, 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)	March 31, 2020		December 31, 2019
Raw materials	$	99	$	99
Work in progress	9		8
Finished products	54		62
Inventories	162		169
Inventory valuation reserve	(27)		(25)
Total inventories, net of reserve	$	135	$	144

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of (loss)/income before income taxes

Loss Before Income Taxes	Three Months Ended March 31
(Dollars in millions)	2020		2019
Electronics	$	(94)	$	(90)
Brake Systems	(13)		(19)
Segment operating loss	(107)		(109)
Corporate and other	(15)		(19)
Gain/(loss) on divestiture and Assets held for sale	(67)		—
Interest and other non-operating items, net	(1)		3
Loss from equity method investment	(18)		(17)
Loss before income taxes	$	(208)	$	(142)

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Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2020

Payables and Accruals [Abstract]

Summary of Accrued Expenses

	As of
(Dollars in millions)	March 31, 2020		December 31, 2019
Operating related accruals	$	58	$	43
Employee related accruals	66		76
Customer pricing accruals	34		39
Product related liabilities1	18		15
Other accruals	22		19
Total Accrued Expenses	$	198	$	192

¹ As of March 30, 2020 and December 31, 2019, $11 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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Stock Incentive Plan - Narrative (Details) - USD ($) $ in Millions		3 Months Ended
	Jun. 29, 2018	Mar. 31, 2020	Mar. 31, 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)		659,231
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		$ 10
Stock-based compensation expense		$ 2	$ 1
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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Loss per share - Narrative (Details) - $ / shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 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
Stock Compensation Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from calculation (in shares)	443,168	321,619
Convertible Debt Securities
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from calculation (in shares)	9,277,305	0
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Initial conversion price			$ 22.3125

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Fair Value Measurements - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) contract	Mar. 31, 2019 USD ($)	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
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
Foreign exchange forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional value	$ 100		$ 291
Derivative asset	1		1
Fair Value Measured at Net Asset Value Per Share
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment	11		$ 10	$ 15
Distributions from fund	$ 1

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Discontinued Operations and Disposal Groups - Disposal Group, Including Discontinued Operations (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Liabilities held for sale
Total liabilities held for sale		$ 118
Disposal Group, Held-for-sale, Not Discontinued Operations | Brake Systems
Assets held for sale
Prepaid exp/accrued income	$ 1
Property, plant and equipment, net	79
Current deferred charges	90
Impairment of carrying value	(144)
Total assets held for sale	26
Liabilities held for sale
Accounts payable	6
Accrued expenses	1
Total liabilities held for sale	$ 7
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Honda VNBS Product Line
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

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Relationship with Former Parent and Related Entities - Summary of Amount Due to and from Related Parties (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Related Party Transactions [Abstract]
Related party receivable	$ 6	$ 11
Related party payables	2	3
Related party short-term debt	$ 1	$ 1

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Relationship with Former Parent and Related Entities

3 Months Ended

Mar. 31, 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 and $1 million of expense under the TSA for the three months ended March 31, 2020 and 2019, respectively. The Company recognized less than $1 million of income under the TSA for the three months ended March 31, 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 amount to $18 million and $26 million for the three months ended March 31, 2020 and 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)	March 31, 2020		December 31, 2019
Related party receivable	$	6	$	11
Related party payables	2		3
Related party short-term debt	1		1

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.

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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	(148)			(137)		(11)
Foreign currency translation	(11)				(11)
Stock based compensation expense	1		1
Balance at end of period at Mar. 31, 2019	1,768	87	1,939	(318)	(30)	90
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	(231)			(233)		2
Foreign currency translation	(19)				(19)
Stock based compensation expense	2		2
Business divestitures	(88)				3	(91)
Balance at end of period at Mar. 31, 2020	$ 1,482	$ 111	$ 2,345	$ (914)	$ (60)	$ 0

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Revenue (Tables)

3 Months Ended

Mar. 31, 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 March 31, 2020						Three Months Ended March 31, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	58	$	24	$	82	$	89	$	72	$	161
Americas	117		13		130		154		15		169
Europe	150		—		150		164		—		164
Total net sales	$	325	$	37	$	362	$	407	$	87	$	494

Net Sales by Products

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	162	$	—	$	162	$	215	$	—	$	215
Active Safety products	163		—		163		192		—		192
Brake Systems	—		37		37		—		87		87
Total net sales	$	325	$	37	$	362	$	407	$	87	$	494

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 362	$ 494
Cost of sales	(309)	(409)
Gross profit	53	85
Selling, general and administrative expenses	(44)	(52)
Research, development and engineering expenses, net	(131)	(156)
Amortization of intangibles	(1)	(5)
Other income, net	1	0
Operating loss	(122)	(128)
Gain (loss) on divestiture and assets held for sales, net	(67)	0
Loss from equity method investment	(18)	(17)
Interest income	4	3
Interest expense	(5)	0
Loss before income taxes	(208)	(142)
Income tax expense	(23)	(6)
Net loss	(231)	(148)
Less: Net income (loss) attributable to non-controlling interest	2	(11)
Net loss attributable to controlling interest	$ (233)	$ (137)
Net loss per share - basic (in dollars per share)	$ (2.09)	$ (1.57)
Net loss per share - diluted (in dollars per share)	$ (2.09)	$ (1.57)
Weighted average number of shares outstanding, (in millions) (in shares)	111,470	87,240
Weighted average number of shares outstanding, assuming dilution (in millions) (in shares)	111,470	87,240

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income tax expense	$ (23)	$ (6)
Net discrete (benefit) expense related to changes in valuation allowance	$ 21	$ 3

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Debt - Schedule of Short and Long Term Debt (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019	May 28, 2019
Short-Term Debt:
Short-term borrowings	$ 3	$ 3
Long-Term Debt:
Total Debt	172	171
Convertible Senior Notes | 4% Convertible Senior Dotes due 2024
Long-Term Debt:
4.00% Convertible Senior Notes due 2024 (Carrying value)	$ 163	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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Relationship with Former Parent and Related Entities - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Autoliv | Affiliated Entity
Related Party Transaction [Line Items]
Revenue from related parties	$ 18	$ 26
Autoliv | Transition Services Agreement | Affiliated Entity
Related Party Transaction [Line Items]
Expense under the TSA	1	1
Income under the TSA	$ 1	$ 1
Veoneer Nissin Brakes Systems
Related Party Transaction [Line Items]
Minority ownership percentage	49.00%
Majority ownership percentage	51.00%

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Segment Information

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segment Information

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 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 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 March 31
(Dollars in millions)	2020		2019
Electronics	$	(94)	$	(90)
Brake Systems	(13)		(19)
Segment operating loss	(107)		(109)
Corporate and other	(15)		(19)
Gain/(loss) on divestiture and Assets held for sale	(67)		—
Interest and other non-operating items, net	(1)		3
Loss from equity method investment	(18)		(17)
Loss before income taxes	$	(208)	$	(142)

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Condensed Consolidated Statements of Cash Flow - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities
Net loss	$ (231)	$ (148)
Depreciation and amortization	23	29
Gain on divestitures	(77)	0
Assets impairment charge	144	0
Undistributed loss from equity method investments	18	17
Stock-based compensation	2	0
Deferred income taxes	0	3
Other, net	(4)	7
Change in operating assets and liabilities:
Receivables, gross	36	7
Accrued expenses	17	22
Related party receivables and payables, net	4	7
Accounts payable	9	(33)
Prepaid expenses	21	(6)
Inventories, gross	7	(3)
Income taxes	20	(2)
Other current assets and liabilities, net	2	10
Net cash used in operating activities	(9)	(90)
Investing activities
Proceeds from divestiture of businesses	176	0
Capital expenditures	(27)	(59)
Equity method investment	(16)	0
Short-term investments mature into cash	0	5
Net cash provided by (used in) investing activities	133	(54)
Financing activities
Dividend paid to non-controlling interest	(5)	0
(Payments for) proceeds from long-term debt		1
(Payments for) proceeds from long-term debt	(1)
Payments for short-term debt	1	0
Net increase in related party short-term debt	0	1
Net cash provided by (used in) financing activities	(7)	2
Effect of exchange rate changes on cash and cash equivalents	(6)	(7)
Increase (decrease) in cash and cash equivalents	111	(149)
Cash and cash equivalents at beginning of period	859	864
Cash and cash equivalents at end of period	$ 970	$ 715

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 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

New Accounting Standards

New Accounting Standards

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 does 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 is required to adopt ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-18 does 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 is required to adopt ASU 2018-18 in the first quarter of 2020. The adoption of ASU 2018-13 does 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 Statements of Operations or Statements of Cash Flows.

Accounting Standards Issued But Not Yet Adopted

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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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (231)	$ (148)
Other comprehensive loss, before tax:
Change in cumulative translation adjustment	(22)	(11)
Pension liability	1	0
Other comprehensive loss, before tax	(21)	(11)
Expense for taxes	0	0
Other comprehensive loss, net of tax	(21)	(11)
Comprehensive loss	(252)	(159)
Less: Comprehensive income (loss) attributable to non-controlling interest	2	(11)
Comprehensive loss attributable to controlling interest	$ (254)	$ (148)

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Revenue

3 Months Ended

Mar. 31, 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 March 31, 2020						Three Months Ended March 31, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Asia	$	58	$	24	$	82	$	89	$	72	$	161
Americas	117		13		130		154		15		169
Europe	150		—		150		164		—		164
Total net sales	$	325	$	37	$	362	$	407	$	87	$	494

Net Sales by Products

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
(Dollars in millions)	Electronics		Brake Systems		Total		Electronics		Brake Systems		Total
Restraint Control Systems	$	162	$	—	$	162	$	215	$	—	$	215
Active Safety products	163		—		163		192		—		192
Brake Systems	—		37		37		—		87		87
Total net sales	$	325	$	37	$	362	$	407	$	87	$	494

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

During the three month periods ended March 31, 2020 and 2019, the Company recorded a tax provision of $23 million and $6 million, respectively. Discrete items, net were a expense of $21 million and $3 million for the three month periods ended March 31, 2020 and 2019, respectively. The discrete item in the three month period ended March 31, 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 United States, Swedish, French, Japanese operations and Chinese operations.

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Retirement Plans

3 Months Ended

Mar. 31, 2020

Retirement Benefits [Abstract]

Retirement Plans

Retirement Plans

Defined Benefit Pension Plans

The defined benefit pension plans impacting Veoneer's financial results include the following:

Existing Veoneer Plans comprised of plans in Japan, Canada, and France. Transferred Veoneer Plans comprised of plans in Germany, India, Japan and South Korea.

The Company’s net periodic benefit costs for plans for the three months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Service cost	$	1	$	1
Interest cost	1		—
Expected return on plan assets	(1)		(1)
Net periodic benefit cost	$	1	$	—

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Relationship with Former Parent and Related Entities (Tables)

3 Months Ended

Mar. 31, 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)	March 31, 2020		December 31, 2019
Related party receivable	$	6	$	11
Related party payables	2		3
Related party short-term debt	1		1

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Retirement Plans (Tables)

3 Months Ended

Mar. 31, 2020

Retirement Benefits [Abstract]

Schedule of components of net periodic benefit cost

The Company’s net periodic benefit costs for plans for the three months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Service cost	$	1	$	1
Interest cost	1		—
Expected return on plan assets	(1)		(1)
Net periodic benefit cost	$	1	$	—

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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
	Mar. 31, 2020	Mar. 31, 2019
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 1	$ 1
Interest cost	1	0
Expected return on plan assets	(1)	(1)
Net periodic benefit cost	$ 1	$ 0

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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
	Mar. 31, 2020	Mar. 31, 2019
Basic and diluted:
Net loss attributable to Veoneer	$ (233)	$ (137)
Denominator:
Basic: Weighted average number of shares outstanding (in millions) (in shares)	111,470	87,240
Diluted: Weighted-average number of shares outstanding, assuming dilution (in millions) (in shares)	111,470	87,240
Basic loss per share (in dollars per share)	$ (2.09)	$ (1.57)
Diluted loss per share (in dollars per share)	$ (2.09)	$ (1.57)