Microsoft Corp. has struck a broad cloud computing deal with Volkswagen AG to build a joint software platform on Azure that will eventually power all the automaker’s connected car services.

Volkswagen detailed the collaboration in an announcement today. The company, which holds the title of the world’s largest car manufacturer, said services delivered via the planned “Automotive Cloud” will be included with more than 5 million new vehicles every year starting from 2020.

Volkswagen’s technology roadmap doesn’t end there. The automaker plans to build an even more expansive “One Digital Platform” atop Azure that will eventually cover not only vehicles sold under its flagship Volkswagen brand, but also its numerous subsidiaries. Audi, Bentley, Bugatti, Lamborghini and Porsche are among the dozen car brands owned by the company.

Volkswagen provided few details about the technical aspects of the project. However, the automaker did reveal plans to open a cloud development center near Microsoft’s headquarters in Redmond, Washington, that’s expected to employ 300 engineers in the near future.

The hub’s proximity will enable the companies to collaborate closely on the project. In addition to helping with the development of the Automotive Cloud, Microsoft will assist Volkswagen across areas that include hiring, human resources management and consulting services. The announcement indicated that the technology giant is also set to provide certain training to Volkswagen’s engineers.

The companies didn’t share the deal’s financial terms, but judging by the sheer number of cars involved, it’s safe to assume that the contract is quite substantial. And its value for Microsoft could grow significantly once Volkswagen starts extending the Automotive Cloud to its subsidiaries. The automaker sold 10.7 million vehicles worldwide in 2017.

Beyond the direct revenue from hosting Volkswagen’s services, the deal will give Microsoft a stronger position in the auto market. The contract represents a big win over cloud leader Amazon Web Services Inc., which is actively targeting automotive suppliers as well and boasts high-profile customers such as BMW.

AWS is one part of a multipronged effort by parent Amazon.com Inc. to grow its presence in this industry. Last week, the company introduced Echo Auto, a compact device that a user can place on their car’s dashboard and plug into the infotainment system to access the Alexa voice assistant.

Image: Michael Kappel/Flickr