Volkswagen's XETR:VOW software unit Cariad and supplier Bosch (ROBG.UL) announced the end of their joint autonomous driving project in a statement on Wednesday.
Both partners will retain access to the jointly created intellectual property and data, and they can further develop the technologies independently, the statement said.
"CARIAD and Bosch have created a strong technological foundation through the Automated Driving Alliance," said Volkswagen Group CEO Oliver Blume.
"We are now building on that foundation with a clear focus on speed, scalability and rapid implementation for our brands and customers," he added.
Germany's Bild newspaper first reported the move, which comes as Volkswagen vows to ramp up cost-cutting across the group as it battles tariffs, weak demand and stiff competition from China.
Bosch and Cariad launched the partnership in 2022 to develop software for driver assistance and autonomous driving across Volkswagen's brands.
Sources told Reuters last week that job cuts at Volkswagen could double to 100,000 and four German plants face possible closure, under a management plan expected to face strong resistance from the group's powerful workforce representatives.