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Volkswagen AG on Monday launched a new company to challenge Uber Technologies Inc. and other tech rivals, seeking to become a global force in the digital auto services that are threatening established car makers.

The move marks the latest step by the Wolfsburg, Germany-based auto maker to get past an emissions-cheating scandal that has cost the company nearly $20 billion. The scandal has also threatened to slow Volkswagen's efforts to catch up with rival car makers as they move into new technology services that are transforming the auto industry.

Volkswagen said the new company, to be called Moia, will be based in Berlin which has a vibrant startup scene, putting it at arm's length from Volkswagen's corporate headquarters in Wolfsburg. Moia will initially employ about 50 people and is expected to grow to about 200 over the next year, Volkswagen said.

"We want to prove that it is possible to create innovative mobility services outside Silicon Valley," Moia Chief Executive Ole Harms told participants at the Tech Crunch Disrupt conference in London.

One of Moia's businesses is already operating: the Gett ride-hailing service, in which Volkswagen acquired a strategic stake in May for €300 million ($321 million). Moia plans next year to launch another service, an app-based shuttle, or ride-pooling, service using electric vans to service commuters.

Before the emissions scandal, Volkswagen management was slow to pursue development of electric vehicles and new digital businesses, falling behind rivals while upstarts like Tesla Motors Co and Uber established themselves as new players in the global auto game.

After a management reshuffle at Volkswagen after the diesel scandal in September last year, the new CEO, Matthias Mü ller, began accelerating development of new technology businesses.

The German company still has much catching up to do.

Japan's Nissan Motor Co. launched the Leaf, an electric compact car, in 2010. Daimler AG, maker of Mercedes-Benz cars, launched its Car2Go car-sharing service in 2008, followed by BMW AG and its DriveNow service. In January, General Motors Co. invested $500 million in Uber rival Lyft Inc.

GM's move on Lyft spurred Volkswagen into action.

Mr. Harms, a former business consultant, was instrumental in Volkswagen's investment in Gett. The Israel-based ride-hailing service, which forms the nucleus of Moia, is active in more than 100 cities world-wide.

Volkswagen wants eventually to equip Gett with a fleet of robot taxis, anticipating that car ownership could decline with the emergence of new car-sharing services, creating new competition from shared vehicles and self-driving taxi and delivery services.

"Even though everyone won't continue to own a car in the future, Moia can help make everyone a customer of our company in some way or another," Mr. Mü ller said in a statement.

Today, companies like Uber rely on private car owners to offer services with their own vehicles. Volkswagen expects ride-hailing service providers will begin investing in their own fleets. With services like Gett, Volkswagen hopes to provide the hardware and the vehicle, but also to capture revenue and profits from the services those vehicles provide.

"Tech companies need to operate as a fleet," said Mr. Harms. "Now they are asset light, but they will become asset heavy."

Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

December 05, 2016 10:45 ET (15:45 GMT)

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