The two companies are working with the graphics chipmaker Nvidia to develop an in-car navigation map system and a three-dimensional display so passengers can recognise where they are in relation to the surrounding topography.
The development features a vehicle-centric touch screen interface to Google Earth, with state-of-the-art graphics, accurate 3D maps and real-time traffic updates and routing.
Google introduced Google Earth in 2005 as a free satellite imagery-based mapping product.
It has been controversial with some governments who say it could be anational security risk as Google Earth enables anyone to zoom in on aerial images of landmarks such as government buildings and airports.
VW of America, working through its Electronics Research Laboratory, is working on other advancements, including automatic personalised information updates for the navigation system.