* Chevy MyLink system to stream Pandora Web radio in cars

* GM takes aim at Ford, rivals in vehicle entertainment

* Chevy vehicles to continue to offer satellite radio

General Motors Co (GM.N) will launch a new system to stream online radio from Pandora in upcoming Chevrolets starting with the Volt and Equinox.

The new partnership comes as the top U.S. automaker looks to make up for lost ground against Ford Motor Co (F.N) in the increasingly competitive market for digital entertainment systems in vehicles.

GM said the 2012 Chevrolet Volt and the Equinox would come equipped with a new system dubbed Chevy MyLink anchored by a seven-inch, color touch-screen display in the dashboard.

The system will allow Chevy drivers to stream music from Pandora Media Inc by syncing the vehicle to a smartphone and using an existing Pandora account.

Chief Executive Dan Akerson, who has a background in telecommunications, has said one of his priorities was to sharpen the automaker's focus on vehicle electronics. Thursday's announcement marked the first new such service GM has launched since Akerson's arrival as CEO in September.

GM was the first automaker to launch an on-board navigation and safety system when it debuted OnStar in 1996, a satellite system that it developed on its own.

But by striking a partnership with Microsoft Corp (MSFT.O), Ford managed to generate momentum for its turnaround over the last two years with Sync, an entertainment system that helped drive sales for younger consumers.

The most recent version of the Ford system, known as MyFord Touch, went on sale in vehicles including the Edge crossover last year.

Micky Bly, the GM executive in charge of electric vehicle and battery development, said the automaker had also concluded that it could not keep up with the pace of change in auto electronics without bringing in partners.

We're just not able to do their cycle times, and a lot of research and development is going into this area, so why not partner with the best companies in this field, he said.

GM will roll out the MyLink system on all of its vehicles over the next 18 months, Bly said.

PANDORA'S GOAL: AS EASY AS RADIO

In addition to Pandora, GM also announced tie-ups with Nuance Communications (NUAN.O) and Sony Corp (6758.T) subsidiary Gracenote.

Nuance will provide a voice-recognition system for the Chevy MyLink system that will allow drivers to control their cell phones and select radio stations or songs. Gracenote provides a service that recognizes music being played in the car and prompts with artist name, title track and other information.

Pandora, which filed for an initial public offering of common stock earlier this month, has some 80 million registered users.

Pandora already has deals to bring its service to vehicles built by Ford, BMW's (BMWG.DE) Mini, Daimler AG's (DAIGn.DE) Mercedes, Toyota Motor Co (7203.T) and Hyundai Motor Co (005380.KS).

But the Chevy system, which GM developed over the past year, will allow drivers to control settings on Pandora from the car itself rather than fiddling around with the connected smartphone, representatives of both sides said.

It's in our interest to make Pandora as easily and readily accessible in vehicles as traditional radio because over half of radio listening happens in the car, said Pandora Senior Vice President Jessica Steel.

Pandora is different from other streaming music services because it uses a database to analyze songs based on a listener's known preferences and create a customized channel.

The service is free although listeners can also opt to pay a subscription if they want to listen without commercials.

Pandora is seen as a rising competitive threat to satellite radio provider Sirius XM Radio Inc (SIRI.O), a subscription service that is home to programs by Howard Stern and NFL football.

Chevy will continue to offer XM radio on its vehicles and the MyLink system will allow for the satellite service to stream graphics to vehicles as well, Bly said. (Editing by Steve Orlofsky)

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