Volvo Cars and Geely Auto scrap merger plans but agree ‘collaboration’

Powertrain operations to be combined in new company focused on next-gen hybrid systems and internal combustion engines

Volvo Cars and Geely Auto scrap merger plans but agree ‘collaboration’

Volvo Cars and Geely Auto have agreed on a new collaboration that will deliver synergies in powertrains, sharing of electric vehicle architecture, joint procurement, autonomous drive technologies and aftersales.

While preserving their existing separate corporate structures, the deeper collaboration will be overseen by a new governance model, supported by Geely Holding, the lead shareholder in both companies.

Volvo Cars and Geely Auto confirmed the combination of their existing powertrain operations into a new standalone company.

The company, expected to become operational this year, will provide internal combustion engines, transmissions, and next-generation dual-motor hybrid systems for use by both companies as well as other automobile manufacturers.

Related: Government loosing £1K for every new EV sold

The two companies will focus on the development and sourcing of next-generation technologies, from connectivity and autonomous drive to car sharing and electrification.

They are planning to share and jointly source batteries, electric motors and connectivity solutions that will generate valuable synergies.

This will include the joint development of a world-leading autonomous driving (AD) solution under the lead of Zenseact, Volvo Cars’ AD software development company.

Related: Ford to go ‘all-electric’ by 2030

The firms, which are planning to share the new SEA and SPA2 electric architectures among their brands, have launched combined efforts to drive speed and efficiencies in the development of hardware and software for the next-generation world-leading modular EV architectures.

Intended sharing of platforms and architectures between the companies will drive additional synergies and allow for an expansion of product portfolios across the Volvo Cars, Geely, Lynk & Co and Polestar brands, and external partners.

Leveraging Volvo Cars’ existing distribution and service network, the two companies will also collaborate on the global expansion of the jointly owned Lynk & Co brand.

Related: Jaguar to become ‘electric only’ brand by 2025

Håkan Samuelsson, President and CEO of Volvo Cars, said: “Having evaluated different options to realise value, we concluded jointly that a collaboration model between two standalone companies is the best way to secure continued growth and at the same time achieve technological synergies in many areas.”

An Conghui, President and CEO of Geely Auto, said: “Geely Auto looks forward to partnering more closely with Volvo Cars, achieving significant synergies for our respective businesses.

“This will enable Geely Auto to accelerate its global expansion, to capitalise on our strengths in China and develop a new generation of world-class new-energy vehicles and associated mobility services.”

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