Volvo Cars and Geely Auto: closer cooperation, no fusion
The Swedish car manufacturer Volvo and Chinese partner Geely Auto, both owned by Geely Holding, are not going ahead with the announced fusion. They will intensify their collaboration instead, focusing on electrification and autonomous drive.
In February last year, Volvo and Geely had announced that they were thinking of a fusion creating an ‘international group’ in the car market that would survive and grow in a fast-changing environment.
Now, they changed plans. Hakan Samuelsson, CEO of Volvo Cars: “Having evaluated different options to realize 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. We welcome the opportunity of further and deeper collaboration with Geely Auto.”
The new collaboration will focus in the first place on electrification and autonomous driving. It will be overseen by a new governance model, supported by Geely Holding, the lead shareholder in both companies (Volvo Cars and Geely Auto).
The collaboration agreement has been welcomed by Li Shufu, Chairman of Geely Holding: “As shareholders and portfolio-managers of both wholly-owned and listed companies, Geely Holding sees significant benefits from deeper partnerships and alliances whilst maintaining independence.”
“We are encouraged by the potential synergies and growth opportunities created by this collaboration, which will create two even stronger globally competitive companies in the rapidly changing world of automotive technology and new mobility services.”
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 both companies and other automobile manufacturers.
Intended sharing of platforms and architectures between the companies will drive additional synergies and expand product portfolios across the Volvo Cars, Geely, Lynk & Co, Polestar brands, and external partners.
Leveraging Volvo Cars’ existing distribution and service network, the two companies will also collaborate on the jointly owned Lynk & Co brand’s global expansion.