Volvo XC60
Swedish car manufacturer Volvo is set to merge its combustion engine operations into with those of its Chinese parent company Geely. The merger will form a stand-alone business and establish a new global player which is looking to develop the next generation of combustion engines and hybrid powertrains.
The proposed new business would allow Volvo to focus solely on developing its range of all-electric premium cars. The Swedish auto maker is aiming to build an entirely electrified product range as part of its ambition to place sustainability at the heart of its operations. It expects half of its global sales to be electric, and the other half to be hybrid by the middle of the 2020s.
On Geely's part, the new entity brings technologically-advanced and efficient combustion engines and hybrid powertrains for itself and its subsidiaries such as Lotus, LEVC and LYNK & CO. The new business will also supply third party manufacturers.
The planned new business would represent a significant industrial collaboration between Volvo and its parent company with substantial operational, industrial and financial synergies.
The new business would also become an employer for approximately 3,000 employees from Volvo Cars and around 5,000 employees from Geely’s combustion engine operations including research and development, procurement, manufacturing, IT and finance functions. Volvo has said that it anticipates no job cuts as a result of the merger.
Both Volvo Cars and Geely are in the process of carving out their combustion engine operations into new units within their respective organisations, as a first step towards a merger of the two into a combined new stand-alone business.
Volvo Cars has said that it belives the electrification of the automotive industry will be a gradual process,and that there will be significant ongoing demand for efficient hybrid powertrains alongside fully-electric offerings.
“Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently,” said Håkan Samuelsson, Volvo Cars’ president and chief executive.
The detailed plans of the new business are under development and subject to union negotiations as well as board and relevant authority approvals.
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