Geely, Volvo to launch powertrain venture

BEIJING: China’s Geely Automobile and its Swedish sister company Volvo Cars will abandon merger plans but launch a new entity to combine their powertrain operations and expand cooperation on electric vehicles, the companies said.

A year ago the two said they were planning to merge, giving Volvo access to public markets, as global automakers pursue alliances to respond beter to the cost of the transition to electric cars, tougher emission rules and autonomous driving.

Geely and Volvo on Wednesday said they had decided to preserve their existing separate corporate structures ater “a detailed review of combination options” but would launch a new company to combine their existing powertrain operations.

The new entity, expected to become operational this year, will provide engines, transmissions systems and petrol-electric hybrid systems for use by both companies and other automakers.

“I firmly believe that this is the best combination, the best way forward for our companies,” Volvo Cars Chief Executive Hakan Samuelsson told a joint news conference.

Asked if Volvo Cars would consider a stock market listing, he said there were currently no such plans.

The two companies will also focus on the development and sourcing of next-generation technologies, from connectivity and self-driving vehicles to car sharing and electrification, their statement added.

The companies did not disclose what savings they expected to make from the various collaborations.