Volvo Cars and Geely will merge their existing combustion engine operations into a stand-alone business, establishing a new global supplier that will develop next-generation combustion engines and hybrid powertrains.
The proposed new business will allow Volvo Cars to focus on developing Polestar, their all-electric range of premium cars.
It’s part of the worldwide automotive slowdown as manufacturers grapple with developing both more efficient internal combustion engines (ICE) and the high costs of developing electric vehicles.
Volvo intends to build an entirely electrified product range as part of the firm’s ambition to put sustainability at the core of its operations.
By the middle of the next decade, Volvo says it expects “half its global sales” to be fully electric and the other half hybrid, supplied by the new unit.
For Geely, the planned new entity means technologically advanced and efficient combustion engines and hybrid powertrains would be made available to the brands that it currents owns: Geely Auto, Proton, Lotus, LEVC and LYNK & CO.
Both companies also said the planned new stand-alone business can also supply “third-party manufacturers”, providing possible growth opportunities.
The planned new business is a significant industrial collaboration between Volvo Cars and Geely, with substantial operational, industrial and financial synergies.
The proposed new business is intended to be an attractive 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.
No workforce reductions are anticipated, Volvo and Geely said.
Both Volvo Cars and Geely announced they’re in the process of carving out their respective ICE (internal combustion engine) operations into new units as the first step towards a merger of the two into a combined entity.
Volvo Cars says the electrification of the automotive industry will be a “gradual process”, meaning there will be significant ongoing demand for efficient hybrid powertrains alongside fully electric offerings.
Their first mass-market offering, the Polestar 2 follows in the footsteps of the Polestar 1, a low-volume production hybrid with 600hp.
It’s aimed squarely at the Tesla Model 3, with prices starting at 39,900 euros ($61,300). The ‘launch edition’ of the Polestar 2 will go for 59,900 euros.
Regardless of which one you choose, you get a performance car which can sprint to 100km/h in less than 5 seconds courtesy of two electric motors doling out 408hp and 660Nm of torque.
Sporting a five-door fastback design, the Polestar 2 houses a 78kWh battery (72kWh in China), estimated to give about 500km of range.
“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 Volvo’s president and chief executive Håkan Samuelsson.
The detailed plans of the new business are under development and subject to union negotiations as well as board and relevant authority approvals.