Volvo and Geely end merger talks, will focus on powertrains instead
The two initially planned to become one single entity, however, collaboration will instead extend to joint powertrain development.
Closer ties, but no merger.
Volvo Cars and China's Geely will not become one company as the two first envisioned. On Wednesday, the companies said in a joint statement they will instead create a standalone powertrain operations firm to unlock greater efficiencies and streamline research and development. The agreement extends to traditional internal-combustion engines to future hybrid systems.
Additionally, the two will step up collaboration when it comes to sharing electric car platforms as well, and plan for joint procurement to cut purchasing costs. Through all of this, Geely will oversee the new powertrain operation and Volvo will remain entirely separate in the process. Geely owns a majority stake in the Swedish luxury carmaker, so it already exudes sway over its operations.
When Geely first talked about merging powertrain operations in 2019 before an all-out merger, the move was also supposed to free up Volvo from engine development so it could better focus on electric powertrains. This deal may also see Volvo powertrains make their way to future Lotus cars. Aside from owning a majority stake in Volvo Cars, Geely also bought itself a British sports car maker in Lotus after taking a majority stake in a company called Proton, Lotus' former owner. Geely's been outspoken about reinvigorating the British company to become a global sports car and luxury brand. Plans even include an SUV.
Aside from the powertrain news, Geely will also tap into Volvo to spread its Lynk & Co brand around the globe -- including the US. The relative newcomer to Geely's automotive portfolio remains a China-only affair after the company pushed back plans to sell cars in Europe come 2020. That should happen this year with the US to follow sometime this decade. When it does reach America, we'll see the funky cars sold at Volvo dealerships, thanks to the deeper ties forged between Geely and Volvo.
