Volvo and Geely focus on collaboration over merger

25 February 2021

25 February 2021

Volvo Cars (Volvo) and Geely Auto (Geely) have agreed to collaborate on a wide range of automotive advances. This will include electrically-chargeable vehicle (EV) architecture, joint procurement, autonomous technologies and aftersales. The collaboration will be overseen by a new governance model supported by Geely Holdings, the lead shareholder in both carmakers.

The confirmation of continued collaboration between Volvo and Geely puts to bed plans for a merger that came to light roughly a year ago. After a ‘detailed review of combination options,’ the two companies decided new growth opportunities could be secured in their respective markets while meeting new challenges through deeper collaboration.

‘Having evaluated different options to realise 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,’ said Håkan Samuelsson, president and CEO of Volvo Cars. ‘We welcome the opportunity of further and deeper collaboration with Geely Auto.’

An electric focus

While preserving their existing corporate structures, Volvo and Geely will look to create a new entity that combines their powertrain efforts. Slated to become operational this year, the new standalone company will provide internal combustion engines (ICEs), transmissions, and next-generation dual-motor hybrid systems. These powertrain systems will then be used by both Volvo and Geely, as well as other automotive companies.

As the industry takes further strides into electromobility, collaborative efforts to develop and secure EV technology is of primary importance. This is apparent in Volvo and Geely’s plans to share and jointly source batteries, electric motors and connectivity solutions.

Brand sharing

The pair are also planning to share the SEA and SPA2 electric architectures among their brands. Accordingly, they have launched efforts to develop hardware and software for the next generation of modular EV platforms. This will encourage additional synergies, and an expansion of products across the Volvo, Geely, Lynk & Co and Polestar brands, as well as external partners.

‘Geely Auto looks forward to partnering more closely with Volvo Cars, achieving significant synergies for our respective businesses,’ said An Conghui, president and CEO of Geely Auto. ‘This will enable Geely Auto to accelerate its global expansion, to capitalise on our strengths in China and develop a new generation of world-class new-energy vehicles and associated mobility services.’

Developing advanced technologies

The two companies will also turn their attention to next-generation technologies. This will include connectivity, autonomous-drive systems, car sharing and electrification. Led by Volvo’s software development company Zenseact, the pair will build an autonomous-driving solution.

‘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,’ said Li Shufu, chairman of Geely Holding. ‘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.’