Volvo And Geely To Merge Internal Combustion Engine Operations

Volvo Cars and parent company Geely have announced they intend to merge their existing combustion engine operations into a standalone business.

According to the two companies, the move will allow them to establish “a new global supplier that will seek to develop next generation combustion engines and hybrid powertrains.”

This will also help Volvo focus on the development of its all-electric range of premium cars. You may be aware that the Swedish company is building an entirely electrified product range. By 2025, Volvo expects half its global sales to be fully electric and the other half hybrid.

Also read: Volvo’s Electric XC40 SUV Teased In Official Sketches

The hybrid powertrains will be supplied by the new business unit, which will also produce efficient combustion engines for Geely Auto, Proton, Lotus, LEVC, and Lynk & Co. According to the press release, the new standalone business can also supply third party manufacturers.

The proposed new business is expected to employ approximately 3,000 people from Volvo Cars and around 5,000 employees from Geely’s combustion engine operations, including R&D, procurement, manufacturing, IT, and finance functions. No reductions in the workforce are anticipated, the carmakers said.

As a first step towards a merger, both Volvo Cars and Geely are carving out their ICE operations into new units within their respective organizations. “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.

Detailed plans of the new business are under development and subject to union negotiations as well as board and regulatory approvals.

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  • Smith

    Sounds like a well thought out plan, to merge all the engine production into one new company focused on R&D and development of obsolete and dead technology. Money well spent. It will be great to see Chinese engines in premium Volvo, Polestar, Lynk & Co and and Lotus cars.

    • Matteo Tommasi

      The current Volvo engines are chinese, and will be built for at least 20 years more

  • Dennis James

    Well, nothing about the current Volvo was not Chinese aside from a few executives and a probably a rented headquarter in Sweden.

  • Emoto

    Everyone I know who owns a late model Volvo has had serious engine problems.

  • Paul Webster

    Volvo is dead to me now.

  • ThatGuy

    Okay cool, so Volvo is moving towards electrification of their vehicles and Geely will continue building Volvo’s engines for the group. Makes good business sense. So moving on…

    • Tostik

      Funny, that’s not what I saw in the article. There will be a stand alone company to make engines manned by former Volvo and Geely employees. That probably means the Volvo plant in Skövde, Sweden, and
      Zhangjiakou, China will both stay open.

      • ThatGuy

        Tostick, if you read between the lines that is the core outcome, singing semantics like stand alone company instead of saying moving making engines in China, trade war issues, essentially.

        The creation of the stand-alone business will result in no job losses, Volvo said.

        The new combustion engines business will combine 3,000 employees from Volvo Cars with 5,000 employees from Geely’s combustion engine operations, and include research, development, procurement, manufacturing, IT and finance functions, Volvo said.

        Global tariffs, accelerated by a trade war between China and the United States, as well as higher investment requirements for electric and autonomous vehicles, are forcing carmakers to seek new ways to cut and share costs.

        Geely will continue combustion engine and component production for the group. Volvo in Sweden will be working on Hybrids and all Electric vehicles as well as associated R&D. – This is my assumption but i can see it happening with cases like VW, PSA and Renault-Nissan Alliance.

        So all in all smart business acumen and financial diligence will keep them competitively viable and cut costs in the current world economy, but its all a risk that they hope pays off, but as long as the trade war rages the global economy is set for a recession.

        SO nothing new, hence we move on

        • Tostik

          Well, Volvo makes (made) more engines in Skövde, Sweden than in Zhangjiakou, China, and I don’t see any evidence that they’re closing the facility in Skövde. Maybe they will, but then some Swedish workers will be out of work and that would go against what Volvo said. …. Ultimately, I know that they’ll quit making internal combustion engines, but that’s at least a couple decades down the pike. ….. But if I worked for the new Geely/Volvo engine company, I’d be looking for a new job. I think I’d have a few years for that.

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