Merger scrapped, Geely and Volvo to launch powertrain venture
With abandoning the merger plan, China’s Geely Automobile and its Swedish sister company Volvo Cars to launch a new entity for combining their powertrain operations and to expand cooperation on electric vehicles.
A year ago, the plan was to merge, providing Volvo access to the public markets, to make global automakers pursue alliance to get a better response on the cost of transition to electric cars, tougher emission rules, and autonomous driving.
They mentioned on Wednesday that they had decided to preserve their already existing separate corporate structures after a detail of the merger options and decided to launch a new company to combine their powertrain operations.
“I firmly believe that this is the best combination, the best way forward for our companies,” Volvo Cars chief executive Hakan Samuelsson said in a joint news conference.
The two companies also have a focus on the development and sourcing of next-generation technologies, from connectivity and self-driving vehicles to carpooling and electrification.
However, they did not disclose their expected savings from their collaboration.
Last year Geely Auto sold 1.32 million cars while Volvo Cars sold 661,713 vehicles.
Geely Auto place to raise 20 billion yuan from a public share sale on Shanghai’s Nasdaq-style STAR Market, which is claimed to stay unaffected by the new collaboration with Volvo.
Geely President, An Conghui exclaimed that the company has made plans to set up an independent entity for pure electric vehicles.