Volvo Cars and its parent company Geely intend to merge the development and production of internal combustion engines and hybrid drives into an independent company to save costs and to focus on the development of an all-electric range of cars.
In future, all brands of the Geely Group will be supplied with combustion engines and hybrid drives from a single source, including Geely Auto and Volvo Cars as well as Lynk & Co., Proton, Lotus and LEVC. This may include the supply of third party manufacturers.
With this step, Volvo intends to fully concentrate on its own fully electric vehicles in the future. By the middle of the next decade, the manufacturer expects to generate half of its worldwide sales with purely electric vehicles and the other half with hybrid cars. Volvo is targeting the phasing out of solely combustion engines. As early as 2017, the Swedish company announced that every newly introduced Volvo model would have an electric motor in the future – either as a pure electric car, plug-in hybrid or mild hybrid.
Both Volvo and Geely are currently in the process of spinning off their combustion engine activities into new units within their respective organisations, which will then be merged into a new company in the next step. Volvo is convinced that the electrification of the automotive industry will be completed in stages. This means that, in addition to fully electric vehicles, there will also be a sustained significant demand for efficient hybrid drives. “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, President and CEO of Volvo.
The detailed plans for the new company are still under development. They are the subject of negotiations with the unions and are subject to approval by the Board of Directors and the relevant authorities.