Volvo Cars and its Chinese parent company Geely have announced they will spin off their existing internal combustion powertrain operations into a standalone business.
The resulting new business will develop hybrid and pure combustion powertrains for both car makers, as well as the other Geely-owned car companies Proton, Lotus, LEVC and Lynk & Co. It will also offer its products to third-party manufacturers.
The move leaves Volvo to focus on the development of pure electric powertrains. By the middle of the next decade, it expects half its global sales to be fully electric and the other half hybrid, supplied by the new unit.
The companies claim that the proposed new business is intended to be an attractive employer for approximately 3,000 employees from Volvo Cars and around 5,000 employees from Geely’s combustion engine operations. This includes research and development, procurement, manufacturing, IT and finance functions. They anticipate no reductions in the workforce.
Both Volvo Cars and Geely have already started to carve out their ICE operations into new units within their respective organizations, in a first step toward a merger of the two.
“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.