Geely & Volvo deepen collaboration, scrap merger plan –

Volvo Cars and Geely Auto have decided to scrap their merger plans and instead chose to deepen collaboration. Volvo said in a press release that the collaboration will see both automakers pool powertrain, EV architecture, joint procurement, autonomous drive technologies and aftersales to drive savings.

Last December, the automakers delayed their tie-up plans after Geely sought to get itself listed on the Shanghai New Star Market. Due to the listing process, Geely was prohibited from making changes to its capital structure.

Now, after a detailed review of options, Volvo president and CEO, Hakan Samuelsson said the “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.” Samuelsson added that a full merger would have “slowed down” the businesses, and both companies “would like to avoid any type of loss of momentum when people start to talk about internal power issues,” the Financial Times reported.

This way, Volvo highlighted that existing stakeholders and potential new investors in both companies can still value their respective standalone strategies, performance, financial exposure and returns. “We will also have the opportunity to explore capital market options,” Volvo said.

The collaboration will see Geely and Volvo deliver synergies regarding the internal combustion engine, transmission, and next-generation dual-motor hybrid systems. These components will be shared between the two, and potentially other vehicle manufacturers as well, such as Proton and Lotus.

Other aspects of the collaboration include the development and sourcing of next-generation batteries, electric motors, connectivity solutions, and autonomous driving solutions. Leading the development of self-driving systems is Zenseact, Volvo Cars’ software development company. Each company will lead its respective area of expertise – Volvo will focus on electrification for large and premium cars, while Geely develops the ICE and hybrid business.

The new SEA (Sustainable Experience Architecture, world’s first open-source EV platform) and SPA2 electric architectures will be shared as well, allowing for the expansion of product portfolios across Volvo Cars, Geely, Lynk & Co, Polestar, and even external partners. Volvo’s existing distribution and service network will also be used to expand the Lynk & Co brand globally.

Geely Auto president and CEO, An Conghui said: “Geely Auto looks forward to partnering more closely with Volvo Cars, achieving significant synergies for our respective businesses. 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.”

The collaboration was also welcomed by parent company Geely Holding chairman, Li Shufu. “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,” he said.

“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.”

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