Volvo Cars and Chinese parent company Geely have announced plans to build a new company for supplying their gasoline engines and hybrid systems worldwide.
According to the Nikkei Asian Review, the idea behind floating this new combined unit is to help Volvo and Geely free up resources for developing electric vehicles.
The two automakers will start forming their own independent units next year, and it appears the process will be completed around 2025.
The new company will employ roughly 3,000 workers from Volvo and about 5,000 from Geely. The capital structure of the unit will be determined at a later date.
According to the Nikkei Asian Review, the new company will handle R&D, procurement and production of next-gen gasoline engines and hybrid powertrains.
It will supply Geely and Volvo as well as other automakers under Geely’s umbrella, such as Lotus of the U.K. and Malaysia’s Proton, in addition to customers outside the group.
Volvo became the first automaker in 2017 to announce that all models sold from 2019 will be fully or partially electrified.
The goal is to have fully electric vehicles make up half of global sales by around 2025, with the other half coming from hybrids.
According to Volvo Cars’ CEO and President Hakan Samuelsson, the new venture will initially focus on boosting the competitiveness of hybrids
“Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently.”
Image and content: Volvo Cars/Nikkei Asian Review