Geely Holding and Volvo Cars to form joint-venture company producing powertrains

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Geely Holding and Volvo Cars to form joint-venture company producing powertrains

Geely Holding (or more correctly, Zhejiang Geely Holding Group in full) has been building up its portfolio of brands over the past two decades. While allowing the brands – which include Lotus, Volvo, Polestar and Proton – to operate autonomously, there has also been a strong effort to fully utilise the available synergies that such a large group of companies enables. Sharing resources can give a competitive edge in the business and Geely Holding has therefore not just developed the car companies but also looked at how it can create its own ecosystem for other elements.

One important area is powertrains and while each of the companies has had its own R&D in this area, a ‘centralised’ powertrain company would be beneficial to the group. To establish this, Geely Holding has announced a joint-venture with Volvo Cars to create Aurobay, a new company that will be in the powertrain business. The new company will be a global supplier of complete powertrain solutions including next-generation combustion engines, transmissions and hybrid solutions.

Aurobray will get Volvo’s engine facilities
Aurobay will initially be jointly owned by Volvo Cars and Geely Holding and as part of the creation of Aurobay, Volvo Cars will transfer all assets in its wholly-owned subsidiary Powertrain Engineering Sweden, including its engine plant in Sweden as well as the related R&D team, along with its engine plant in China and other relevant assets to the joint-venture in coming months.

The creation of the stand-alone joint venture and the transfer of assets allows Volvo Cars to focus fully on the development of its new range of all-electric models in coming years. The company aims to have 50% of its global sales volume made up of fully electric vehicles by 2025, of which 50% will be hybrids using powertrains supplied by Aurobay. By 2030, it will no longer sell vehicles with combustion ends and offer only fully electric models.

For Geely Holding, the new entity will benefit from the addition of a strong R&D team and technologically advanced and efficient combustion engines and hybrid powertrains for its portfolio of brands, creating a strong base for substantial operational, industrial and financial synergies.

Supply to other companies outside Geely Group
The new business also has plans to supply customers outside of the Geely Holding Group, with the objective of becoming a leading player in the supply of high-quality, low emission, cost-efficient powertrains solutions. The supply of engines to other companies isn’t something unusual and larger carmakers have been doing so for a long time. For example, Proton used to source engines for the Waja and Savvy from Renault.

*Besides making and supplying powertrains to Geely Holding Group companies, Aurobray will also supply them to other companies.*

Besides the new powertrain business, Geely Holding and Volvo Cars have other plans for collaboration. These include sharing of electric vehicle architecture, joint procurement, autonomous drive technologies and aftersales.

“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,” said Li Shufu, Chairman of Geely Holding. “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.”