Volvo Cars and Geely Holding create joint venture Aurobay for powertrain operations
Gothenburg, Sweden-headquartered Volvo Cars Group and its China-based parent firm Geely Holdings Group have announced the signing of an agreement to create a joint venture (JV) for its powertrain operations, called Aurobay.
According to available information, Aurobay will be responsible for developing and producing complete powertrain solutions for next-generation combustion engine-equipped vehicles, transmissions and hybrids. The new JV will be supply the complete powertrain solutions globally.
Previously, the two manufacturers had announced plans to merge their powertrain operations into a new standalone business. The JV is obviously the result of those plans.
The new JV will initially be jointly owned by the Swedish manufacturer and its Chinese parent firm Geely. Under the terms of the deal, Volvo Cars will transfer all assets in its subsidiary Powertrain Engineering Sweden, including research & development (R&D) team, to the JV. In addition to the Swedish assets, Volvo will also transfer its Chinese assets to the joint business.
Volvo Cars said that the new entity will benefit from its portfolio of brands, and it would create a strong base for significant operational, industrial as well as financial synergies.
Announcing the new JV, the auto giant said, “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.”
The new JV will supply high-quality, low emission, cost-efficient powertrains solutions not only to auto brands of the Geely Holding Group but also to other manufacturers around the globe. The creation of the stand-alone JV and the transfer of assets to the new entity will allow Volvo Cars Group to focus completely on the development of its new range of fully-electric premium cars in the future. As governments around the globe are pushing manufacturers as well as customers to switch from conventional internal combustion engines (ICEs) to environment-friendly EVs; Volvo aims for 50 per cent of its global sales volume to consist of all-electric cars by 2025. By the end of current decade (2030), the manufacturer aims to sell only pure electric cars.
In a separate development, Volvo purchased additional shares of Gothenburg, Sweden-headquartered Polestar, taking its stake in the EV manufacturer to 49.5 per cent. The fresh investment shows the manufacturer’s eagerness to electrify its portfolio.