Volvo's joint venture to create new electric vehicle technology

Bruno Cirelli
Luglio 20, 2017

The new joint venture (JV) between the carmakers aims to further deepen industrial synergies while providing economies of scale that will further allow them to rapidly develop the next-generation of electrified vehicle technology.

Geely holding company, owner of London Taxi Company and Lotus, and Volvo will also join forces with electric auto brand Lynk & Co which is also owned by the Zhejiang Geely company. They will also cooperate by commonly sourcing components and cutting procurement costs.

Volvo, one of Sweden's biggest companies by revenue, posted operating earnings of 6.8 billion Swedish crowns (US$820 million) for the six months to June 30, against 5.6 billion crowns in the same period previous year.

Under the terms of the tie-up Volvo and Geely will establish a 50:50 joint venture to produce systems for electric cars, which will be based in China with a Swedish subsidiary.

Hakan Samuelsson, Volvo chief executive, said: "Partnerships to share know-how and technologies are common practice in the automotive industry". This is the model we are adopting.

Volvo Cars and Geely are already sharing technology, most notably in the Compact Modular Architecture (CMA) that is being used by Volvo Cars for its soon-to-be-announced smaller range of 40 series cars and by Lynk & Co. Volvo, Geely Auto and LYNK & CO, a brand established previous year and positioned between Volvo and Geely in price, would share vehicle architecture and engine technologies via cross licensing arrangements managed by the new venture. This will help in reduction of the costs for a partner to develop the technology all by itself. Volvo would also take a minority shareholding in LYNK & CO, the carmaker said. Lynk & Co will be jointly owned by Geely Holding, Geely Auto and Volvo Cars. "We will unlock significant benefits across our portfolio by sharing both technologies and next-generation vehicle architectures", Zhejiang Geely Chairman Li Shufu said in statement.

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