Volvo and Geely anticipate combustion engine merger

Volvo Cars and Geely intend to merge their existing combustion engine operations into a stand-alone business in order to establish a new global supplier that will seek to develop next-generation combustion engines and hybrid powertrains.

The proposed new business would clear the way for Volvo Cars to focus on the development of its all-electric range of premium cars. Volvo Cars is building an entirely electrified product range. By the middle of the next decade it expects half its global sales to be fully electric and the other half hybrid, supplied by the new unit.

For Geely, the planned new entity means technologically advanced and efficient combustion engines and hybrid powertrains would be available to Geely Auto, Proton, Lotus, LEVC and LYNK & CO. The planned new stand-alone business can also supply third-party manufacturers, providing possible growth opportunities.

Both Volvo Cars and Geely are in the process of carving out their ICE (internal combustion engine) operations into new units within their respective organisations, as a first step towards a merger of the two into a combined new stand-alone business.

"Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently," said Håkan Samuelsson, Volvo Cars' president and chief executive.