Geely, Volvo abandon full merger
Geely and Volvo jointly announced on February 24 that they had reached a merger plan to maintain their existing independent corporate structures while continuing to expand their areas of cooperation.
Geely's announcement claimed a "merger" between the two, but the content of the announcement showed that Geely and Volvo have essentially abandoned the previously anticipated full merger proposal.
According to a statement released by Geely Holding Group, it has agreed on a merger plan with Volvo.
The proposal reads as follows:
The two companies will merge their powertrain businesses into a new company in the form of an equity merger, focusing on the development of a new generation of dual-motor hybrid powertrains and efficient internal combustion engines.
The new company will continue to supply products and services to third-party automotive companies, in addition to both companies. The company is scheduled to be operational by the end of the year.
In 2010, Geely Holding Group acquired 100 percent of Volvo Cars from Ford Motor Company for $1.8 billion.
On February 10, 2020, Geely made an announcement that it was planning a business restructuring with Volvo Cars.
According to the plan at the time, the assets of Volvo after the restructuring would be incorporated into Geely Automobile's Hong Kong-listed company and a future listing in Sweden would be considered.
Geely stressed at the time that after the merger, the new group would maintain the independence of the Volvo, Geely Automobile, Lynk & Co, and Polestar brands.
But Yuan Xiaolin, Volvo's global senior vice president, president, and CEO of Volvo Asia Pacific, said that another world auto giant would be born soon and that one out of every 30 cars sold worldwide would come from this new group in the future, triggering expectations for their full merger.
However, their latest announced new proposal does not mention the merger at the equity level but focuses on the merger of powertrain business and the joint development of core technology and highly autonomous driving business.
In the field of intelligent electric vehicles, on the basis of the currently shared SEA Vast and SPA2 electric vehicle architecture, the two sides have launched the joint development of the next generation of modular architecture exclusive to pure electric cars to achieve the sharing of core technology achievements and scale advantages. Volvo, Geely, and Lynk & Co, and Polestar will all share this architecture.
Both parties will share technology in batteries, motors, electronic control systems, and intelligent network connectivity, shared battery packs, and electric drive systems, and reduce costs through joint procurement.
Volvo and Geely will continue to expand areas of cooperation and deepen cooperation in vehicle electrification, intelligence, networking, and sharing while maintaining their existing independent corporate structures and achieving their strategic goals, the statement said.
The cooperation between the two sides is mainly at the level of technology and resource sharing, which should not have much impact on the existing sales system.