Geely, Volvo Shelve Merger Plan, Agree to Deeper Collaboration
China’s Geely Automobile Holdings Ltd. and its Swedish affiliate Volvo Cars will expand cooperation on electric and self-driving vehicles while putting off their merger plan, the companies said Wednesday.
The two companies a year ago said they planned to merge and list the combined entity in Hong Kong and Stockholm. But instead Geely is now seeking an initial public offering (IPO) itself on Shanghai’s Nasdaq-style STAR Market. Geely said Sept. 28 that it secured approval for an IPO, but a specific listing time was unknown.
Hangzhou-based Zhejiang Geely Holding Group, Geely Automobile’s parent, bought Volvo from Ford Motor Co. in 2010. Since the acquisition, Geely has been taking small steps to promote integration between the two companies.
The new collaboration plan is different from the earlier merger plan. Geely and Volvo said Wednesday that they would preserve their separate corporate structures while cooperating more closely on power trains, electrification and autonomous-driving technology.
“The deeper collaboration will enable existing stakeholders and potential new investors in Volvo Cars and Geely Auto to value their respective stand-alone strategies, performance, financial exposure and returns,” the companies said Wednesday. “We will also have the opportunity to explore capital market options.”
“I firmly believe that this is the best combination, the best way forward for our companies,” Volvo Cars CEO Hakan Samuelsson said in a statement.
In 2016, they launched a joint venture, Lynk & Co., which produces the luxury electric vehicle Zero Concept. A year later, they jointly established another high-end electric vehicle brand, Polestar.
Volvo is moving aggressively toward electric vehicles, aiming for 50% of its sales to be fully electric by 2025 and all of them to be electric by 2030.
Volvo and Geely still plan to launch a new company to combine their existing powertrain operations. The new entity, expected to become operational by the end of this year, will provide engines, transmission systems and gasoline-electric hybrid systems for use by both companies as well as other automakers.
Geely is also collaborating with other partners in its electric-vehicle push. The company announced a plan last month to set up a joint venture with iPhone assembler Foxconn Technology Group to provide electric vehicle contract manufacturing for global automakers. Geely has also linked up with Chinese search giant Baidu to co-develop intelligent electric vehicles.
Contact reporter Denise Jia (firstname.lastname@example.org) and editor Bob Simison (email@example.com).
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