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Volvo and parent company Geely to create new engine division

Yet-unnamed group will be global supplier in engine and hybrid development

Published: October 18, 2019, 10:30 PM
Updated: October 24, 2019, 3:15 AM

Volvo engine production

Volvo, which has stated its intention to go full electrification on its line, has announced consolidation of its combustion engine operations with its parent company, China’s Geely (Zhejiang Geely Holding Group), forming a standalone division.

Volvo T4 Drive-E 4-cylinder engine rear

Volvo expects its move to full electric lineup to last well into the next decade, meaning there will be a significant need for hybrid powertrains during the phasing-in period.

“Hybrid cars need the best internal combustion engines,” said Håkan Samuelsson, Volvo Cars’ President and Chief Executive. “This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently.”

Håkan Samuelsson, Volvo President and CEO - Håkan Samuelsson, Volvo President and CEO

The yet-unnamed group will become a global supplier in the development of the next generation of combustion engines and hybrid powertrains, and clear the way for Volvo to concentrate on its full range of all-electric vehicles.

The proposed new company would primarily supply engines to Geely’s other holdings — Geely Auto, LEVC, Lotus, LYNK & CO and Proton — and would also supply third-party manufacturers.

Volvo 3-cylinder engine

Plans for the division including the employment of about 3,000 people from Volvo and 5,000 from Geely, working in research and development, procurement, manufacturing, IT and finance. No job-cuts are anticipated as employees shift positions.

For first steps, the two companies will carve out their current internal combustion engine operations into new units. The detailed plans are still under development and will need approval from the board, unions and regulators.