Swedish car-maker off-loads combustion engine manufacturing and development to new Geely joint-venture
Sweden’s Volvo Cars has become the first major car-maker to stop building internal-combustion engines (ICE) and hybrid powertrains.
Sort of.
The premium Scandinavian brand’s official books will now only show that it develops, validates and builds battery-electric (BEV) powertrains for current and future Volvos, well ahead of its 2030 target to become an EV-only car-maker.
But that’s not the whole story.
While Volvo became the first established auto brand in Australia to sell only electrified vehicles in mid-2021, you can still buy Volvos with ICE powertrains and Volvo’s ICE powertrains will continue to be developed.
The difference is that Volvo Cars has shifted the carbon-dioxide emitting powertrains off its books and on to a new joint-venture company, Aurobay.
A creation of Volvo and its Zhejiang Geely Holding Group parent company, Aurobay will take a month or two to absorb all of Volvo Cars’ ICE and hybrid development and production assets.
Aurobay will be instantly filled with Volvo Cars’ Powertrain Engineering division and the Skövde engine plant in Sweden, along with all of Geely’s engine plants in China.
And then Volvo will have scrubbed itself clean of fossil fuels, just like that.
It will leave Volvo free to develop and build electric powertrains, with Aurobay delivering the combustion powertrains Volvo will need to bridge the gap to Volvo’s 2030 cut-off target.
While EVs made up just over 10 per cent of Volvo’s global sales last year, it expects half its cars to be all-electric within three years, with Aurobay supplying the other half.
“The new stand-alone business also has the ambition to supply customers outside of the Geely Holding Group, and aims to be a leading player in the supply of high-quality, low emissions, cost-efficient powertrain solutions,” Volvo said in a statement.
Aurobay will become a powertrain supplier with an instant captive market that includes Volvo, Geely, Lynk&Co and Malaysia’s Proton – all Geely-controlled brands.
Geely’s Lotus, Polestar and LEVC brands have already pivoted to full electric futures.
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Keyword: Volvo dumps combustion engines