Geely keeps Volvo’s engine production in Sweden

Yesterday, we reported that Volvo is merging its internal combustion engine operations with Geely’s, thus creating a new stand-alone business that will supply the wide range of manufacturers in the group, from Volvo to Lotus, with powertrains. Today, a Volvo representative spoke with us and supplied more details.

“A potential merger of all operations related to combustions engines—R&D, Manufacturing, Procurement, etc.—would result in a new company on Geely Holding level, serving all car makers in the Geely Group as an internal supplier to Volvo Cars, Lynk&Co, Geely, etc.,” the rep said. “This would mean that Volvo Cars could focus entirely on developing battery electric technologies for our future battery electric cars while also gaining economies of scale from shared developments of combustion engines. Volvo Cars’ current engine family would however continue to be used in our hybrid models for the foreseeable future.”

The rep continued, “There are no plans for changes in locations—a new unit would need existing competence and production capacity, so both developments and manufacturing would remain in Sweden, although under the umbrella of a new stand-alone unit. As for headquarters of the new company… no decisions have been made at this point.”

The merger into this new business effects 3000 employees from Volvo Cars and approximately 5000 from Geely’s combustion engine operations. And with development and production of the traditional engines soon reorganized, Volvo’s core R&D team will focus on the Group’s intensive electrification efforts.