Volvo Readies For Electrified Future With Two Major Tie Ups
AUG 28 2017 BY MARK KANE
A lot is going on at Volvo these days, as the Swedish brand becomes more and more entangled in parent Geely Holding’s business structure.
Volvo Cars and Geely Holding intend to establish a joint venture company to boost synergies, deepen the partnership, share existing and future technology and provide the economies of scale (to more rapidly develop next generation electrified vehicle technology).
To be fair, we are not sure any of that needs to be said and/or formerly set up, as Geely has owned Volvo outright since 2010, perhaps just for outward appearances?
The latest Memorandum of Understanding stands that Volvo Cars, Geely Auto and LYNK & CO will share vehicle architecture and engine technologies, via cross licensing arrangements of technologies managed by the new joint venture. They will also cooperate more deeply by commonly sourcing components and cutting procurement costs.
Again, all three companies (Volvo Cars, Geely Auto and LYNK & CO) are controlled by Geely Holdings. The new joint-venture will be 50/50 Volvo Cars and Geely Holding and be headquartered in China with a subsidiary in Gothenburg, Sweden; which brings us to the true need of the JV, to firmly establish ownership percentages as China regulations set for domestic sales.
The broader policy is to share technology between the separate brands, creating more unified automotive group.
At the same time is the news that the Volvo subsidiary will take a significant minority shareholding of LYNK & CO. In other words, some mental IP will be moving to LYNK.
“This stake reflects the fact that LYNK & CO will benefit from the use of Volvo technology both now and in the future. LYNK & CO will be jointly owned by Geely Holding, Geely Auto and Volvo Cars.”
It’s also expected that LYNK & CO will use Volvo dealer network in Europe and U.S. from 2019.
“Volvo Cars and Geely already share technology, most notably the Compact Modular Architecture (CMA) which is being used by Volvo Cars for its soon-to-be-announced smaller range of 40 series cars and by LYNK & CO.
The intellectual property rights for the technology to be shared will remain with the company that developed it, but the technology itself will be available for use by Volvo, Geely Auto and LYNK & CO, via license agreements.
Future modular vehicle architectures and other technology will be shared and developed based on cost sharing agreements. The company leading the development will own the technology and the other group companies will have full access to it through a license, reducing overall development costs.
It is expected that the collaboration will extend in future to also cover electrified vehicle components such as battery cells, e-motors and charging systems in order to maximize synergies across the group.”
“The above transactions are subject to definitive agreements and relevant authority approvals.”
Håkan Samuelsson, president and chief executive said:
“Partnerships to share know-how and technologies are common practice in the automotive industry. This is the model we are adopting. This planned collaboration will strengthen Volvo’s ability to develop next generation electrified cars.”
Li Shufu, chairman of Geely Holding said:
“We will unlock significant benefits across our portfolio by sharing both technologies and next-generation vehicle architectures. I am confident these synergies can be achieved while preserving the separate identities and strategic autonomy of our different automotive brands.”
source: Automotive News