Geely Automobile and Volvo cars announced on February 24 that both parties have agreed to cooperate in a series of automotive core business sectors to play a synergistic effect and excavate new growth opportunities.

Two companies plan to combine their own power systems into a new independent company, which is expected to be in operation this year. According to a joint statement issued by both parties, this newly established power system will provide ICE, gearbox and new generation dual motor hybrid system for both parties and other automakers. In terms of electrification, the two companies include brands such as Geely, Volvo, polar stars and packets will share the new SEA and SPA2 electric car architecture. In addition, the two sides will jointly develop the next generation of modular electric vehicle (EV) architecture, and is applied to their own brands to expand the combination of electric vehicles. By cooperating, both companies will share and jointly purchase batteries, electric motors and networking solutions. Volvo’s automatic driving software development company ZENSEACT will be responsible for developing an automatic driving solution for both companies. In addition, Geely and Volvo will also use the Volvo’s existing channels and after-sales service networks to support the expansion of the packet brand in the European market. Håkan Samuelsson, President and CEO of Volvo, said: “After widely assessing various programs for realizing corporate value, we have reached a consensus, and we think that the cooperation models taken by the two independent companies are to ensure continued growth, while in many fields Implement the best way of technological synergies. “

Geely Auto and Volvo will still retain their existing independent companies. The cooperation between the two parties will be supervised with a new governance model under the support of the parent company Zhejiang Geely Holdings Group.

IHS Markit View Deep Analysis

Two leading companies from Geely Group leading company Geely Auto and Volvo, after a year of negotiations for the merger, finally reached a substantive agreement on the next work arrangement. However, both companies and shareholders seem to have to continue to operate under existing cooperative architectures and seek cooperation in the fields of electrification, automatic driving and power systems. Compared with the full merge program, the arrangement of this alliance will help the two companies can use to use each other’s resources without the need for restructuring, to address the cost of electric vehicles and new technologies. Geely Automobile and Volvo have been cooperated in the development of automobile platforms over the past few years. Volvo Auto and Geely Automotive CMA platforms developed for compact vehicles have become a key vehicle architecture of Geely Group. Since 2017, the first batch of Volvo XC40 and Biocke 01, which is built in 2017, currently based on CMA-based models have been produced in six assembly plants, including three plants located in Ningbo, Taizhou Road and Zhangjiakou, since China Ningbo, Taizhou Road Bridge and Zhangjiakou and Volvo. Factory located in Gente, Belgium. We predict that by 2021, the global production of cars based on CMA will grow from 302,647 in 2019 to more than 530,000 vehicles. The modular platform makes the pile brand accelerate the release speed of the model between 2018 and 2020. In addition, Geely Group’s entry-level brand Geely also launched a CMA-created model last year. This initiative will help improve the sales of Geely brand and allow the brand to position its new models in higher-end markets. Successfully introduced by the CMA platform, the two sides plans to further share the SEA and SPA 2 electric automotive platforms, which helps jointly in the power of electric vehicles in electric vehicle platforms, thereby making two companies to take advantage of the electric car market. status.

The newly established powertrain will help two companies reduce operations and research and development costs. By starting to provide technology to other companies in the industry, this will open a new opportunity for new companies, but the two companies have not disclosed the details of the cost savings. In November 20020, Geely and Daimler announced a major cooperation project on joint development of hybrid system solutions. Once Gilish and Volvo’s new power system company should be able to accelerate the pace of Dai Dimler to develop a hybrid ICE power system, and further promote the synergies of three companies in the field of high-efficiency power systems.

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