Volvo and Geely merging development for engines, still needed in hybrids

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Volvo will offload its development of internal combustion engines to a new joint project with parent company Geely, the two companies announced Monday, allowing Volvo\’s in-house propulsion engineers to concentrate exclusively on electric powertrains. 

While Volvo says it believes ICEs are here to stay for the foreseeable future, it is in the early stages of phasing out cars powered exclusively by fossil fuels. Hybrids will remain a part of Volvo\’s lineup, which means ICE development is still critical to the company\’s product plans, but that work doesn\’t necessarily need to be done by Volvo\’s engineers. 

By the middle of the next decade, Volvo expects half its global sales to be EVs and the other half hybrids, the announcement said, and those hybrid engines will be supplied by the new joint operation. Both companies have already begun to spin off their ICE programs from their core operations in preparation for the merger, the announcement said. 

This new business will bring roughly 3,000 employees from the Volvo side and 6,000 from Geely, the two automakers anticipate. Neither company plans to cut overall employment figures at all.

“Hybrid cars need the best internal combustion engines. This new unit will have the resources, scale and expertise to develop these powertrains cost efficiently,” said Volvo CEO Håkan Samuelsson, in the announcement.

Volvo\’s electrification push is well underway. The company already offers several plug-in hybrid models (though not all are sold in the United States just yet) and its first dedicated EV model, based on the new XC40 crossover, will make its formal debut later this month. 

Geely is also pursuing electric cars; the company announced its first BEV for global distribution, the GE11 fastback, earlier in 2019. 

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