As it turns to electric vehicles, Volvo shuts down internal combustion engine operations


With buyers becoming less concerned with what is really hiding under the hood, Volvo agreed last week to phase out all internal combustion engine operations.

Volvo and parent company Geely will form a joint venture under the Aurobay name to oversee all future combustion engine developments. As part of the deal, the two automakers will transfer their respective combustion engine businesses, including factories, to the joint venture.

Volvo will also supply around 3,000 employees and Geely around 5,000 to Aurobay. The move shouldn’t cost either automaker jobs. On the contrary, it will free up resources that can be reinvested in the development of electric vehicles. In Volvo’s case, the automaker has pledged to go all-electric by 2030. It has also established operations in Sweden and China for the development of electric motors.

Aurobay’s goal is to develop next-generation engines, including engines in hybrid configurations, for resale to Volvo and Geely, and potentially to other brands within the Geely group. Aurobay will also be open to supply from competing automakers.

Volvo has a similar plan for infotainment systems, via a deal it announced in March with Ecarx, an in-car technology company backed by Geely.

Volvo and Geely have ruled out a full merger, but the two automakers plan to deepen their collaborative efforts in the future. Companies originally viewed a merger as a way to boost their capital raising efforts, but Volvo is now more likely to launch an initial public offering to raise capital.

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