BEIJING -- Geely Automobile and sister company Volvo Cars will abandon merger plans but launch a new entity to combine their powertrain operations and expand cooperation on electric vehicles.
A year ago, the two said they were planning to merge and list in Hong Kong and possibly Stockholm, giving Volvo access to public markets, as global automakers pursue alliances to respond better to the cost of the transition to electric cars, tougher emissions rules and autonomous driving.
In a joint statement on Wednesday, Geely and Volvo said that they would preserve their existing separate corporate structures after "a detailed review of combination options."
They said, however, they would launch a new company to combine their existing powertrain operations.
The new entity, expected to become operational this year, will provide engines, transmissions systems and petrol-electric hybrid systems for use by both companies as well as other automakers.
The two companies will also focus on the development and sourcing of next-generation technologies, from connectivity and self-driving vehicles to car sharing and electrification. They plan to share and jointly source batteries, electric motors and connectivity solutions, the statement added.
Geely Auto will also forge a partnership with Volvo's sales network to help to boost growth for their jointly owned Lynk & Co car brand.
Hangzhou-based Zhejiang Geely Holding Group, Geely Automobile's parent, bought Volvo Cars from Ford Motor in 2010. Last year Geely Automobile sold 1.32 million cars while Volvo Cars sold 661,713 vehicles.
