Volvo Dumps Combustion Engines – To A New Joint Venture

Volvo Cars has shoved its carbon-emitting engine business off its books by moving all of its internal-combustion powertrains to a new joint-venture company called Aurobay.

A creation of Volvo and its Zhejiang Geely Holding Group parent, the Aurobay joint venture means there are no more combustion engines within the Volvo Cars Group, with the carmaker keeping only its electric powertrains on its balance sheet.

The move leaves Volvo free to develop and produce electric powertrains, while Aurobay delivers the combustion power it will need to bridge across to 2030, when Volvo plans to be all electric.

It expects half of its cars to be electric by 2025, and Aurobay will supply the hybrid powertrains that will flesh out the other half. EVs made up just over 10% of Volvo’s sales last year.

“The new stand-alone business also has the ambition to supply customers outside of the Geely Holding Group, and aims to be a leading player in the supply of high-quality, low emissions, cost-efficient powertrain solutions,” Volvo said in a statement.

It will take a month to merge combustion powertrain operations from as far afield as Volvo’s Powertrain Engineering division and Skövde engine plant in Sweden, with Geely’s engine plants in China.

Aurobay will continue to develop powertrains for Volvo, Geely, Proton and other brands, without Volvo having to account for any of the combustion engines on its own balance sheet.

There is talk of Aurobay supplying automakers that aren’t linked to Geely.