Ford to Establish Hybrid Development Center in Sweden; Volvo Cars to Invest $1.4 Billion in Environmental R&D

30 June 2006

Ford Motor, through its subsidiary Volvo Cars, announced it will establish a development center for hybrid systems in Gothenburg, Sweden, to serve Ford’s Premier Automotive Group and Ford of Europe business units.

In a related announcement, Volvo said that it will invest SEK 10 billion (US$1.4 billion) in environmental R&D to improve fuel economy and tailpipe emissions of its global fleet.

Hybrid development center. The hybrid development center will have overall responsibility for the application of hybrid systems into Volvo Cars vehicles globally as well as for ensuring Ford of Europe and brands from Ford’s Premier Automotive Group are able to apply core hybrid systems into their own product plans.

The center will be staffed initially by a mix of 20 leading engineers from both Volvo Cars and other brands from the Ford Motor Company group.

Part of a global initiative by Ford Motor Company to speed the introduction of more fuel-efficient vehicles, the new hybrid development center will build on the experience and expertise that Volvo Cars has built up over many years in developing advanced environmental technology systems, including some of the early hybrid systems, that eventually made their way into the world’s first hybrid SUV, the Ford Escape.

We are very pleased that Ford Motor Company has decided to establish a development-center for hybrid technology in Gothenburg. This shows a strong belief in Volvo Cars and our ability to deliver results in future advanced technologies and underline the fact that Sweden has all the pre-requisites for research and development excellence.

“The hybrid cars of tomorrow will be more sophisticated and much further developed compared with what we see on the road today. And it is likely that we will find high-performance hybrids running on diesels and renewable fuels.

—Fredrik Arp, President and CEO of Volvo Car Corporation

The center’s location will ensure that hybrid technology development at Ford Motor Company takes into account different market trends and customer preferences in regions around the world. While the new center will be located in Gothenburg, each brand within Ford European operations will be responsible for applying new technologies to their own product portfolios.

The team at the new hybrid center will also work closely with Ford’s hybrid development team in Detroit, Michigan, to ensure optimum global alignment and economies of scale.

Environmental R&D. In a linked announcement, Volvo Cars announced the investment of SEK 10 billion (US$1.4 billion) in environmental research and development. The aim is to reduce the total fuel economy and tailpipe emissions of the global Volvo Cars fleet.

The investment initiative will focus primarily on:

1. The development and deployment of cleaner, more efficient diesel engines, hybrids and alternative fuel vehicles;

2. The use of light, strong materials like magnesium, aluminium and lighter high-strength steel; and

3. The introduction of smaller vehicles, while continuing to meet customer expectations for safety in Volvo Cars.

At the Challenge Bibendum 2004, Volvo introduced the 3CC electric concept car, a 3-seater prototype electric vehicle powered by a lithium-ion battery. (Earlier post). At the Challenge Bibendum 2006, Volvo introduced the Multi-Fuel, an extremely clean engine offering high performance, which can run on five fuels (bio-methane; bio-ethanol; natural gas; gasoline and hythane, a mixture consisting of 10 percent hydrogen gas and 90 percent methane gas). (Earlier post.)

Previously, we were able to solve several major environmental problems ourselves with the help of skilled engineers and advanced technology. Today however, our biggest environmental problems—increased carbon dioxide emissions and climate change—require much more than just technical solutions from individual car manufacturers.

All of society has to be involved: decision-makers the world over must pursue sustainable policies, the production and distribution of renewable energy must be improved and last but not least, consumers must to an ever-increasing extent dare—and want—to invest in environmental technology.

Volvo Cars will be an active partner in the highly complex challenge facing society. Our role is to be a premium supplier of sustainable mobility solutions.

—Fredrik Arp

The Volvo Car Corporation, with its head office in Gothenburg, Sweden, has been a subsidiary of Ford Motor Company since 1999. Volvo has approximately 27,000 employees around the world.